Model shop law to boost e-commerce

The government's decision to bring warehouses under the purview of the Model Shops and Establishments Act will benefit logistics and e-commerce companies.

For the first time, godowns, warehouses or workplaces related to packaging activities have been proposed to be covered by the law.

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According to the draft Act, establishments with 10 or more workers like shops, shopping malls and warehouses will be allowed to be kept open round the clock and on all days in a year. The draft proposes allowing women to work in night shifts. The ministry has sent the proposed legislation for Cabinet approval.

NEW ACT

• The current size of warehousing sector is Rs 75,000 crore
• Demand of warehousing capacity has risen to 1,439 mn sq ft from 919 mn sq ft due to growth in e-commerce
• E-commerce logistics sector in the country expected to reach about $2 billion by 2019
• The Act will allow companies to keep warehouse functional round the clock

"This will bring e-commerce companies into the labour law rule books. Many of these companies face problems operating godowns in states," said a senior labour ministry official.

According to the labour ministry, the government has decided to keep warehouses under the purview of the Act after several meetings with stakeholders even though trade unions have opposed it.

It is, however, up to states to adopt the law. "States that want investment will enact. This will bring about uniformity in legislative provisions, ensuring common working conditions across the country," said the official.

E-commerce companies like Amazon, Flipkart and Snapdeal have increased their warehousing space manifold as they bring more sellers on board.

"If warehouses are allowed to be kept open round the clock, we can process more orders. We now have to close warehouses at 6:30 pm. This will allow us to double business in one year," said Rahul Shetty, chief marketing officer of Royzez.com.

According to a study by property consultancy firm CBRE, India's logistics and industrial market grew by more than 60 per cent last year. Around six million sq ft of warehousing space was taken up mainly by global brands and e-commerce companies.