Context:
- The introduction of GST tax reforms will have the most far-reaching ramifications in the growth of the logistics sector in India.
- GST reform is certain to catalyse conformity in every part of the business chain and to expand the tax base in a transparent and efficient manner
Supply chain evolution
- From a macroeconomic perspective, a commonly used metric to assess global economies in terms of supply chain efficiency is the ‘logistics costs as a percentage of national GDP.’
- This percentage for India is as high as 14% compared with 8% in developed nations.
- Compared with global economies, India has some of the cheapest transportation and warehousing costs.
- India’s inventory carrying costs and losses(from food wastage), is the highest in the world.
- The high inventory carrying costs are due to modest physical infrastructure, inadequacy of technology adoption and complicated tax structure.
Impact of GST :
There are facets of our industry where the GST is undeniably expected to impact.
- Interstate movement of goods has become easier with reduced procedures and restrictions at state borders.
- Dismantling of check posts at state borders on July 1 has remarkably reduced transit times by about 18% for organised players as average truck speeds have increased.
- In the long term, GST offers a unique opportunity for customer organisations to eliminate inherent inefficiencies in the location, movement and inventory holding of goods.
Logistics industry:
The logistics industry supports goods movement for numerous end-user verticals.
- The state governments have begun issuing interim transit rules, requiring logistics players to quickly adapt for efficient movement of goods.
- The initial draft e-Way bill Rules needed to recognise the process involved in time-sensitive multi-modal transportation.
Conclusion:
Complemented by this encouraging environment, GST is expected to help unlock much-needed efficiencies I n the way domestic businesses operate today Shifting gears and moving on to a faster lane is a matter of time for the logistics industry.
