India is one of the fastest-growing consumer markets in the world. In fact, there are opportunities in every sector. But, before you start, it is smart to know the challenges of selling in India. One of the biggest challenges is the distribution of your products in India.
Storing air and sea freight in Free Trade and Warehousing Zones (FTWZ)
India is very similar to Europe in terms of size, structure and diversity. Therefore, an efficient, fast and flexible distribution network makes sales in India successful. Good warehouse management is essential for this. How products are stored on arrival, where they are stored and who your logistics partners are, therefore has a huge impact on the ease with which you do business in India.
In India, after customs inspection, the imported products are first stored in warehouses. Only after that, they make their way to the customer. Owing to this, it is crucial to ensure that warehousing is done according to international standards. Therefore, international companies in India have been able to use the so-called Free Trade and Warehousing Zones (FTWZ) since 2005. In these zones, foreign entrepreneurs store their products in India, but officially this is international territory.
Logistical advantages of FTWZ
Free Trade and Warehousing Zones are independent and large trading hubs. They offer international companies state-of-the-art storage facilities, container freight stations (CFS) and a rail connection. Moreover, they offer access to offices, banks and insurance companies on a single site. In fact, the storage of products in these special hubs has proved very attractive to foreign companies in recent years.
India currently has three of these special trading hubs at important logistic intersections in the country. The largest of the three is located in Khurja, a stone’s throw away from the capital New Delhi. The other two active hubs are located near Mumbai, and in Sri City, close to the metropolis of Chennai, Andhra Pradesh. The Indian government approved plans for 5 new FWTZs in 2019. This will further improve distribution opportunities in India in the coming years. The central location of the hubs will facilitate the further distribution of the products through India. Additionally, it could provide a significant price advantage.
Rapid customs clearance
The logistical advantages are not the only reason to take a closer look at the possibilities offered by the FTWZs. These hubs offer international companies the option of importing their products without having to pay import duties. Besides, the goods can remain in storage there for up to two years. After two years, companies can return products free of charge to the country of export or officially import them into India. Of course, import duties will have to be paid.
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In addition, the special trade zones offer a lot of services that normal storage facilities cannot provide. For example, there is a continuous and faster customs clearance. Additionally, it can be labelled, packed or assembled on the spot without having to pay a Goods and Services Tax. The cost of storage in an FTWZ is higher than in a normal warehouse in India. It must be paid in foreign currency. These trading centres also offer much higher quality storage for any type of goods. They also offer excellent connections for further distribution due to their central location. Besides, they significantly reduce the distribution time.
Special Economic Zones (SEZ)
Foreign companies wanting to import to India are not the only companies for which special zones (SEZ) have been set up. Another example of the FWTZ is the special, low-cost Export Processing Zones (EPZ). Companies that want to produce in India or want to export from India can go there. India has a total of 300 such SEZs. If you would like to know more about these advantages, please contact our experts
This article is translated from the original Dutch from our partner India Connected.