Logistics Stocks Gain On FDI Boost For E-Commerce Sector

Logistics shares were in focus on Wednesday after the government on Tuesday approved 100 per cent foreign investment in marketplace e-commerce companies.

The formalising of rules for the first time for the multi-billion dollar e-commerce sector will also give a big boost for the logistics sector, analysts said. 

"An explicit position from the government on where it stood with reference to e-commerce has been long overdue. In that sense, it is good that some clarity has been provided," said Vivek Gupta, a partner at BMR Advisors.

Gati, Blue Dart Express, Snowman Logistics, Transport Corporation of India and Allcargo Logistics shares  were up between 2 per cent and 3 per cent.

In a notification on Tuesday, the commerce ministry said it would allow 100 per cent foreign direct investment in marketplace e-commerce companies, which would also be allowed to provide services including warehousing, inventory and payments processing to merchants.

The ministry however said foreign investment in inventory-based e-commerce companies, where goods sold are owned by the online retailer, would still not be allowed.

Bank of America Merrill Lynch has forecast Indian e-commerce will surge to $220 billion in value of goods sold by 2025 from about $11 billion last year, outpacing growth in bricks and mortar retail. (With Reuters Inputs)