India’s free trade and warehousing zones, also known as export processing zones (EPZs) or special economic zones (SEZs), play a crucial role in the country’s economic growth and development. These zones are specially designated areas that offer various incentives and benefits to businesses, to promote exports and attract foreign direct investment (FDI). In this blog post, we will delve into the role of India’s free trade zones and their impact on the country’s economy.
India’s free trade zones were first established in the late 1960s, to boost exports and industrialization. Over the years, the government expanded these zones and introduced a range of incentives such as tax holidays, duty-free imports and exports, simplified customs procedures, and infrastructure support. These measures aimed to attract both domestic and foreign companies to invest in these zones and set up export-oriented industries. In the Indian context, these zones are designed to boost exports, generate employment, and attract foreign direct investment (FDI). The concept of FTZs gained momentum in India in the early 2000s as part of economic liberalization measures.
One of the significant benefits of free trade zones is the duty exemption on imported raw materials, machinery, and components used for the production of goods meant for export. This has made Indian free trade zones attractive for manufacturing and assembly operations, particularly for industries such as textiles, electronics, automobiles, and pharmaceuticals. By allowing duty-free imports, companies can reduce their production costs and become more competitive in the global market. This benefit has helped India become a manufacturing hub for various international brands.
Another advantage of free trade zones is the ease of doing business. The government has taken steps to simplify customs procedures and reduce bureaucratic hurdles for businesses operating in these zones. This includes providing a single-window clearance mechanism for obtaining various permits and licenses required for setting up and operating a business. These streamlined processes have significantly reduced the time and effort required for companies to start their operations and have contributed to the overall ease of doing business in India.
Furthermore, free trade zones offer a range of infrastructure facilities and services to businesses. These include well-developed industrial parks, dedicated power supply, transportation networks, and ready-to-use factory spaces. These infrastructure provisions not only help businesses reduce their setup costs but also ensure a conducive environment for production and operations. Additionally, free trade zones often have specialized training facilities and research centers, which further enhance the skill levels of the workforce and promote innovation.
A key objective of establishing free trade zones is to attract foreign direct investment (FDI). India has been successful in attracting FDI inflows, particularly in sectors such as information technology, pharmaceuticals, and automotive industries. The incentives and benefits offered within the free trade zones, coupled with the country’s large domestic market, skilled labor force, and growing economy, make India an attractive investment destination for foreign companies. This inflow of FDI not only brings in much-needed capital but also facilitates technology transfers and knowledge sharing, contributing to the overall development of Indian industries.
The presence of free trade zones also benefits the local economy and generates employment opportunities. The establishment of industries within these zones creates direct and indirect employment for the local population. Furthermore, the growth of industries in these zones stimulates economic activities in nearby regions, leading to the development of ancillary industries, trade, and services. This creates a multiplier effect, generating additional employment opportunities and income streams for the local population.
In recent years, India has also leveraged its free trade zones to promote various export-oriented sectors. For example, the government has set up special economic zones dedicated specifically to sectors such as textiles, gems and jewelry, pharmaceuticals, and electronics. Such targeted approaches not only boost exports but also help in promoting the growth of these specific industries, fostering innovation and technological advancements.
Despite the many advantages of free trade zones, there have been some criticisms as well. Opponents argue that the incentives and benefits provided within these zones create a non-level playing field, as companies operating outside the zones do not enjoy similar benefits. This can result in a skewed growth pattern, with most economic activity concentrated within the free trade zones while neglecting other regions. Additionally, there have been concerns about labor conditions within some of these zones, with allegations of labor exploitation and poor working conditions.
Furthermore, the success of FTZs depends on factors such as political stability, regulatory clarity, and a conducive business environment. Navigating these challenges requires a collaborative effort between the government, businesses, and local communities.
In conclusion, India’s free trade zones play a vital role in promoting economic growth, attracting foreign direct investment, and boosting exports. The incentives and benefits offered within these zones have made India an attractive investment destination for both domestic and foreign companies. Furthermore, the establishment of industries within these zones generates employment opportunities and stimulates economic activities in nearby regions. However, the government needs to address the concerns raised by critics and ensure that these zones contribute to balanced and sustainable economic development across the country.
TVS Supply Chain Solutions is one such company that offers a wide range of services within India’s Free Trade Zones. With expertise in supply chain management, we provide comprehensive solutions to businesses operating within these zones. TVS Supply Chain Solutions specializes in three key areas: warehousing and distribution, transportation, and value-added services.
