• Research
  • Consumer Durables
  • Goods And Services Tax
  • FMCG
  • GST
  • FMCG
December 21, 2017

Big box beckons

GST set to alter the warehousing landscape

CRISIL Research’s analysis of supply chains in the consumer durablesand fast-moving consumer goods (FMCG) sectors reveals warehousingcost for consumer durables is set to halve, and will fall by 25-30% forFMCGs following the implementation of the Goods and Services Tax(GST) regime.


Consequently, the number of warehouses that a consumer durablescompany could reduce from a typical 25-30 to 10-12, and from 45-50to 30-35 for an FMCG company. And the size of warehouses will bebecome bigger, and turn into the so-called big boxes.


As for warehousing hubs, we have analysed the five major ones today– Mumbai, National Capital Region (NCR), Bengaluru, Hyderabadand Kolkata – which will retain their importance being significantconsumption centres for both consumer durables and FMCG. However,new hubs will also emerge in Assam and Haryana. But Nagpur isunlikely to emerge as a warehousing hub in the near term.


Warehousing consolidation on the cards, Haryana hot


Haryana is preferred as a consolidated consumer durables and FMCGhub compared with New Delhi or Ghaziabad on account of it being oneof the highest consumption markets in NCR, within 300 km from majormarkets such as Punjab and Delhi, and 350-450 km from Rajasthan,Himachal Pradesh and Uttarakhand.


Besides, Haryana’s central location in NCR, easy land availability,relatively cheap cost of land, its status as a key consumption marketand connectivity with the Golden Quadrilateral make it a preferredlocation. Moreover, the interior regions of Haryana such as Faridabad,Manesar and Kundli have good road connectivity