Warehouse modeling post Goods and Services Tax (GST) implementation for Reliance Logistics (P) Ltd.

Abstract

India is one of the fastest growing economies of the world today. This growth is fuelled by growth in infrastructure, booming manufacturing sector, EXIM trade, retail and agricultural related activities amongst others. Logistics and warehousing industry assumes central activity in these growth areas . This industry is growing at a rate of 20% annually while the world’s industry growth rate of 10% . The logistics and warehousing are impacted by several forces, some intrinsic to the organisation, some market specific and some fiscal in nature. Fiscal considerations have historically been a key determinant of supply chain structuring in India with manufacturing bases and distribution networks engineered primarily to harness fiscal benefits. The availability of tax exemptions/ benefits and the prevalence of differential taxes based on geographical locations have influenced the structuring of supply chains, procurement patterns and distribution networks. India a country with a complex tax structure is set to introduce tax reform by implementing Goods and Services Tax system (GST) to make the economy more attractive and ease to do business. The GST will be a major milestone for the Indian Tax System and will mark a transition from the existing origin-based to a destination based taxation regime . The GST presents both challenges and opportunities for corporates. One of the key challenges relating to the GST would be with regards to supply chains. It will bring about changes in the way manufacturing, warehousing and distribution is carried out in Indiav . Organizations have to restructure their supply chain strategy to overlook tax boundaries and will be able to position their warehouses and distribution networks, more focused on cost and time. To stay competitive, companies should be ready with their new supply chain strategy post GST - with details of an optimal network structure and the steps that needs to be taken to get there. Realising this, Reliance Logistics Pvt. Ltd., a logistics service provider intend to redefine its warehousing strategy. Hence through this CCS project, we aim to study the impact of GST on logistics and warehousing industry and to provide solution to Reliance Logistics Pvt. Ltd. by designing the warehouse and distribution network that would result in GST efficient supply chain.