In terms of warehousing and distribution, TVS Supply Chain Solutions offers state-of-the-art facilities within the FTZs. We provide secure storage spaces for goods, ensuring efficient inventory management and timely deliveries. These warehousing facilities are equipped with advanced technologies and integrated systems, enabling real-time monitoring and tracking of goods, thus ensuring efficient handling and minimizing downtime.
When it comes to transportation, we offer a wide range of services to meet the diverse needs of businesses operating within FTZs. WeThey provide multimodal transportation solutions, including road, rail, air, and sea, ensuring the seamless movement of goods across different locations. Additionally, our extensive network and expertise optimize transportation routes, minimize transit times, and reduce transportation costs.
Apart from basic warehousing and transportation services, TVS Supply Chain Solutions also offers value-added services within the FTZs. Our customized solutions such as packaging, labeling, kitting, assembly, and quality control, are tailored to the specific requirements of our clients. These value-added services help businesses streamline their operations, improve product quality, and enhance customer satisfaction.
Setting Up A Special Economic Zone In The Form Of Free Trade And Warehousing Zones
In an era of globalization and increasing international trade, countries are constantly seeking ways to boost their economic growth and attract foreign investment. Special Economic Zones (SEZs) have emerged as powerful tools for achieving these objectives. Over the period it has become a significant driver of economic growth by providing an ideal business environment that encourages innovation, growth, and trade through the provision of fiscal incentives, streamlined regulatory frameworks, improved infrastructure, and the availability of a skilled and efficient workforce. One such type of SEZ that has become quite popular in recent times is the Free Trade and Warehousing Zone (FTWZ) which has the potential to reduce logistics costs, improve efficiency, and enhance export competitiveness.
A Free Trade and Warehousing Zone is a type of SEZ that is designed to facilitate import and export activities in a cost-effective and expedient manner. The idea behind this zone is to provide a one-stop-shop solution to the needs of importers and exporters by offering state-of-the-art infrastructure, customs clearance facilities, warehousing, logistics, and other value-added services all under one roof. In this type of zone, free trade is promoted with the aim of enhancing international trade relations and creating a more business-friendly environment with simplified legal processes that make it easier for companies to do business in a country.
FTWZs have the potential to boost exports significantly. One of the main advantages of FTWZs is their proximity to airports, seaports, and highways, making them an ideal location for companies involved in international trade. These zones also offer various tax benefits, including exemption from customs duties and income tax, making them attractive to both domestic and foreign enterprises.
With the government focusing on ‘Make in India’, FTWZs can help Indian manufacturers reach a global market and compete with products manufactured in other countries. They can also serve as a platform for attracting foreign investment, leading to technological advancements and employment generation. FTWZs allow companies to import raw materials and store them in bonded warehouses without paying customs duty, thereby reducing the cost of production. This, in turn, helps businesses become more competitive in the global market.
The Key Features of FTWZs:
Customs and Duty Benefits: One of the primary features of FTWZs is the relaxation or elimination of customs duties and taxes on imported goods meant for re-export or value addition. This incentivizes international trade and encourages businesses to utilize these zones as distribution hubs.
Trade Facilitation: FTWZs offer streamlined procedures for customs clearance and documentation, reducing bureaucratic hurdles and minimizing delays in trade operations. This efficiency enhances the overall competitiveness of businesses operating within the zone.
Warehousing and Distribution: FTWZs provide state-of-the-art warehousing facilities that cater to various needs, including cold storage, bonded warehousing, and consolidation centers. These facilities allow businesses to optimize their supply chains, reduce inventory costs, and enhance distribution efficiency.
Foreign Direct Investment (FDI): FTWZs often offer attractive incentives to attract foreign direct investment, such as tax exemptions, infrastructure support, and simplified regulatory frameworks. These incentives make the zones highly appealing to both domestic and foreign investors, encouraging capital inflows and promoting economic growth.
In addition, FTWZs could act as a catalyst for the development of the surrounding regions, leading to several advantages to businesses that make it a profitable investment. Here are some of the benefits of setting up an FTWZ:
Cost efficiency: Importers and exporters can benefit from the economies of scale by sharing the facilities provided for storage, transport, and trade-related services. There are also several fiscal incentives offered by governments such as tax holidays, duty exemptions, and simplified customs procedures that can reduce the cost of doing business.
Infrastructure and logistics support: FTWZs in India are equipped with world-class infrastructure and logistics facilities. They have well-developed road, rail, and air connectivity, ensuring efficient transportation of goods. Additionally, the availability of warehouses, cold storage units, and other essential facilities within the zones simplifies the storage and processing of goods, leading to improved supply chain management.
