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November, 2018

Warehousing in India

Warehousing industry in India is one of the prominent market segments in total Logistic Sector. Implementation of GST & various E commerce as the two important factors that have created significant growth prospects for the warehousing sector in India. Experts claim a total of approximately 43,000 Crore rupees investment scope by 2020 in this sector.
There are various factors which helps warehousing sector to boost to its peak in Indian market.

1. Growing manufacturing activity under “MAKE IN INDIA” campaign driven by current government
2. Rising domestic consumption
3. Increasing International trade
4. Increasing in Organic harvesting
5. Growing investment of Indian & foreign in warehousing infrastructure
6. Ease of Government rules is last but not the least

In present scenario the warehousing industry is approximately 560,000 crore rupees excluding inventory carrying cost which amount to another 4340 thousand crore rupees with a minimum growth of 10% annually. The industry although is facing a lot of difficulties due to improper cargo flows, improper infrastructure, limited capability of carrying capacity so on and so forth.

Industrial / retail warehousing is major contributor in total warehousing industry with its 55% of total market share followed by 14% – 15 % Share by CFS/ICD, Agri warehousing & Cold store.

Industrial Warehousing is approximately 310 thousand crore rupees market with a basic growth of 10-12% in recent past. Some major players in Industrial warehousing are DHL, Safeexpress, Continental warehousing, Indo Arya, All Cargo etc.

Agri warehousing accounts 15% of total market share with an annual growth of 9-10 % in past few years mainly due to growing annual agriculture production, standardized warehousing operations as per Warehousing development & regulation act, subsidy scheme & Tax Incentive. Key players in Agri warehousing are Food Corporation of India (FCI) and Central Warehousing Corporation (CWC). Although 30 % of Agri Warehousing is still operated by unorganized small warehouse owners.

Cold stores accounts of almost 16 % of total warehousing industry and it expected to grow at 15% per annum on a sustained basis over the next 5 years with the organized market growth at a faster pace of 20%. Some significant players are Snowman, Gati Kausar, Cold Star, ColdEx, Kelvin Cold Chain etc.

Last but not the least is Container handling & storage. ICD/ CFS accounts almost 14% of total warehousing market in India and in past 3 years it has grown 10-15 % with almost 90,000 crore rupees market value. Government initiatives, faster container rail transport & secure cargo movement is the main reason for sudden growth rate in containerized movement of Cargo. The government run CONCOR (Container Corporation of India Ltd) continues to be the largest player operating 48 terminals which handles EXIM Cargo while 14 others handle domestic traffic only.
In today’s scenario Warehousing is not only for storage and transport service it is fast emerging as strategic end to end solutions that improves efficiencies with organized & skilled professional services. The fast growth in retail, automotive, manufacturing, pharmacy and agriculture along with GST in India is expected to give a proper thrust in Warehousing & Logistic business.

September, 2017

GST Impact on Shipping and Logistic Business

GST, an abbreviation of Goods and Service Tax has been finally implemented in India effective 1st July 2017.  It is very early to judge after effect of GST ON Shipping & Logistic Business but in short Terms review we find some positive & negative impact of GST.

First we will see in short which seems to be Negative Impact of GST …

  1. The worst affected are local traders now a days after GST Implementation , who from last so many years doing the business on CASH and not giving Tax to Government  as desired. The Export & Import Trading business in India is very low now a days because of this problem reducing down the volume by approx 19%
  2. The small export house are also affected as the RAW material has been priced hiked due to implementation of 18 % GST. Also due to GST implementation STAR EXPORT HOUSES and small / middle scale export house are now in same platform keeping competition a mammoth task for them
  3. The Custom is still not clear regarding the impact of GST and no proper Guidelines made available to Custom and trade persons to tackle GST , which un necessary slowing the process of Custom clearance in Indian Ports.

Now, we must see the Brighter Side of GST, Al though it is not feasible to foresee the changes within 30 days of implementation of it, because nothing will change abruptly and it is a slow process which will finally become beneficial for Country…

  1. As per Road and Transport Ministry the distance travelled by trucks per day has increased by at least 30% post the rollout of goods and services tax (GST), according to a document prepared by the road transport ministry on the impact of GST on logistics sector. Trucks are covering 300-325 km a day on an average against about 225 km a day before GST, it said.
  2. The implementation of GST helped Star Export house to reduce their price in Export commodities as they do not have to pay VAT, STATE TAX and various other tax when they purchase RAW MATERIAL.
  3. One Nation and one Tax this is the prime moto of GST and it replaces several State & Central Tax implications on everybody  on Logistic Field also.
  4. As per planned if everybody get the Reverse CENVAT TAX Credit then everybody will see the Huge impact on Export & Import business.

Let’s Hope for the best , indeed it is a very brave & great step to implement GST provided everything goes at planned.

January, 2017


How long will it take to stabilize the economy?

cashOn 8th November 2016 India makes another abrupt history when Indian Prime Minister Mr. Narendra Modi announced Demonetization of High denomination Notes with immediate effects. The step has been taken into consideration to stop Black Money, Fake Currency Note, Inflation & fight against terrorism.

