GST re­mains a dis­tant dream

There has been no men­tion of GST in the Union Bud­get 2016-17. But the in­dus­try still has hopes for long term ben­e­fits. Some ex­perts share their views on how a bet­ter tax regime could have been a game changer.

Cargo Talk - - Front Page - KAL­PANA LOHUMI

Not a sin­gle men­tion of the goods and ser­vices tax (GST) in the Union Bud­get 2016-17 has left many with a mixed bag of emo­tions. Ex­perts says that GST presents an op­por­tu­nity to ra­tio­nalise and re-en­gi­neer trans­porta­tion and lo­gis­tics net­works, given the in­ef­fi­cien­cies with taxes based on the cross­ing of ad­min­is­tra­tive bound­aries or bor­der check­points.

The pre­vail­ing com­pli­cated tax struc­ture in In­dia means that lo­gis­tics de­ci­sions, in­clud­ing the choice of set­ting up in­ven­tory and dis­tri­bu­tion cen­tres, are taken based on the tax regime such as cen­tral sales tax and state val­ueadded tax (VAT) rates, rather than on op­er­a­tional ef­fi­ciency.

GST has the po­ten­tial to un­leash a new era of de­vel­op­ing lo­gis­tics in­fra­struc­ture and take in­vest­ments to the next level. From the in­fra­struc­ture point of new, this tax struc­ture would re­duce the num­ber of ware­houses but in­crease their sizes. Truck de­lays due to road­blocks, toll and other stop­pages which add to the lo­gis­tics can be re­duced by this new tax struc­ture. Se­condly, the ‘ Make in In­dia’ ini­tia­tive also needs the much- awaited tax to en­able the coun­try to be­come a man­u­fac­tur­ing hub. It is nec­es­sary that the for­eign in­vestors find it en­cour­ag­ing to do busi­ness here and in­di­rect and com­pli­cated tax regime pos­si­bly will be­come the im­ped­i­ment to a smooth busi­ness. GST would also re­duce the cost of man­u­fac­tur­ing both from a tax per­spec­tive as well as on com­pli­ance front. Some ex­perts ex­press their views. Ex­ceprts:

Ar­naud Cauchy, Man­ag­ing Di­rec­tor, Ge­fco In­dia

“It has been a long wait but we have faith in the sys­tem and hope it takes a pos­i­tive turn. It is def­i­nitely go­ing to ben­e­fit the lo­gis­tics in­dus­try as a whole and es­pe­cially the ship­ping in­dus­try by bring­ing down the prod­uct prices.

The im­ple­men­ta­tion of GST will pro­mote the de­vel­op­ment of lo­gis­tics parks, and free-trade ware­hous­ing zones will speed up for­ma­tion of re­gional hub-based was ex­pected to in­crease GDP by 1 per cent.

If not im­ple­mented, there may be fi­nan­cial losses due to in­vest­ment made and un­der­util­i­sa­tion of re­sources.

De­fer­ment of GST will dras­ti­cally im­pact the sev­eral ini­tia­tives taken by the govern­ment for the growth of the econ­omy, ef­forts of mak­ing the lo­gis­tics sec­tor seam­less in the coun­try and on ease of do­ing busi­ness.

GST has the po­ten­tial to re­shape the tax­a­tion in In­dia and bring more clar­ity and trans­parency into the sys­tem.

Also, an­tic­i­pated may shrink.”



Vi­neet Di­rec­tor, TCI

“GST is the most crit­i­cal tax re­form that In­dia has been long­ing for. The in­vest­ments in in­fra­struc­ture and tech­nol­ogy by the lo­gis­tics play­ers will be ab­sorbed by mar­ket de­mands in com­ing time. The ben­e­fits of GST are im­mense in terms of re­duc­ing eco­nomic dis­tor­tions, cre­at­ing a na­tion­wide sin­gle tax mar­ket, widen­ing of tax


Man­ag­ing Em­ploy­ment num­bers, hop­ing for a suc­cess­ful ‘Make in In­dia’ ini­tia­tive, will also be hit badly.”

Shan­tanu Bhad­kamkar, Man­ag­ing Di­rec­tor, ATC (Clear­ing and Ship­ping)

“It is most un­likely that GST in its true form will be rolled out. GST cou­pled with ‘ Make in In­dia’ would have given a big im­pe­tus to the man­u­fac­tur­ing sec­tor in par­tic­u­lar and econ­omy in gen­eral.

Lo­gis­tics in­dus­try, par­tic­u­larly the or­gan­ised lo­gis­tics in­dus­try, greatly de­pends on the man­u­fac­tur­ing sec­tor for growth. In­vest­ments in lo­gis­tics sec­tor need to be done far ahead of the ac­tual re­quire­ment and it needs to be fac­tor while in­vest­ing, un­less the in­vestors have spec­u­lated on any par­tic­u­lar lo­ca­tion. They will any­how ben­e­fit by growth in the man­u­fac­tur­ing sec­tor.

GST in orig­i­nal form that is sin­gle win­dow, sin­gle law, sin­gle dec­la­ra­tion, sin­gle re­turn, to name a few was ex­pected to in­crease GDP by 1 per cent (which trans­lates in to ac­cel­er­a­tion of growth rate by about 15 per cent) on count GST alone. This would have con­trib­uted hugely to im­prove­ment in ‘Ease of Do­ing Busi­ness In­dex’, and im­prove­ment in rank­ing of ‘Ease of Do­ing Busi­ness In­dex’ would re­sult

De­fer­ment of GST will im­pact sev­eral govern­ment ini­tia­tives for eco­nomic growth and ef­forts to make lo­gis­tics seam­less With a de­fer­ment, the op­por­tu­nity for re­duc­tion of lo­gis­tics trans­ac­tion costs in In­dia will be lost and this could prove costly

Man­ag­ing Di­rec­tor TCI

Man­ag­ing Di­rec­tor Sindhu Cargo

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