Which logistics companies specialize in FTWZ shipments in India?

The Free Trade and Warehousing Zones (FTWZs) in India are becoming important components that make it easier for companies to engage in international trade and streamline their logistics operations. FTWZs allow businesses to import goods, store them, repackage them, and then re-export them without having to pay customs duties right away. FTWZs are becoming increasingly popular as more businesses rely on these zones as reliable and cost-effective ways of developing logistics operations. Industry sources state that usage of FTWZs has increased by around 20 to 25 percent every quarter since the onset of the Covid-19 pandemic. This blog explores the role of logistics companies in FTWZ shipments, the capabilities that define specialization, and why dedicated FTWZ operators are increasingly becoming the preferred choice for businesses operating in India.

 

Understanding FTWZ Shipments in the Indian Context

The Government of India considers FTWZs as if they are located outside of India. Goods imported to an FTWZ may be imported without immediate payment of customs duty and can be stored, processed, tested, relabeled, or re-exported based on the business needs of the operator. Payments for customs duty are made only when goods enter the Domestic Tariff Area (DTA). Because of this unique operational model, it is necessary for logistics providers to provide more than just traditional transportation or storage services for the deliveries of FTWZ shipments. Logistics companies that handle the transportation or storage of FTWZ shipments must consider regulatory compliance, customs procedures, inventory management, and zone-specific regulations while providing services to clients with speed and accuracy.

 

Why FTWZ Shipments Require Specialized Logistics Companies

FTWZ operations are at the crossroads of the warehouse, compliance, and international distribution. Logistics companies operating within this landscape have specific requirements that must be met to ensure compliance with FTWZ regulations and compliance with Special Economic Zones.

• Logistics operations must be familiar with the laws regarding FTWZs and SEZs.
• Logistics operations must be coordinated with regulatory agencies, specifically, Customs.
• Logistics operations must have the proper infrastructure to provide duty-free storage and value-added services.
• Logistics operations must have extensive experience in the handling of regulated, high-value cargo.

General logistics companies can operate in some, if not all, of the various shipping areas, such as freight forwarding or transporting; however, FTWZ shipments require a highly developed and connected approach.

 

Key Capabilities to Look for in FTWZ-Focused Logistics Companies

When marking FTWZ Logistics Companies on the list of qualified candidates for FTWZ shipments, there are certain criteria separating the logistics companies that are specialists in the area versus those that provide general service.

1. Licensed FTWZ Infrastructure- FTWZ only allows licensed FTWZ operators to perform end-to-end operations within an FTWZ; finished goods can be placed in duty-free storage by a licensed operator and processed and re-exported by a licensed operator in accordance with FTWZ’s legal framework.
2. Integrated Customs and Compliance Support- FTWZ shipment international customs authorities interact with FTWZ shipment customs; therefore, many logistics firms specializing in FTWZ shipments employ a customs compliance team within the firms’ infrastructure to manage all documentation, auditable records, and compliance procedures.
3. Value-Added Services Offered Within FTWZ- In addition to operating a storage facility, specialized FTWZ logistics companies offer additional value-added services. Common additional services offered in FTWZ include labelling, re-packaging, kitting, testing, conducting quality checks, and consolidation, etc. These specialised logistics companies provide additional supply chain value, allowing clients to keep supply chain inventory aligned with customer demand.
4. Multi-Location Presence- FTWZs that can be located within reasonable proximity to a port or an airport that receives international shipments are most effective. Companies with a national (pan-India) network of FTWZ facilities will offer clients more flexibility and scalability than local providers.

Types of Logistics Companies Handling FTWZ Shipments in India

1. Global Freight Forwarders- Some international logistics providers also participate in freight forwarding and transportation for cargo through FTWZs. They facilitate cargo movement as freight forwarders but also utilize FTWZs for their zone-related services that are not handled by the logistics provider.
2. Bonded and General Warehouse Operators- Certain logistics providers operate general/bonded warehouses and/or provide limited FTWZ-compatible services. These types of business models will provide capability to support certain FTWZ use cases but may not offer the same level of flexibility and depth of service, workshops, and infrastructure as a dedicated FTWZ operation.
3. Dedicated FTWZ Operators- The next specialized area of logistics providers that are involved in FTWZs are dedicated FTWZ operators. Their infrastructure, processes, systems, and personnel are designed and developed specifically for the purpose of operating FTWZs, compliant with the regulations and operating processes required by FTWZ regulations. They can provide the most appropriate level of operational control, compliance to FTWZ regulations, and the highest operational efficiencies.

 

Leading Logistics Companies Associated with FTWZ Shipments

The ecosystem of India’s FTWZs consists of a combination of domestic and international companies that help facilitate FTWZ shipments through key trade hubs such as Mumbai, Chennai, NCR, and Gujarat. Even though many logistics providers are involved in various portions of the FTWZ supply chain, there are only a handful of full-service FTWZ experts who have developed complete end-to-end service offerings. These companies support a vast assortment of different cargo types, including fast-moving consumer goods (FMCG), electronics, pharmaceutical products, alcohol, exhibition materials, and project cargo, and they ensure that their performance meets the global standards set forth for international trade.

 

OSV FTWZ: Setting the Benchmark for FTWZ Operations

OSV FTWZ —operating under the FTWZ space— is one of the largest operators focusing exclusively on providing FTWZ-led trade solutions. Unlike traditional import/export models, OSV FTWZ is strictly dedicated to the provision of FTWZ solutions. Through licensed FTWZ facilities located in key locations across India, OSV FTWZ provides an efficient and compliant environment for businesses to manage their import activities, storage, processing, and export of goods. The business model of OSV FTWZ places an emphasis on adherence to regulations, inventory management, and the provision of value-added services within the FTWZ. This approach allows businesses to improve cash flow and achieve operational flexibility. With the capability to handle complex cargo types, support various market-entry strategies, and harmonise FTWZ operations with long-term supply chain planning, OSV FTWZ has established itself as a preferred provider of structured and scalable FTWZ solutions to its customers.

Choosing the Right Logistics Company for FTWZ Shipments

Choosing a logistics provider that supports FTWZ shipments will require strategic thinking on the part of your company. It will require careful consideration of whether the logistics provider has the skills, knowledge, and experience to provide your business with a full FTWZ experience, or only limited or peripheral service. Evaluating the provider on these dimensions will provide a firm foundation for your decision about which company to engage for FTWZ operations. As FTWZ’s are more prominent in India’s trade and manufacturing industry, logistics providers with a dedicated FTWZ service capability will provide essential assistance in constructing efficient and compliant cross-border logistics solutions.

Conclusion 

India has an ever-growing logistics ecosystem consisting of FTWZ shipments that comprise a unique section of India’s logistics industry. FTWZ-related operations are conducted by many logistics companies, however, only a small percentage of these companies have the necessary resources (infrastructure) to enable them to create and provide complete FTWZ operations. Through leading companies like OSV FTWZ, dedicated FTWZ operators have changed the way companies view duty management, managing stock, and conducting international trade from India. The changing nature of Global Supply Chains will result in increased importance for the role of specialized logistics companies dealing with FTWZ shipments.