Budget demand: Sustainable SCM
Adil Zaidi Executive Director – Government & Transaction Advisory Services Ernst & Young LLP
The answer to the innumerable challenges, in the logistics sector, is to address them proactively through sustainable supply chain management and logistics practices.
This budget we expect the government to perceive the sector holistically and focus on bringing the logistics cost at the comparative level, i.e., we spend around 13 per cent of our GDP in logistics related activities and is substantially high when compared with developed countries. We should aim to bring down the cost to eight per cent in the next few years.
Promoter – Director, MJ Logistic Services
Since the advent of GST in 2016 will bring the need for better infrastructure for the industry as a whole, it will require long term investments; the budget should envisage availability of long term (more than 10 years) and cheaper debt.
With reference to cold chain, I think the infrastructure capital expenditure and capacity induction challenge have been sufficiently met by the various subsidies and incentives given by various authorities.
The budget should focus on getting cheaper and constant power to the industry, enabling it to meet its biggest operating challenge.
General Manager- India and Sub- Continent, Goodpack Returnable Solutions India
The Indian logistics industry as a whole is a highly fragmented one and as it is already marred with a rigid tax environment hopefully GST will come to the rescue, sooner rather than later. The current lay out of the budget has mixed reactions from industry players like us as we were expecting a reform-oriented budget, which would completely overhaul the prevailing taxation system and smoothen the transition of the much awaited GST. Other key initiatives should be around decongestion of seaports and airports, engineer the overlap of cargo networks, clarity on various ongoing tax issues so as to mitigate litigations, implement the movement of bulk commodities into mutimodal modes like rail and waterways leading to cost management and more options for logistics players like us. The intention and the aim of the new government to provide a ‘Robust physical infrastructure’ connecting each part key manufacturing clusters in the country is also a very welcome move and we as a logistics industry entity look forward to its quick implementation.
Vice President – Marketing, Safexpress
The biggest challenge is poor infrastructure whether it is roads, railways or airports; the golden quadrilateral activity has to be paced up. Regulatory bodies should be removed and the check posts should be automated. A uniform taxation system, ie, GST can help in that. There is a huge supply chain skill gap. Looking at the bottom of the pyramid, it is where the maximum number of manpower exists. But there is a huge gap because they are not paid well and there is a lack of basic amenities. We need training institutes as the drivers are not well trained. Apart from the three primary things that the government needs to look at, the ‘Industry’ status is going to help as our industry has too many Ministries.
Chief Executive Officer, Maini Materials Movement
We are expecting a growth-oriented budget encouraging investments in infrastructure and heightening consumption demand. This could be achieved by easy tax regime further enabling exports.n There must be a specific focus to give a boost to the warehousing sector and modernise it to international standards. I am sure that the next union budget will fulfil these expectations and create an environment for graduating Indian warehousing and logistics market to offer value propositions.
Chief Executive Officer, Fresh & Healthy Enterprises
As most of the promotional schemes of various government departments are limited to providing subsidies for construction of cold storages, food parks, logistics, etc my expectations and recommendations to the Government of India for development of cold chain are as under:
Customs and excise duties on cold chain equipment need to be pegged at five per cent or below to encourage domestic and foreign investments for minimising horticultural wastages and increas- ing shelf life of products; Construction of pre-cooling centres, cold stores in the production areas should be given top most priority in all government schemes; Budget allocation shall be increased for supporting pre-harvest activities for farmers like improving the seed stock to augment irrigation facilities; The government should promote launching of well-designed and large-scale projects under PPP model on a viability gap funding basis to modernise the country's cold chain.
Varun Aditya Thapar
Vice Chairman, Indicon Enterprises
In order to give a boost to the logistics sector, and particularly the multi-modal container logistics sector as well as the cold chain logistics sector, here are my suggestions: There should be a rate classification review for container cargo – more commodities and products should be allowed to be transported by the CTOs. A competitive environment should be encouraged rather than stymied by the Railways. Developing a nation-wide cold chain network should be made a focus point by encouraging investment into the sector through incentives and schemes. There should be uniform VAT rate across all the states for the same manufactured goods pertaining to the logistics sector. Lower taxation rates should be encouraged even when GST comes in to boost domestic manufacturers of capital equipment. Speedy completion of the DFCC will be a big boost for all logistics players.