Enhanced ease of doing business: FTWZs in India provide a conducive environment for foreign investors. They offer streamlined customs procedures, simplified regulations, and a single-window clearance system. This promotes ease of doing business and reduces bureaucratic hurdles, allowing companies to operate with greater efficiency.
Seamless connectivity: A well-planned FTWZ is seamlessly connected to ports, airports, railways, and highways. This makes it easier to move goods and to reduce transit time between different locations
Boost to International Trade: FTWZs serve as gateways for international trade, encouraging the flow of goods and services across borders. By providing an environment conducive to trade, these zones facilitate export-oriented manufacturing, re-export activities, and global sourcing of inputs, thereby contributing to overall economic growth.
Employment Generation: The establishment of FTWZs creates employment opportunities for both skilled and unskilled labor. The zones attract investments in various sectors, leading to the establishment of manufacturing units, logistics companies, and associated service providers. This, in turn, stimulates job creation and contributes to the socioeconomic development of the region.
Technology Transfer and Skill Development: FTWZs often act as hubs for technology-intensive industries, attracting businesses that bring advanced technologies and expertise. This facilitates knowledge transfer and encourages skill development among the local workforce. The presence of multinational corporations and research institutions within these zones can foster innovation and drive technological advancements in the host country.
Regional Development: FTWZs are typically developed in strategic locations, including ports, airports, and major transportation corridors. This strategic positioning promotes regional development by attracting infrastructure investments, improving connectivity, and creating ancillary industries in the surrounding areas. As a result, the benefits of FTWZs extend beyond the boundaries of the zones themselves.
While FTWZs offer numerous benefits, their successful establishment requires careful planning and consideration of certain factors:
Infrastructure Development: Adequate investment in infrastructure, including transportation, logistics, and utility services, is essential to support the operations of FTWZs. Seamless connectivity to ports, airports, and road networks is crucial for efficient movement of goods and people.
Regulatory Framework: A supportive legal and regulatory framework is vital for the smooth functioning of FTWZs. Governments need to establish clear policies, including customs regulations, tax incentives, and labor laws, that encourage investments and provide certainty to businesses operating within the zones.
Collaboration and Stakeholder Engagement: Collaboration between government agencies, private enterprises, and local communities is essential for the success of FTWZs. Consultation with stakeholders can help address concerns, ensure sustainable development, and create a favorable business environment.
Risk Mitigation: FTWZs should have risk mitigation strategies in place to address potential challenges such as political instability, changes in trade policies, or global economic downturns. Diversification of industries within the zone can also help reduce vulnerability to sector-specific risks.
Free Trade and Warehousing Zones (FTWZs) have emerged as powerful instruments for boosting international trade, attracting investments, and promoting economic growth. These specialized economic zones provide a unique combination of customs and duty benefits, streamlined trade procedures, and world-class warehousing facilities. Through the establishment of FTWZs, countries can stimulate employment, promote technology transfer, and foster regional development. While challenges exist, careful planning, infrastructure development, and a supportive regulatory framework can help realize the full potential of FTWZs as catalysts for economic growth in the modern globalized world. Therefore, investing in an FTWZ can be a lucrative investment with significant potential for growth and expansion.
TVS supply chain solutions offer Free trade warehousing zone bonded services to a number of global customers that serve a wide range of supply chain activities such as warehousing, inbound transportation, distribution, customs clearance, and customer-specific value-added services. We provide end-to-end service from port to customer destination, fulfilling customer expectations on safety, quality, and timely delivery of goods. Through proven service expertise, we have received approvals from the Unit Approval Committee to perform Value Added Service (VAS) activities such as kitting, bolting services, ambient temperature storage services, packing, spare parts segregation, and repacking services.
How to choose Best Ecommerce Fulfillment Services?
Ecommerce fulfillment is the entire process of picking, packing, and shipping products to customers. It includes maintaining inventory, locating products within storage, packaging products, and managing the logistics of delivery.
Who would need e-commerce fulfillment partners?
Businesses that run on a direct-to-consumer model and have no high street store or storage facilities
Companies that have simply outgrown in-house fulfillment centre capabilities to the point they can no longer dispatch orders at scale
Omni-channel businesses that are looking to add an e-commerce channel
Fulfillment providers have seen a great increase in business, with several new providers coming online. Picking the best one for your unique supply chain can be difficult, but considering these factors will help.
Worked with similar industries
Having a vendor that understands the needs of your products and customers will go a long way. If you’re shipping something with unique requirements, like perishable food or fragile goods, it’s important to have a shipping partner that fully understands how to handle them.
