FTWZ V/S Bonded Warehousing in India: Which Option Fits Your Business?

Many businesses take their time to decide whether to use the services of a free trade warehousing zone or a bonded storage warehouse. In the international trade market, there is not much difference between an FTZ and a Bonded Warehousing. 

There are primarily two types of warehousing facilities offered to businesses to store goods or products when they are imported or exported into or outside the country. They are bonded warehouses and free trade warehousing zones. In the battle between FTWZ V/S bonded warehouses in India, both services are somewhat similar but slightly different. 

According to the company’s goals and aspirations, the owners can decide on the type of warehouse needed for their businesses. Let us explore the possibilities with a bonded warehouse.

Bonded Warehouse 

A bonded warehouse generally means a protected distribution centre, wherein all imported goods or products can be stored and assembled before payment of customs duty. It is only to be paid after the goods are taken out from the warehouse for local or country-wide distribution. 

When goods enter a Bonded Warehousing, the officials store the products under a special bond, this is like an obligation that is completed by the customs department when the goods are sent out or removed to be transported. 

Bonded Warehouses & Its Benefits 

• Customs duty is not to be paid until the goods or commodities are taken out for consumption. 
• Till the time the duty is paid, the importer can utilise this money in other investments. 
• The company or importer can sell the goods for export purposes, and delete his obligation to pay the duty fee in the case when no local buyer can be sourced for the imported goods. 
• The charges owed are settled only at the time when goods or commodities are withdrawn from the bonded storage warehousing facility. 

As an import/export business professional, if you are undecided and still checking out the FTWZ V/S bonded Warehousing in India, you can weigh the benefits of free trade zones that definitely tip the scales. World-renowned logistics providers such as OSV FTWZ can offer their valued services by providing several lucrative benefits. You can compare and note the advantageous points while choosing between the two types of warehouses. 

Explaining Free Trade Zones 

FTZs originated in the late 60s decade and can have been specifically designed for import and export trade of goods or commodities. It is a special zone meant for the import, storage, assembling, production, processing, and also re-export of goods or commodities without payment of customs duty, taxes, or tariffs. These deemed areas are also called special economic zones SEZ or EPZ export processing zones. These trade zones can directly impact the country’s economic development and give several incentives to allure businesses considering foreign direct investment in India. 

When pitted against one another; FTWZ V/S bonded warehouse in India,  free trade warehousing zone is referred to as a unique category of SEZ governed by the SEZ Act. FTWZ is further designated as an alleged foreign territory and considered an integrated space used as a global trading hub. 

Key Differences FTWZ V/S Bonded Warehouse in India 

 

An FTZ warehouse is a distinct area within a nation that is looked upon as outside the customs territory.  FTZ facilities offer warehousing units to businesses from varied industries to store goods for an indefinite period and perform activities like repacking, testing, processing, sorting, manufacturing, assembling, and more.  FTWZ is a duty-free region facilitating global trade  FTWZ enjoys a certain level of freedom from customs department interference  FTWZ provide a wide range of tailored services that includes trading of goods, packing, quality control, and even production of goods

A Bonded Warehousing is an area managed by a private   company but under the regulations and supervision of the   customs territory.   Bonded warehouses offer special storage services to business   owners from different industries in storing goods until   necessary paperwork are completed.   A bonded storage warehouse is a protected facility   designed  to store imported products and commodities until   the time when customs duties are paid   Bonded warehouses do not have autonomous freedom, they   are routinely monitored by customs officers.  Bonded storage warehouses only offer exclusive storage   services

 

Know More About Warehousing Facilities in India 

When you collect info about FTWZ V/S bonded warehouses in India, you will know that a free trade zone is considered a foreign territory for trading purposes. On the other hand, bonded warehouses are situated inside a foreign country. In the operations segment, a free trade warehousing zone provides international trade and investment opportunities, while a bonded warehouse is seen as a vital part of the entire global supply chain. 

Another key difference between FTWZ V/S bonded warehouses in India can be found in their purpose. While bonded warehousing facilities are good storage units for products awaiting customs clearance certificates, they only offer a temporary solution for import/export traders. The goods may be released into the Indian market or re-exported back. An FTZ warehouse is more focused on giving value-added services such as processing, assembly, and manufacturing within that zone. Many profitable trade policies can be exploited by companies to boost production and streamline their supply chain. 

Why do many businesses prefer FTZ over bonded storage warehouses?

Another interesting point while exploring FTWZ V/S Bonded Warehousing in India is that businesses involved in the import of high-value products or plan to re-export products can benefit from using free trade zone warehouses compared to a bonded storage facility. 

Free trade zones are situated outside the jurisdiction of the customs department and give flexible logistic solutions. Businesses in FTZ also enjoy low duty rates. Bonded storage facilities cannot escape customs interventions as they are subject to government regulations. Bonded warehouses can be considered by businesses planning to re-export products or require warehousing units for long-term goods storage purposes. 

While most businesses prefer the freedom and flexibility that come with free trade zones, speculating on  FTWZ V/S bonded Warehousing in India, choosing one depends on your nature of business. You can partner with OSVFTWZ, a trusted FTZ Bonded Warehousing provider in India offering reduced services at costs by eliminating customs duties, improving cash flow, minimising production expenses, and increasing your net profit margins.