MUMBAI: Deutsche Post DHL's (DPDHL's) dedicated ecommerce logistics arm is starting operations in India, two people in the know said, as a booming online retail industry, the implementation of goods and services tax and the recently given infrastructure status to the logistics industry promise massive growth potential.
DHL eCommerce, which has made investments in India since 2014 through parent DPDHL's Blue Dart ExpressBSE 3.05 % subsidiary, will now have its own presence here.
"DHL eCommerce is actively hiring for the top management in its planned India team. The CEO has been hired. Another 4-5 positions have been filled. The company aims to launch its India operations by March," one of the people said. It hired Reliance Jio Infocomm's former chief marketing officer, Neeraj Bansal, as the local chief executive. Before Reliance Jio, Bansal was regional sales head at Google. Most recently, he was managing director of India and South Asia at AdParlor. "In India, DHL eCommerce will work with Blue Dart rather than competing with it. There is enough space and segments in the ecommerce industry for them to coexist," said another person. Both people insisted anonymity.
Post-ecommerce-parcel is one of the four key divisions of DPDHL, the world's biggest logistics company. The other three are express, global forwarding and supply chain. DHL is the only major global company to have a dedicated, separate entity for ecommerce logistics.
"India is an important and strategic market for DHL and we will continue to invest and transform our logistics presence to keep up with the growth momentum we see. We are constantly looking for ways to grow our service offerings for our customers, and will be happy to share details when new developments arise," said a company spokesperson.
DPDHL's plans can be seen as part of its efforts to step up business in this segment — its fastest growing — outside of the company's stronghold in Europe.
"Ecommerce activities were stepped up outside of Europe, in part through logistics centres in the United States, Mexico and India and through last-mile delivery in Thailand," DPDHL said in its earnings release for 2016.
The ecommerce industry in India is estimated to grow at a compounded annual growth rate of 30% to $200 billion by 2026 in terms of gross merchandise value (GMV), according to a recent report by Morgan Stanley. GMV is the total value of goods sold.
Efficient logistics, supply-chain management and transportation are key to the success of the ecommerce industry.
Logistics companies in India are expanding their ecommerce arms fast to cater to the growing demand and in some years aim to exponentially grow their revenue from this segment.
The firms are also facing tough competition from ecommerce giants such as Amazon and Alibaba that are spending billions in setting up their own logistics and supply chain network.
Two government moves this year are expected to give a fillip to the logistics industry.
The government made a historic tax overhaul from July 1 that replaces several indirect tax heads, including countervailing duty, special additional duty of customs, excise duty, service tax, central sales tax, value-added tax, octroi and state cesses with one tax on goods and services.
The government also conferred infrastructure status to the logistics sector on November 21, which means any more investment in infrastructure — like warehouses and cold-chain storage — would get cheaper financing from banks.
The Bonn-based group posted revenue of 57.3 billion, of which post-ecommerce-parcel contributed the biggest chunk at 16.8 billion. The division was also the highest contributor to earnings before taxes, even as ecommerce revenue grew at the fastest at 12.5%.
The group is planning a four-year investment of more than 250 million in India, its biggest bet yet on the world's fastest growing major economy, CEO Frank Appel had told ET in an interview earlier this year.
Appel had said the investment would be made in various tranches and in all its four business segments.
BUENOS AIRES: As ministers from over 160 World Trade Organization (WTO) converge for their biennial meeting, India has a battle at hand to avoid global rules on services and e-commerce, while seeking a new mechanism for domestic support for food procurement and seeking sharp cuts in support to farmers in the US and Europe.
Although the government is not averse to a global framework on services, officials said the proposals on the table are something that they are not comfortable with. For instance, the European Union and Australia want to thrust domestic rules across WTO countries, which will reduce flexibility for governments. On its part, India wants issues related to easier access for Indian software and accounting professionals along with nurses and doctors addressed.
On e-commerce the view is that current negotiations should go on at the WTO headquarters in Geneva as various options are being discussed. Besides, there is fear that under the banner of e-commerce several other aspects are sought to be introduced that will leave countries like India with little flexibility in seeking domestic content for programmes such as Digital India and may also make it tough to depend on open source software. Plus, it limits the government's ability to tailor rules that seerve its interests instead of policies that benefit only Amazon or Alibaba.
India is banking on support from the African Group to block the launch of negotiations, which may culminate in global standards in two-four years, but sources said there is a split with many African countries indicating their backing for the move from Japan, South Korea and Singapore, with tacit support from the US. China too is not in favour of international disciplines but is open to a more accelerated work programme.
For the last 16 years, WTO has been negotiating the Doha Round - which includes agriculture, services and import duty on industrial goods - but has made little headway due to the reluctance of the US and the EU to play ball. These countries instead want new issues such as e-commerce, investment facilitation and a global regime for MSMEs. The US is blocking any move to address the concerns of the flawed rules decided in 1994 which are impacting the development of the poorer countries.
In this background, India and China have joined hands to get the developed world to reduce subsidies offered to their farmers. "A reduction in domestic support by the rich countries is the first stage of reform. It is the mother of all distortions in trade," an Indian official said, claiming that there is support from 120 countries on the issue.
In the past too ministerial meetings have begun with support from majority of the members but by the second or the third day there are only a few left in the same camp as India. When the ministerial meet kicks off on Sunday, India is going to make a strong case for some flexibility to the package on public stock holding agreed in Bali four years ago to correct an anomaly that would have restricted the government's ability on minimum support price. "It was agreed to find a final solution by this ministerial and it can be done," an official said.
The other issue that is likely to be clinched is a global agreement on support for fisheries although the agenda has now been reduced only to illegal, unregulated and unreported fishing. On this issue too Indian officials said, they would seek a postponement as it will impact poor fish farmers who receive support from the state governments.