Has similar existing clients
If a company has a history of success with companies with fulfillment needs similar to yours, it’s reasonable to expect that they can do the same for you.
Has multiple warehouses
A robust warehouse management network with multiple geographic locations is ideal for reducing shipping times and costs. A healthy network of fulfillment centers is a sign that an order fulfillment company is prepared to cover inventory storage and make deliveries wherever the customer is.
Storage and fulfillment fees
Cost will always be a consideration. It is essential to understand how much is it to ship an order and how much is warehouse space per pallet? If you need to scale operations or introduce new SKUs, will there be a change in costs?
Data and analytics
What kind of data can the provider give you? How do they track packages and how are KPIs measured? Have a full understanding of what kind of metrics the vendor is able to provide.
Shipping Speeds
Amazon Prime’s one/two-day delivery speeds are the new norm, which means modern consumers are expecting faster shipping speeds than ever before.
So, how can you align with these evolving expectations? By working with an order fulfillment company who can deliver on them. Top fulfillment companies should have efficient and effective fulfillment processes that enable them to get your products to your customers quickly. This becomes possible when they have numerous, strategically-located fulfillment warehouses and simplified order fulfillment software
Location of Fulfillment Warehouses
It’s clear that customers expect lightning-fast shipping speeds and, naturally, an important component of this process is the proximity of the fulfillment warehouse to the customer. It makes a ton of sense—the closer the order fulfillment center is to the end customer, the shorter the distance your products have to travel to get there, which means shorter shipping timelines (and lower shipping costs).
Features of Order Fulfillment Software
Different fulfillment companies use different order fulfillment software with various features and capabilities. It’s important to understand what your needs and goals truly are, and choose a fulfillment partner who leverages a software with features that can align. You also want to make sure their order fulfillment software is easy to implement and actually use throughout the day-to-day, and that it can seamlessly integrate with any other platforms and business apps you’re already using.
How well can your online store or app work with their API? What is onboarding like? Will there be issues with integrations? How will the shopping cart be impacted? Have a full understanding of what technology requirements there will be before committing to a vendor.
Transparency and Visibility
Your fulfillment process is a key component of this transparency – 88% of consumers say the ability to track shipments in real-time is important, and 69% say they are less likely to shop with a retailer in the future if a purchase is not delivered within two days of the date promised. A promise is a promise, and if you can’t fulfill it, you shouldn’t make it.
Branding Options
There’s millions of eCommerce businesses out there competing for consumers’ attention, so how can your brand stand out? Choosing an e-commerce fulfillment centre that provides branding options can help you build a brand and create a buzz for your business.
Packaging Options
Along with branding, you want to choose an e-commerce fulfillment center with a wide variety of packaging options depending upon the product you are shipping. Not all boxes are created equal, so you want to be sure you have your pick of packaging
In addition to packaging be sure you have your pick of insulation materials too, whether that’s styrofoam peanuts, corrugated paper, foam rolls, shredded paper, bubble wrap, or air pillows.
Returns Management
You don’t want an online fulfillment center to be hands-off once they’ve shipped the product; after all, about 30% of all products ordered online are returned. Some returns are uncontrollable (a customer simply didn’t like the product), however a reputable fulfillment company will work with you on returns management to mitigate controllable returns – those that could potentially be reduced or eliminated through better forward logistics.
Minimum Orders:
Order minimums are the number of orders your e-commerce fulfillment center must fulfill before they begin shipping them out.
This is important because some fulfillment centers have higher minimums than others, so you may need to adjust your inventory depending on their requirements or find another fulfillment center with lower minimums if necessary.
Policy for lost or damaged items?
It’s essential to know what are the policies and procedures that the fulfillment center of your choice has in case your products get damaged or lost in transit.
Whether you’re selling products of low or high value, having them damaged or lost can heavily impact your business and brand reputation.
Therefore, before signing up with an online fulfillment center, you’ll want to know what kind of compensation you’ll receive if any of your inventory is damaged or lost during transit.
Policy for shipping mistakes?
Knowing how your new fulfillment center will handle shipping mistakes should be another important factor in your decision-making process.
You want to know that if there’s a mistake with an order — like sending out the wrong product or wrong quantity — there will be no penalty or fee you’ll need to pay them to fix it. Or, if there is one, you’ll want to know how much.
It may be best to work with a company that offers free returns on all orders so that neither you nor your customers are charged if something goes wrong during the return process.
