Mayur Gandhi Chief Financial Officer Schenker India
Infrastructure status to the logistics sector will enable the sector to avail medium and long-term debts at beneficial terms. With the anticipated growth of the economy, the logistics sector will be key to bring down the logistics cost from about 13 to 14 per cent of GDP to a lower level. Tax holidays from direct tax for warehouses set up in rural area outside 50 kilometers of the specified city limits can be considered as an option in the budget as this will generate employment in the rural area and also will make it possible to create larger warehouses which will bring down the overall cost of logistics. The budget can also consider higher rates of depreciation being allowed on various warehousing infrastructure and handling equipment. In the upcoming budget, the government could consider allocating funds to augment the capacity and infrastructure at the dry ports in India. This will support the ambitious Sagarmala project to be more effectively connected with the industrial town within India. There will be a need to monitor the growth and achieve efficiency of these ports. Post implementation of GST, it should be possible to reduce the number of dry ports.
The budget should allocate the funds to develop inland waterways for freight movement in a phased manner. There is a need to develop skill sets for the effective management of future supply chains in the growing economy of India. Therefore, we would like the budget to allocate funds for education and skills development in the area of logistics and supply chain.
The government could set up a committee to review the various maritime laws currently applicable in India. These laws were framed several decades back and needs to be updated and aligned to meet the changing business scenarios in a growth market like India.
Pirojshaw Sarkari CEO Mahindra Logistics
From 3PL company’s perspective, currently the transportation revenue is subject to TDS at two per cent. This puts huge pressure on cash flow as TDS today is far more than tax liability. Though there is a provision for reduced rate of tax, it takes lot of time and administrative burden.
Every year, 3PL companies like Mahindra Logistics files its ROI with huge tax refund eligibility.
Secondly, under GST regulations per current provisions, there is an option for a transporter to either pay GST under Reverse Charge Mechanism (RCM) under which, the ultimate recipient of services pay the applicable GST, or under Forward Charge Mechanism (FCM).
Using FCM would be an advantage for the service provider (as it entitles it to claim the input tax credit for all the inputs), but if it is adopted, it needs to be for all its customers.
This needs to be made customer specific, as it is not necessary for all customer to agree/not agree for FCM. This puts lot of difficulties for a transporter to align with its customers.
Proposed implementation of e-way bills need to have compulsory closing mechanism from the consignee on delivery of goods at the destination. This will do away with the requirement of paper acknowledgment of delivery of goods and will reduce huge administrative burden of the transport service providers. Facilitate Integrated Logistics and Manufacturing Zones (ILMZs) that combine railway, road and port infrastructure along with the manufacturing set-up.