Evolv­ing with e-com­merce

Vijay Ku­mar, COO, Ex­press In­dus­try Coun­cil of In­dia (EICI), speaks about how e-com­merce is help­ing the ex­press in­dus­try evolve and the domino ef­fect that the im­pend­ing GST might have.

Cargo Talk - - Association -

Has the growth of e-com­merce changed the way the ex­press in­dus­try works in In­dia?

Yes, and its growth has had a pos­i­tive im­pact on the ex­press in­dus­try sim­ply be­cause a door-todoor de­liv­ery is very crit­i­cal. Re­cent re­ports show that e-com­merce space should grow about 10 times in the next five years. Has it helped grow the ex­press in­dus­try?

While e-com­merce isn’t the only growth driver for the ex­press in­dus­try, it is one of the big­ger op­por­tu­nity ar­eas. A lot of SMEs need lo­gis­tic providers for the ex­press in­dus­try and with e-com­merce grow­ing, there is an au­to­matic growth for the ex­press in­dus­try. In­ter­na­tion­ally too, e-com­merce pro­vides a huge op­por­tu­nity for our ex­porters – like mi­cro and mini ex­porters. They prob­a­bly work out of 100 sqft space. The pace with which these en­trepreneurs are ac­tu­ally tak­ing on the world is ex­cit­ing to watch. But they can be suc­cess­ful only if they have some­one to de­liver their goods. E-com­merce in ef­fect is cre­at­ing en­trepreneurs and our mem­bers are pro­vid­ing a vi­tal ser­vice for them. How has EICI helped evolve the in­dus­try?

Well, for one, we were the first ones to set up ex­press ter­mi­nals in Mum­bai, Delhi and other ma­jor cities years ago – not just for our mem­bers but for the ben­e­fit of the en­tire trade. It was funded by us at a time when that ini­tia­tive was com­pletely loss­mak­ing. Is there any is­sue that EICI is work­ing to­wards?

One of the ma­jor ini­tia­tives we have un­der­taken is the relook at the For­eign Trade Pol­icy 201520 where Direc­torate Gen­eral of For­eign Trade had an­nounced that com­mer­cial ex­ports can­not go through courier. This prob­a­bly makes In­dia the only coun­try to do so. So even small pack­ages go through cargo and there is no ex­pe­dited de­liv­ery. We have made rep­re­sen­ta­tions to the Min­istry to al­low ex­porters to courier. What is your take on GST?

We are bullish about the longterm im­pact of the GST – if it comes the way we en­vis­age it – it will be very good for us. How­ever, we have iden­ti­fied a few con­cern ar­eas. We need to move all border check­posts out. It leads to in­creas­ing trans­ac­tion costs, and the trucks are idling, lead­ing to in­ef­fi­cient oper­a­tion. Would GST bring with it com­pli­ca­tions in doc­u­men­ta­tion?

Our mem­bers are net­work op­er­a­tors serv­ing pan-In­dia. They pay Ser­vice Tax in one sin­gle reg­is­tra­tion to op­er­ate across the coun­try; they don’t need mul­ti­ple regis­tra­tions. They take in­put credit against ser­vices which can be done any­where in the coun­try. It’s a seam­less flow and it’s a very well es­tab­lished tax­a­tion regime. With GST, there seems to be mul­ti­ple regis­tra­tions in each state. That is go­ing to be a killer for us. Mem­bers will have to reg­is­ter them­selves in each state.

As far as GST re­turns are con­cerned, they will have to file a re­turn ev­ery month. So in­stead of fil­ing re­turns twice a year un­der Ser­vice Tax, un­der GST there will be one for IGST, one for CGST and one for state GSTs. This makes it three re­turns mul­ti­plied by 34 ad­min­is­tra­tions.That is close to 900-odd re­turns. So it’s a huge com­pli­ance cost. Also, the over­sight will be with 34 ad­min­is­tra­tions. In­stead of hav­ing an easy regime which fa­cil­i­tates busi­ness, here you are ac­tu­ally con­strain­ing busi­ness.

A lot of SMEs need lo­gis­tic providers for the ex­press in­dus­try and with e-com­merce grow­ing, there is an au­to­matic growth for the ex­press in­dus­try

Would GST have any ef­fect on in­put cred­its?

Yes, there may be credit block­ages with GST. Mem­bers will not be able to get what­ever tax­a­tion that has gone into the in­put set off. So there will again be cas­cad­ing of du­ties. The fact that GST is com­ing in is to do away with this cas­cad­ing ef­fect of du­ties. In this case, this will ac­tu­ally start hap­pen­ing. An­other is­sue is spe­cific to freighter op­er­a­tors and prob­a­bly the air­lines. It deals with ATF (even though we can­not claim in­put credit for petrol prod­ucts) what they have done for ATF is the CENVAT credit, that is ex­cise on ATF. There is an in­put credit that we can set off against the ser­vice tax. But in the new regime in GST, ATF has been plugged along with petroleum which is out­side of GST. We have also asked for zero rat­ing of in­ter­na­tional ship­ments.

Do you have any­thing on the bucket list?

Apart from more and bet­ter in­fras­truc­ture, we need a sin­gle win­dow clear­ance. Cus­toms clear­ance is not only that, you also need to have NoCs from a lot of al­lied agen­cies. We are happy with the Air Cargo Pol­icy. We had re­quested that ex­press should be in­cluded as a sep­a­rate seg­ment. With this pol­icy, any air­port op­er­a­tor will now have to fig­ure in the ex­press in­dus­try as part of the over­all plan.

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