The Indian economy will be integrated into a single market once the goods and services tax, aimed at dismantling inter-state barriers to trade, becomes a reality. One effect of this shift will be the creation of national supply chains to replace the fragmented production structure currently in place thanks to complicated state taxes.
National supply chains can work only if there is a good logistics network to seamlessly move stuff around. Such networks require hubs—or centres where goods are redirected to other parts of the country. It is worth speculating which cities are best placed to emerge as hubs in the coming years. The cities of central India such as Nagpur, Indore and Hyderabad have a natural advantage here.
India’s economic geography is such that its coastal regions have benefited more from globalization than the interiors. That is why it needs better infrastructure to link landlocked states to growing consumer markets. The new logistics hubs could act as catalysts for this important transition.