To some extent the Demonetization abolishes Terrorism, Black Money in India but Growth of any Country depends upon its Export Import Trade and indeed it is very crucial for India too. After demonetization however Exports have slowed down due to currency crunch.  The Trading Market almost demolished due to the fact that this market operates in Currency Notes only. True to its core that instability in the Exports leads to inflation and that in turn leads to an uncertainty of internal purchasing power and unstable economy.

The Foreign Trade industry is suffering in the aftershocks and shall continue to suffer for a further period, though for limited time as per Trade Experts.

Government’s decision to ban use of old Rs 1,000 and Rs 500 currency notes is expected to impact adversely the growth of export-import (EXIM) trade, shipping giant Maersk Line said in a report.

rajesh-arora“Trade wise, Maersk Line expects India’s EXIM growth in the fourth quarter (October-December) to be slower than third, as a result of the demonetization exercise undertaken by the government in November this year,”…. the global containerised division of the Maersk Group said in a statement.

However the influx of money from the black market shall certainly improve to be beneficial in the long run for Export Import Trade. The fact lies at the moment that plunge in money supply with overflowing bank deposits ring an alarm in consumption demands, means decline in imports.

The Indian Government has always paid incentives and promoted Export with easy policies. Nonetheless the Exports market is taking a toll at the moment. “ Make in India” projects need easy flow of currency for manufacturing, hence the Import and Export both trade have got their bottlenecks as of now and nobody is sure how much time it requires to be back on business…

Demonetization is indeed a great move by Government to fight against corruption, fake money, black money, terror financing and long term economic gains and  for a greater cause it is inevitable that for a few months Indian’s Export trade will be slow but as per experts considered it is a bold step taken by Indian Government to strengthen our GDP the future of Indian Export Import trade looks promising for coming 2017.

September, 2016

Impact Of Gst On Indian Logistics Industry

The logistics industry in India is growing slowly but steadily, with introduction of E- commerce , Economic reformation by proposed GST , Initiative like “ MAKE IN INDIA”. Today we will see what positive & negative impacts can happen in Logistics Market for Modi Government’s proposed GST which will be implemented from 2017 calendar year….

Logistic Industry in India is primarily categorized into warehousing, land/road transportation, freight forwarding & value added service in which transportation contributes almost 60% on whole logistics part in India followed by almost 25% on warehousing, 10% on freight forwarding & rest 5% on value added services.

Currently Logistic Industry is suffering from various issues like (a) Complex Tax structure within states in India ( b) Poor Infrastructure (c) Poor / strict Custom efficiency and procedure of Customs , thus being a lower cost service proving country actually logistics cost in India is higher than many countries compared to European Countries.

Positive impacts what we can expect for implementation of GST…

1.  Indian Road/ Rail transport will be highly beneficial due to removal of multiple/ combined taxes like State entrance Tax/ Chungi/ Octroi/ Exise Duty/ Countervailing duty/ Service Tax, Value added tax/ luxury tax etc.

Currently if we combine Centre & State tax for most of the goods it works out to be 26.5 %( Cenvat 14% & VAT 12.5%), whereas post GST implementation the same is expected to reduce to standard rate of about 18-21% which will be levied on most goods and all services.

2.  Due to trade barriers such as Entry Tax/Local Body Tax/OCTROI and other hurdles trucks lie idle for 30-40% as per schedule , whereas post GST this will be phased out and logistics time will be improved resulting in improvement in operational efficiency through quicker and increased number of deliveries along with reduction in logistic cost during the transit.

3.  Inter-state TAX in India forced corporate to create & maintain warehouses in each state, as per a recent study currently there are around 20-30 warehouses per company, one in every state resulting supply chain must longer & Cost inefficient, but after implementation of GST logistics costs are expected to be decreased at least by 2% which can result immense scope of improvement in India’s Supply Chain management industry.

Small but short term negative impacts of GST Implementation.

1.  Importers in India will face a hard time which they import goods from Outside India due to Implementation of GST, because after GST the current Educational & Excise Tax of 15% on Import Duty will be charged between 18-21 % resulting increase of overall Custom duty which will result in increased cost in Imported materials.

2.  Currently India is not fully IT oriented country , still there are a large number of Trade players who are not organized, they will face major challenges as Logistics Industry is highly competitive which leaves little headroom for margin improvement.


Implementation of GST in INDIA is an overall  welcome initiative by the Indian Government for the collective growth of the country, the rollout of GST, in India would dissolve the existing various indirect tax structure, i.e. multiple taxes that is being split between center & state governments leading to reduction of about 20% of current logistics costs.

Due to high Import duty after implementation of GST, Indian manufacturing industry will look out for Indian sources for RAW MATERIAL, instead of importing, which will actually strengthening the Rupees in World market.

Deliberating on holistic view the implementation of GST would help the entire Logistic industry in improving the operational efficiency thus cutting the logistics cost & expanding the business prospect through consolidation of logistic players.

