The Indian Government's System of Uniformed Value-Added Tax to Help 3PL Eliminate Formalities at State Borders and Ensure Flow of Materials

DUBLIN, Ireland--Research and Markets (http://www.researchandmarkets.com/reports/c72256) has announced the addition of the new Frost & Sullivan Report “Strategic Analysis of 3PL Market in the Indian Automotive Vehicles Sector” to their offering.

This Frost & Sullivan research titled Strategic Analysis of the 3PL Market in the Indian Automotive Vehicles Sector provides an overview of the market in 2007. It gives a detailed end-user analysis and competitive structure analysis, along with market drivers, restraints, and strategic recommendations. In this research Frost & Sullivan’s expert analysts thoroughly examine the following market segments: inbound logistics management, spare parts management, aftermarket distribution, complete end-to-end supply chain management.

Market Overview

The Indian Governments’ System of Uniformed Value-added Tax to Help 3PL Eliminate Formalities at State Borders and Ensure Flow of Materials

Several encouraging developments and activities in the expanding Indian automotive vehicles sector are creating opportunities for third party logistics (3PL) services providers. However, infrastructure constraints in India and a lack of capacity by 3PL providers to completely manage a vehicle manufacturers’ logistics remain significant hurdles for efficient logistics. Moreover, complex tax laws and high overhead costs could squeeze 3PL service providers’ profit margins. "However, the Government’s initiatives to simplify taxation in India has resulted in the system of a uniformed value-added tax (VAT), which is expected to replace the redundant sales tax system in the near future," remarks Deepak Mohan, the analyst of this research service.

Besides, the abolition of central sales tax will help to facilitate the flow of materials by eliminating formalities at state borders, which in turn, will reduce the buffer inventory at the plant. Inbound logistics is considered as a key area of growth in the Indian automotive sector, with 3PL suppliers maintaining warehouses close to the vehicle plant for both logistical and tax-related reasons. The usage of a 3PL for aftermarket spares distribution is growing, as is finished vehicle distribution.

Popularity of Value-added Services and Technology to Aid in the Growth of 3PL Market

Although the 3PL penetration is low in the automotive vehicles sector, it has significant growth potential in the next few years. The most successful 3PL providers are likely to be the ones that can offer proper value-added services, MIS support, and integration of IT hardware with the clients’ systems. This trend is expected to start penetrating Tier 1 and Tier 2 component vendors. "This enhancement of technology is gaining popularity with new concepts such as vendor-managed inventory and just-in-time logistics (JIT) becoming standard trends," notes Mohan. "Key service value additions such as pre-assembly of modules to be delivered directly on line, as the original equipment manufacturer retains only core activities in-house."

Enterprise resource planning (ERP) is another strong purchase factor. Many companies are beginning to adopt the ERP pattern integrated with that of their logistics service providers. It helps the client gain visibility of their inventory across all locations by determining stock levels and ensuring first in first out (FIFO) at warehouses, and helps improve their inventory turns as well as lead times.

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