FREE TRADE WAREHOUSING ZONES

Submitted by:-Ayush Dayal

Marketing – OperationsBatch 2008-10

P.R.N. No- 08020441017

OBJECTIVE – To study the concept of F.T.W.Z and its relevance in the current scenario

RESEARCH METHADOLOGY – Primary interviews and secondary data research

INTRODUCTION

Approximately 10-15 percent of a product's cost represents logistics-related costs

Globally, the logistics industry is valued at US$3.5 trillion and the Indian logistics industry is currently estimated at US$90 billion

India ranks 39th in terms of the logistics performance index and indicators

India spends US$1,148 in handling costs to import one cargo container and US$820 to export a container

India spends 13% of its GDP on logistics www.google.com/worldlogisticsreport-2010

• Source – colliers yearly report – 2009

Logistics Industry - Overview

Growing at a rate of 30-40 percent per annum

India has a total warehousing space of approx 1,800 million sq ft, of which only 8 percent (144 million sq ft) is in the organised sector

Source – colliers yearly report 09

POLITICAL

ECONOMICAL

SOCIAL

TECHNOLOGICAL

LEGAL

ENVIRONMENTAL

P.E.S.T.L.E Analysis

Land woes

Infrastructure

Unorganised sector

Inadequacy in the number of facilities available

Taxation

Road Blocks

The Government of India had announced in the Foreign Trade Policy 2004-09 to set up Free Trade and Warehousing Zones (FTWZ) to create trade related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in free currency.

On June 23, 2005, the Parliament of India passed the Special Economic Zones Act 2005 and on February 10, 2006 Government of India notified Special Economic Zones Rules 2006.

The Free Trade and Warehousing Zones (FTWZ) is a special category of Special Economic Zone and is governed by the provisions of the SEZ Act and the Rules.

Source – www.ftwz.com

FREE TRADE WAREHOUSING ZONES

FTWZ’s are envisaged to be Integrated Zones to be used as ‘International Trading Hubs’

Each Zone would provide ‘World Class' Infrastructure for :

◦ Warehousing for various kinds of products

◦ Handling and Transportation Equipment

◦ Commercial office space

◦ All related utilities –telecom, power, water, etc

One stop clearance of Import and Export of goods

FTWZ would be a key Link in Logistic and Global Supply chains –servicing both India and the Globe

Source – www.ftwz.com

Customised categorised warehouses ~ chemicals, food, electronics, oil, etc.

Sophisticated freezer / cooler facilities

Break bulk, containerised, and dry cargo storage facilities

Controlled humidity warehouses

Enhanced transportation facilities

World-class information system for cargo tracking

Office space

Support facilities and amenities like medical facility, canteen services, business centres

FTWZ -Facilities

FTWZ -Utilities

Rain water and storm water drainageEffluents disposal system

Telecom cablesPower supply system

Security hutsContainer stacking area pavementIn plant maintenance workshops

General high mast lighting

Horticulture and landscapingBoundary wall

Water supply and sewerage

Administrative building and officeAncillary building

CanteenServices buildingCovered parking

Roads

FTWZ POSITIONING

Logistics and Distribution Centre

Integrates various aspects of logistics

operations

Provides “Free Zone” environment

Provision of high quality infrastructure

Principally governed by the SEZ Act 2005 and SEZ Rules 2006

100% Foreign Direct Investment is permitted in development and establishment of FTWZ

FTWZ is a deemed foreign territory

Minimum size of the warehousing stipulated at 1 lakh sq mtrs

All benefits available to the SEZs shall be applicable to the FTWZs

The FTWZ shall be under the administrative control of the Development Commissioner (DC)

www.google.com/sezact2005

FTWZ -Relevant Laws

FTWZ -Benefits

Fiscal and Regulatory Benefits

• Duty Deferment Benefits

• Income tax(section 80IA) and Service Tax exemptions for developers and users

• Excise Duty Exemption

Infrastructure Benefits

• Single Product Storage Facilities

• Shared warehousing

• Shared Equipments

Administration Benefits

• Delivery Time

• Support Facilities and Effective Management

FTWZ –Benefits to

Region / State

Export oriented

Boost to all-round economic activity

Competitiveness of industries

Attractiveness of support/ancillary

industries

Employment potential

FDI inflow

MAJOR HUBS IN INDIA

www.google.com

THE 3 I…...S

Mr. Ajay Mittal (C.M.D, Arshiya

Logistics)

Mr. Sagar Bhandare (M.D,

Shree Constructions)

Mr. Bipin Joseph (head, logistics and

warehousing, A4 Global Logistics)

After the fiasco of 2008-09, LEAN MANUFACTURING is the shout out

Improved THROUGHPUT is the key word for manufacturers now

For INDIA, time and cost constraints are the biggest hurdles in this

GOVT. agencies and red tapism

Need for a viable integrated system of warehousing and logistics to avoid the same

Key findings

The art of logistics - integrate the strategic, operational, and tactical efforts of businesses

-ensure that the right material reaches the right place at the right time

The improvement of the taxation system, infrastructure and transparency in the system will pave the path of success and bright future for the logistics and warehousing sector

Conclusion

F.T.W.Z’s are the need for the future for the sheer number of benefits they provide

Improvements in both cost and time are the key drivers for this concept

Location is the most important consideration along with the connectivity

Commitments need to be strictly adhered to as the warehousing companies sign forward contracts with their clients

Thank you