Chief Operating Officer, Express Industry Council of India (EICI)
More than fiscal incentives/ changes, EICI has been asking the government for procedural simplifications and modifications so that customs clearances are expedited at all gateways. The regulatory clearances required, if simplified, would go a long way in improving India’s ranking in ‘Ease of Doing Business’. Secondly, customs staff are posted on cost recovery at express terminals. Customs clearance is a sovereign function and cost recovery of staff posted at terminals should be waived off. Despite customs having issued a notification providing norms for such waivers in April 2013, this has yet not been implemented. We hope the government would implement this to lower transaction costs for our exporters and importers.
Country Director, Kardex India Storage Solutions
Faster implementation and roll out of DTC and GST is what can instate a new vigour. It will also prove that the government is ready to ‘walk the talk’. For ‘Supply Chain and Logistics’ per se this will have very wide impact considering current hindrances faced by all manufactures or importers for improving distribution efficiencies. The effect can be so viral and have lubricating effect over the logistical challenges faced today, by this sector, that it will help in reduction of cost which can be passed on to the consumer and support to the government in its effort to tame inflation.
Radharamanan Panicker Managing Partner, R Logistics Solutions and Managing Director, Dangerous Goods Management India
The logistics industry needs clear cut policy from the government on various elements of logistics business- warehousing zone policy, dangerous goods storage & handling policy and infrastructure development. The entire policy on Customs with respect to establishment of new bonded facility inside and outside the airport should be changed. Customs deployment on new bonded facilities or airport facility should be completely free of custom’s cost recovery. Most importantly in terms of dangerous goods transportation especially by air, there needs to be a better regulation and monitoring as the way the whole business is today developing. Finally there has to be an authority on all matters of air cargo – the government needs to finalise that.
Managing Director, Janta Roadways
It is necessary to develop sustainable strategy based on innovative infrastructure that would apply effective modern technology to multiply the road transport to attain free movement of the vehicles on the Indian roads. The transport industry could not gets its due recognition like any other industry since the same is very much unorganised. The ‘Industry’ status may be conferred for transport industry. A Transport University to be set up. Logistics parks to be set up across the country for speedy delivery Multimodal transportation system to be encouraged and provide the required infrastructure. Water ways and coastal shipping to be encouraged. All the corporate and business organisations should share their outstanding more than 60 days due to logistics or transport companies in their balance sheet and annual report as comes under SME, MSME. Weighted deduction under Income Tax for research activities and driver welfare schemes should be considered on par with the manufacturing research and development activities.
Chief Executive Officer, GMR Hyderabad International Airport Limited (GHIAL)
In line with the recently introduced draft Civil Aviation policy which laid emphasis on the development of air cargo, we expect the Union Budget to address the following structural problems in the logistics and transport sector and address the same:
Recommendation to State Governments to reduce the VAT on ATF so that aviation sector becomes more cost competitive
Abolish Service Tax at Indian MROs, and increase duration of aircraft spares that can be stored in warehouse without being taxed to three years from current one year Simplification and reduction in the customs documentation requirements for imports and exports Grant ‘Industry’ status to the logistics sector
Chief Executive Officer, Cargo Service Center
To nurture the growth of air cargo in the country, infrastructure for cargo needs a major attention with special emphasis on building dedicated cargo terminals. The following could help the sector to increase or create the investment opportunities from various alternatives: Cargo terminals should be granted ‘Infrastructure Status’ which would help the industry to raise huge funds at optimum rates to establish the world class infrastructure for facilitating the efficient and effective handling of air cargo; Upgrading Foreign Direct Investment (FDI) percentage in cargo investment would also act as an added advantage for this sector. This will open gates to various investors and in turn will help the industry to achieve its height.
