GST rollout to turn Nagpur into India’s warehouse

Nov 17, 2017

GST Effect and Futuristic Potential

The city known as zero mile in India is finally in the right place at the right time.

Nagpur is in the dead center of the country, at the crossroads of the busy road and rail corridors that bisect India east to west and north to south. Now, India is on the cusp of a sweeping tax overhaul that could turn the city of 2.4 million people into one of the nation’s biggest logistics hubs.

Known for its oranges, tiger sanctuaries and 45-degree Celsius (108 Fahrenheit) summer heat, Nagpur has seen a groundswell of investment from retailers and warehouse companies betting that the debut of Prime Minister Narendra Modi’s national goods and services tax (GST) on 1 July will transform the city’s fortunes.

The new tax will replace layers of provincial levies and unify India’s 29 states into a single market. It could push economic growth into double digits by eliminating shipping delays across state borders and cutting corruption. There will be no need for border controls. There will be smooth flow of transport from one state to another.

While the new GST won’t solve many structural problems of India’s transport network, it could trim logistics costs of companies producing non-bulk goods by as much as 20%, That makes Nagpur on the vast Deccan plateau attractive as a central store for goods. Some 800 kilometers from either the Bay of Bengal to the east or the Arabian Sea to the west, and more than 1,000 kilometers from either Delhi to the north, or Chennai to the south, Nagpur has been at the center of the country’s trade routes for centuries.

The 30-hectare park has just been completed by DLI, a unit of London-listed investment fund Infrastructure India Plc. Surrounded by fields southwest of the city, its large, white, liquid storage tank is blinding in the sun, while rail cars wait in a dedicated siding near a line of trucks, ready to move containers of goods.

The country’s biggest shipping companies including Container Corp. of India Ltd, Mahindra Logistics Ltd and Transport Corp. of India Ltd are all setting up facilities in Nagpur, along with US-based Deere & Co. ‘Amazon’, the biggest online retailer, and ‘FlipCart’ is also coming up with its dedicated biggest warehouse at Nagpur.

Thus with the GST and the free movement of goods, the very disadvantage of being at the center will be translated into a real economic advantage.
As early as 2002, the state conceived a special economic zone around a new airport, called the Multi-modal International Cargo Hub and Airport at Nagpur. Known as Mihan, it has already drawn some of the nation’s top technology firms, including Tata Consultancy Services Ltd and Infosys Ltd.

For Nagpur, the GST is a step in the right direction.

Nagpur being in the top developing city of India, wherein the infrastructure is still being developed and is expanding at a rapid rate. Many MNC is banking on the fast-growing city Nagpur. The city is flourishing with amenities like Metro Rail and various upcoming government projects. And mark on the unimaginable growth rate, the city is soon coming up with International Airport and with an extended Cargo Airport. Thus, the on-going projects have already put the city on the world map.

The major parameters that any organization/company setting up its warehousing base in any city, looks onto some important factors.

  • Location
  • Distance from Major Markets
  • Connectivity (Road, Rail Air)
  • Time taken to reach their Potential Market
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