Key Criteria for Choosing Top-Warehousing Companies in India
Indian logistics and warehousing sector have become the crucial and fastest growing markets in global business. Over the past decade, the industry has evolved from a traditional warehouse model to a modern logistics and supply chain ecosystem. The country’s thriving logistics industry has enabled a wide variety of warehousing needs, including temperature-controlled warehouses, high-density storage, and advanced distribution centres, among others.
The Indian warehousing market was valued at INR 1,206.03 Bn in 2021 and is expected to grow to INR 2,872.10 Bn by 2027, expanding at a CAGR of 15.64% during the 2022-2027 period. In alignment with the supportive government policies, including ‘Make in India’ and the ‘Digital India’ policies for business, the warehousing sector is also looking to accelerate digital adoption, embrace greener practices that match international standards, and drive value added collaborations with the manufacturing sector.
Warehousing in India constitute a critical link in the supply chain that connects the manufacturer to the ultimate consumer. The technological developments in warehousing industry ensures focus towards on optimisation, speed, and efficiency of the supply chain. Consequently, players have been emphasising on automation and data analytics, while also deploying digital tools for effectively utilising resources and managing operations.
Going forward, it would be critical to be adaptive to the changing industry dynamics and maintaining the efficiency of a business supply chain in order to dictates the reach, time to market and cost efficiencies. In parallel, it would also be essential for companies to consider the challenges around surging prices and skewed modal share. Therefore, staying in line with consumer demand and to gain strategic advantage over other peers, businesses always consider a proper logistics management company that withstand their operation requirement.
While choosing a logistics management partner one must select a company having vast warehousing network that can help in storing and moving the material safely and efficiently. However, finding a logistic and supply chain management partner that can withstand the businesses requirement is an uphill task. Once companies realise their exact requirements like network connectivity, distribution requirements, vendor choices, and other dynamic variables make the outsourcing/selection process of perfect warehousing company seamless and risk free.
The key criteria’s that company consider while choosing the top warehousing companies in India depends on their exact requirement. In recent times the need for a continual reduction in the inventory cycle has radically transformed the role of the warehouse from being a simple storage depot to a virtual pit-stop and thus businesses always look for companies that facilitates services like inventory management, secondary packaging, cross-docking and extraction of products in the least possible time.
The services offered by organized logistics and warehousing providers are increasingly seeing higher demand. A multitude of factors like larger warehouses, safety and security of goods, efficiency in operations, quicker turnarounds, the need for efficient warehousing designs, besides the advent of e-commerce and other multinational businesses are driving the company’s decisions to occupy compliant facilities. Besides compliant facilities companies always in process of identifying a supply chain partner that are capable of facilitates optimum land utilization, multi-storey warehousing, reduce delivery timelines, capable of handling returns and transportation costs.
Therefore, the bottom line in choosing a top warehousing company in India would be a substantial piece in companies overall business puzzle. It will determine the current and future stature of the organisation. A right service provider is always aligned their operation with state-of-the-art facility which are 100% compliant, sustainable and have stringent safety norms. They must fulfil newer trends like In-city warehousing, build-to-suit units, automation and ensures seamless operations with maximum output. Service provider should be able to provide industry-wise customisation, high quality, fully integrated plug and play solutions pan India along with flexible storage spaces to be delivery agile.
The above discussion will help businesses in selecting a right partner amongst the top warehousing companies India. Overall, the process of choosing a top logistics management company offering warehousing solution will not take a long period if businesses have determined their strict needs and requirements.
TVS Supply Chain Solutions is one of the top supply chain companies in India with wide warehousing network of 19.5 Mn Sq. Ft. space, strategically located fulfilment network, best-in-class technology and ability to offer end-to-end transportation. TVS SCS has enabled its clients to expand their business by avoiding any capital investments on operations and concentrate on their core competencies. TVS SCS provide services for multiple categories of warehouses:
In-Plant Warehousing offers highly efficient production support for large manufacturing plants.
Finished Goods Warehousing offers a highly efficient service. With strategic location across India provides customers with the advantage of speed and accessibility to their markets.
Aftermarket Warehousing Solutions efficiently manage high volumes of SKU’s and accurately delivering parts quickly to dealers and customers.
Free trade and bonded warehousing solution for international trading.
TVS SCS’ warehousing solutions enabled with industry-leading technology systems and material handling equipment. Depending upon the client’s need, we can offer multiple warehousing or storage types such as:
Contract Warehousing
Cross-Docking
Open Yard Management
Rework and Refurbish Management State-of-Art.
Multi-User Facilities
Palletised & Racked
Temperature controlled.
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