supply chain management in emerging markets india 2008-09

Download Supply Chain Management in Emerging Markets India 2008-09

Post on 15-Jul-2015

26 views

Category:

Documents

1 download

Embed Size (px)

TRANSCRIPT

UNIVERSITY OF GHENT

FACULTY OF ECONOMICS AND BUSINESS ADMINISTRATIONACADEMIC YEAR 2008 2009

SUPPLY CHAIN MANAGEMENT IN EMERGING MARKETS: INDIAMasters thesis submitted to obtain the degree of Master Business Engineering: Operational Management

Julie Deman & Jean-Christian Tuyishime

Under guidance of

Prof. Dr. Robert Boute & Prof. dr. Ir. Ann Vereecke

Supply Chain Management in Emerging Markets: India

2

Supply Chain Management in Emerging Markets: India

CONFIDENTIALITY CLAUSE

PERMISSION

The undersigned declare that the content of this masters thesis can be consulted and/or reproduced, provided that there is an acknowledgement of sources.

Name student

Name student

Julie Deman

Jean-Christian Tuyishime

i

Supply Chain Management in Emerging Markets: India

I.

PREFACECompleting our masters thesis has been an enriching and challenging journey. We would not have reached our destination of completing the thesis successfully without the support of some people we would like to thank explicitly. First of all, we wish to extend our gratitude to our promoters. Many thanks to professor dr. Robert Boute, for his guidance, patience, support and motivation. Despite a very busy schedule as Professor at the Vlerick Leuven-Gent Management School, he has always managed to find enough time to provide us his advice and assistance. We also express our thanks to professor dr. ir. Ann Vereecke for making it possible for us to write our thesis on this particularly fascinating topic. Secondly, we are grateful to the many professionals who have shared their expertise and insights with us. We thank Mr. Philip De Bie, Vice-President Aftermarket & Accessories at Picanol N.V., Mr. Tim Van den Bosch, Supervisor Sales Department at Nippon Express Belgium NV, Mr. Matthias Reyntjens, senior consultant at S&V Management Consultants, Mr. Franky Veryser, supply chain manager Europe & Asia at Solutia Europe, Mr. Alejandro Parodi, doctoral student and transport team lead at Solutia Europe, Ms. Vicky Tan, transport and warehousing buyer at Solutia Singapore, Mr. Dinesh Bheere, customer service representative at Solutia India, Mr. Ninil Kotanat, logistics engineer at Solutia India, Mr. D. Panchal, Partner Indirect Tax at Deloitte Mumbai, Mr. Tom Timmerman, 1st Citizen at Value Republic and Mr. Michel Tanghe, sales executive at OOCL Benelux N.V.. In addition, we are thankful to the Belgo-Indian Chamber of Commerce and Industry (BICC&I) for inviting us to the seminar India & Logistics, and the Deloitte Academy Belgium and Deloitte Belgiums Indian Desk for inviting us to the seminar Doing business in India: Special focus on Corporate and Indirect Tax. We also thank the members of the Flanders Institute for Logistics (FIL), the Port of Ghent, Flanders Chamber of Commerce and Industry (VOKA), Flanders Investments and Trade (FIT), ArcelorMittal Ghent, and PriceWaterhouseCoopers who have contributed to the realization of this project. Finally, we are deeply grateful to our parents who have been by our sides through every step of lives and our studies with unconditional love and support. Many thanks to our friends and family as well, for always being there for us.

ii

Supply Chain Management in Emerging Markets: India

iii

Supply Chain Management in Emerging Markets: India

II.1.

TABLE OF CONTENTSIntroduction ----------------------------------------------------------------------------------------------- 1 1.1. 1.2. 2. Purpose and scope -------------------------------------------------------------------------------------------------------------------------- 2 Structure --------------------------------------------------------------------------------------------------------------------------------------- 2

Supply Chain Management in emerging markets ----------------------------------------------------- 3 2.1. Impact of the financial crisis on globalized supply chains in emerging markets ------------------------------------- 3

3.

Emerging India -------------------------------------------------------------------------------------------- 6 3.1. 3.2. Economic Background -------------------------------------------------------------------------------------------------------------------- 6 Current situation --------------------------------------------------------------------------------------------------------------------------- 7

4.

India as a demand market -------------------------------------------------------------------------------- 8 4.1. 4.2. 4.3. The market potential ---------------------------------------------------------------------------------------------------------------------- 8 Product design ------------------------------------------------------------------------------------------------------------------------------- 9 Pricing for India ---------------------------------------------------------------------------------------------------------------------------11

5. 6.

Sourcing from India-------------------------------------------------------------------------------------- 12 The logistics challenges of doing business in India--------------------------------------------------- 15 6.1. Inadequate infrastructure ---------------------------------------------------------------------------------------------------------------16 Roads and the road freight industry --------------------------------------------------------------------------- 17 The railways network ----------------------------------------------------------------------------------------------- 21 Indian ports and shipping------------------------------------------------------------------------------------------ 24 Airports and air freight transportation ----------------------------------------------------------------------- 27 Power and Energy ---------------------------------------------------------------------------------------------------- 27

6.1.1. 6.1.2. 6.1.3. 6.1.4. 6.1.5. 6.2.

Insufficient knowledge and under-exposure of 3PL/LSP -------------------------------------------------------------------29 Challenges to the growth of the 3PL/LSP market ------------------------------------------------------ 30 Trends in the Indian 3PL sector -------------------------------------------------------------------------------- 33

6.2.1. 6.2.2. 6.3. 7.

Ineffective usage of ICT in logistics -------------------------------------------------------------------------------------------------34

The Indian retail industry and the distribution channels -------------------------------------------- 35 7.1. 7.2. The retail sector ----------------------------------------------------------------------------------------------------------------------------35 Distribution intermediaries ------------------------------------------------------------------------------------------------------------38

iv

Supply Chain Management in Emerging Markets: India

7.3. 8.

Micro-enterprises---------------------------------------------------------------------------------------------------------------------------39

Building tax issues into supply chains ----------------------------------------------------------------- 41 8.1. Taxes levied by the Central Government -----------------------------------------------------------------------------------------43 Direct taxes -------------------------------------------------------------------------------------------------------------- 43

8.1.1.

Corporate Income-Tax --------------------------------------------------------------------------------------------------------- 44 Minimum Alternative Tax ---------------------------------------------------------------------------------------------------- 44 Fringe Benefits Tax (FBT) ---------------------------------------------------------------------------------------------------- 45 Dividend Distribution Tax (DDT) ---------------------------------------------------------------------------------------- 45 8.1.2. 8.1.3. Income tax holidays ------------------------------------------------------------------------------------------------- 45 Indirect Taxes ---------------------------------------------------------------------------------------------------------- 46

Excise duty or CenVAT ------------------------------------------------------------------------------------------------------- 46 Customs duties -------------------------------------------------------------------------------------------------------------------- 46 Service tax --------------------------------------------------------------------------------------------------------------------------- 47 8.1.4. 8.2. Indirect taxes and your supply chain: an example------------------------------------------------------- 47

Taxes levied by the State Government ---------------------------------------------------------------------------------------------49 From differential sales tax to uniform value added tax ------------------------------------------------ 49

8.2.1. 8.3. 8.4. 9.

Evolution of the tax system ------------------------------------------------------------------------------------------------------------51 Special Economic Zones ----------------------------------------------------------------------------------------------------------------51

CONCLUSIONS----------------------------------------------------------------------------------------- 53 9.1. 9.2. In summary ---------------------------------------------------------------------------------------------------------------------------------53 Limitations and opportunities for future research ------------------------------------------------------

Recommended

View more >