Chairman, Federation of Freight Forwarders' Associations in India (FFFAI)
Customs Act should be suitably amended to make Customs a nodal agency and should be empowered to prevail on other allied agencies for clearance of EXIM Cargo.
Customs Act needs to be suitably amended to provide trade facilitation and greater clarity. Certain sections such as Sections 17(4), 17(5) and 149 of the Customs Act need to be amended.
The Unit Quantity Code in different sections should be suitably amended to have conformity with trade practice. Amendment should be done to Service Tax Act to include export ocean freight under negative list.
Chief Executive Officer, DHL Global Forwarding
Our industry needs a more focused approach as this is resulting in acute operational inefficiencies.
There is need for an integrated planning approach through a centralised regulatory logistics body with key stakeholders from relevant ministries. This would ensure proper coordination and development of projects in a timely manner. I would even suggest giving a premium to speed up timely completion of projects in the logistics space.
Chairman, Jawaharlal Nehru Port Trust (JNPT)
Most of the major ports of the country are suffering from draught restriction in their channels. For shifting transshipment of containers to Indian coast there is an urgent need for huge investment by all major ports in deepening their channels. Globally such exercise gets budgetary support from government. There is an expectation that there will be some provision in the upcoming budget for supporting capital dredging projects of the ports.
There are also expectations for budgetary support for coastal movement of goods by way of waiver of duty on bunker fuel and relaxation from tax withholding provisions in case of Indian flag vessels. The Maritime and Port sector is also expecting some kind of subsidy by budgetary provision in case of modal shift of transportation of goods from rail and road to waterways and coastal movement along with enhanced allocation to IWA for creating infrastructure.
Vice President, Delhi Customs Clearing and Forwarding Association
With reference to the pre-budget expectations, I believe that
There must be uniformity in procedures, bond formats and language, performa of relevant documents needed in import/export clearances at different custom ports across the country;
There is great lack of awareness in trade pertaining to compliances under allied laws / regulations and procedures. Their procedure needs to be simplified and attempts must be there to educate trade about same; As per Customs Circular, it is responsibility of every customs broker to obtain KYC from his client. In case of any mis-declaration / fraud attempted by a client, the responsibility of a customs broker must be over once he has duly obtained KYC documents from his client unless it is found that he has wilfully mis-represented the facts or committed fraud; Verification of IEC code and related information/documents must be done at the time of issuance of IEC itself. And it must be verified every year whether it is operative and if any changes have occurred in provided details by IEC holder; The charges of shipping lines / airlines levied under various heads, e.g. freight, delivery orders, etc. must have standardised norms. Further, they must be informed to customer at the time of booking of cargo so that there be no ambiguity later causing un necessary delay/overheads.
Director, JWC Logistics Park & JWR Logistics
With Narendra Modi’s strong governance and willingness towards ‘Make in India’, the government needs to first concentrate on improving situations within the country to boost the inner development; only then MNCs will be attracted to come and ‘Make in India’.
Therefore, in the next budget, the government should focus on improving the infrastructure for the inner development of the country.
Today, the logistics industry is suffering majorly because of very poor infrastructure. The JNPT Port, which is handling 70 per cent of the entire volume of import and export into India, is in a very poor condition as compared to any other port in the world handling such a big volume. The road, rail and sea connectivities all need to be revamped; only then will a MNC say ‘Make in India’.
Chief Executive Officer India, Celebi Aviation Holding Inc Looking forward to relaxation of FDI norms in the ground handling and cargo terminal handling businesses. As of now a foreign investor is permitted to invest 74 per cent only; permitting a 100 per cent through automatic route will help credible players to bring in more investments without having to form a local structure. Rationalise taxation policy with respect to import duties in specific and reinstate the EPCG scheme for import of ground handling and cargo business related investments. Given our geographic location, a significant potential lies for Indian gateway airports to become transshipment hubs. Necessary changes and regulatory reforms as 24 x 7 customs operations, full adoption of EDI, ramp to ramp transfer etc. are required to make this happen. Airport operators must look at offering subsidised landing and parking fees to promote freighter movements.