GST an elixir for the industry
Early roll-out imperative
We hope that the government, in its upcoming Budget for FY15, shall necessarily give the final go to the much-awaited Goods & Service Tax (GST) rollout plan. This is imperative to shed the state level barriers and simplify the tax structure. GST, in our opinion, will prove to be the true game-changer for the logistics industry as well as for the manufacturing industry; in terms of making them competitive enough to meet the international standards of cost of inventory holding, plus transaction cost, which is one of the major weak links in India's global competitiveness. We are convinced that the early roll-out of GST will help the government in tackling the serious issue of inflation & wastage of perishable goods.
In addition, creating mother warehouses, encouraging hub- and-spoke model for movement and storage of goods will enable efficient distribution channels to earn the much-desired dependability on the logistic industry. Realisation on the government’s part that any manufacturing, trade or infrastructural development will have to be backed by an equally efficient & robust logistics sector in place is extremely critical.
In our view, if the PMO ensures that the project-financing and fast-tracking of all pre-approved major projects, it will have positive effect on the economy which will also benefit the logistics industry directly. In ports, modernisation and funding for developing the deeper drafts using the huge resources and cash-flows earned through royalties from private port developers. Most major ports have substantial cash reserves. This has not been done by consecutive governments to facilitate economy of scale by accommodating larger ships to call at our ports. There should be cross-funding by the port trusts with utmost urgency, because they all are controlled by the Central Government.
We truly hope that, in the upcoming Budget, there shall be proposals to revive the ‘Sagar Mala’ initiative launched by former Prime Minister Atal Bihari Vajpayee. The condition of roads leading to most ports in our country is quite pathetic, and rail connectivity to the ports is a matter of concern for all parties including exporters, shipping lines and transporters. All these initiatives are of great help.
Encouraging coastal shipping through subsidies to manufacturers/exporters will not only decongest the roads, but also promote energy-saving and cost efficiency in transportation. We urge the government to fast-track implementation of recommendations of the PVK Mohan Committee to encourage coastal shipping & inland waterways.
All measures which can help reduce logistics costs to GDP, which currently is much higher in India in comparison to even some developing countries.
Shashi Kiran Shetty, Executive Chairman, Allcargo Logistics Ltd.