March, 2016

Walking a Warehouse Stockroom

Rajesh Chakiat
General Manager, Supply Chain
CSS Dubai

Having run and managed many massive warehouse facilities with some of the most complicated supply chains for leading brands in almost all verticals in the past two and half decades, can summarize some of the main ground rules as below.

You’d think that the place that holds (typically) more than 80% of a company’s inventory, and sometimes accounts for more than half of its working capital, would get plenty of attention. But only a few companies seem to really pay attention to their stockroom or warehouse, or the five processes that affect it. (Receiving, put-away, picking, shipping and maintenance, where “maintenance” represents the combination of cycle counting, consolidation, and other processes that maintain the stockroom in good operating order)

In my opinion, this is short-sighted. You can’t create a truly lean manufacturing process if you don’t have effective processes to supply materials to the floor. Time and motion study, six sigma through process re–engineering with mapping and having re layouts done can significantly boost productivity.  And if it takes a week or more for inbound shipments to move from the receiving dock to warehouse shelves and then out to the production line, you’re robbing other functions (R&D, marketing, even IT) of capital that could make them more effective.

That lack of attention represents an opportunity for individuals, to make a difference at their companies or clients. So… here’s my New Year’s gift to anyone who wants to help their company’s supply chain become more capable. (Or… if you are visiting one of your EMS or logistics partners, this might help you to get a better idea of how well they are managing your inventory)

These are broad guidelines that are generally valid, in my experience – but there can be exceptions, especially in operations that are very focused. (A stockroom that only holds materials for New Product Introduction will look very different from a manufacturing warehouse for a television or large appliance factory!) But more frequently I’ve found that the disconnects I’ve observed were due to not making necessary investments. (Focused investments in materials handling operations can have considerable ROI. Improving receiving and warehouse performance can enable you to take multiple days out of inventory.)

Whether it’s big or small, whether it handles small parts, large items, or a mix, a well-run warehouse will have the following characteristics:

  • Items will be stored according to a strategy that accounts for the physical size of each item and the frequency with which it is picked.
  • Items will be managed to make efficient use of available space.
  • Items will be stored in a way that will keep them safe and in good condition – and will not pose a danger to warehouse workers.
  • Items will be managed to make safe and efficient use of manpower.
  • Items will be managed in a way to provide high performance to the warehouse’s “customer” – the manufacturing floor or shipping dock.
  • Items will be managed in a way to minimize handling.
  • Problems and issues will be physically separated and handled expeditiously.
  • Performance and diagnostic metrics will be collected & published.

There are trade-offs between these, especially when resources are limited. If space is limited, a well-run warehouse may decide to pack some of its slow-moving parts into a small space. This make picking those parts less efficient, but it will also increase the amount of space (and decrease handling time) for the frequently picked / fast-moving parts. If automation (forklifts, conveyors, etc.) is limited, the stockroom may use more floor storage.

There are also differences in the way that a manufacturing stockroom will operate versus a finished goods warehouse. Outbound shipments tend to be larger, less frequent, and more predictable than inventory movements to the manufacturing floor. So you will usually see a lot more activity in a manufacturing stockroom.

What you should see when walking through a stockroom and associated areas like receiving, staging, etc.:

1.  Picking processes and storage strategies that are designed to minimize the amount of time and effort spent on the most frequently picked items while maintaining control of inventory. Examples of this include:

  • Putting the most frequently picked items along the main aisle, at ground level, or near the exit from the warehouse (to the manufacturing area). You might see, for instance, a set of shelves with commonly picked items along the wall by the doorway; or flow racks; or even pallets of materials staged for quick delivery.
  • A mix of storage methods: pallet racks for items that are received on pallets and are picked in large quantities, flow racks, shelves for small parts storage, etc.
  • Use of automated identification tools – bar code or RFID. Without auto-ID, workers have to manually keypunch transactions – which will lead to errors.
  • Guided picking processes, where stockroom workers using RF Barcode equipment are guided through the stockroom in an efficient manner, so that they pick one item, then move to the next shelf for another item, and so forth – instead of moving from one area to another, then back to the original area.

2.  Cleanliness and good order – not to the point of obsession, but you should be able to easily see box labels, and items should be stacked neatly. There should be a clear distinction between each storage location. Usually that means a physical barrier (like a metal divider) or air – so it’s obvious which items are in each location.

3.  Clearly visible bin (location) IDs on the shelves & racks, to identify each individual storage location.

4.  Generally, one item stored per location. There can be temporary exceptions to this rule when a stockroom or warehouse is near or over capacity, but multiple part numbers in the same location will lead to picking and inventory errors if allowed to become normal practice.

5.  Attention to safety and ergonomics, including adequate lighting. Workers shouldn’t have to spend their days kneeling on the floor, nor should they be asked to frequently pick up heavy boxes. At minimum, you should see manual conveyors, tables, and carts for workers to use while receiving and picking goods. If forklifts operate in the aisles, there should be obvious attention to safety requirements.

6.  A small area holding received goods that can’t be processed, items in “quarantine” and other problem items. The items in this area shouldn’t have aged more than a week or two. (Yes, there are exceptions to this. But they should be true exceptions – you shouldn’t see lots of aged problem items.)

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