India’s logistics sector has been waiting since 2006 for the Goods and Services Tax (GST).
      Now, the biggest hurdles—mostly from the states—have been overcome and the country would institute one single, uniform tax policy starting in July of this year.

Some Taxing Questions

      While transporters have been looking forward to GST, freight forwarders have been asking whether GST will lower costs for the air cargo sector.
      Trucking majors like Spoton in the road express business, whose Managing Director Abhik Mitra once headed TNT in India, are looking forward to GST.

Mitra Measures Revolution

      In a conversation with FlyingTypers, Mitra said:
      “GST will bring about a change—a revolution in road transport statistics.”
      He mentioned that there would be “a fundamental change where crossing borders of states is not a deterrent or does not take away from the predictability (of delivery) of your shipments.”
      Giving the example of the U.S. and Europe, Mitra pointed out that “you move state borders as if they don’t exist.
      “But here in India, the state borders exist and the state borders create their own separate challenges of taxes.”

Agility Predicts GSA Game Changer

      Agility’s recent Emerging Markets Logistics Index predicts that India has the most potential to grow as a logistics market.
      The Agility Index, based on a survey of supply chain and logistics professionals, mentioned that GST would be a game-changer and India would be the leading emerging market destination for foreign investment over the coming five years.

Ah, But For Air Cargo

      GST, however, will be a different ball game for the air cargo industry.
      Carriers have been enjoying a number of exemptions on imports and so the GST could bring in its own list of complications. One of these is the decision to keep aviation turbine fuel from the GST levy and that will, according to experts, lead to increased costs.
      More important is the tax that will be paid for export cargo.

Voice of Forwarders

      According to India freight forwarders we spoke to, the place of manufacture or supply has been divided into two categories: Business to Business and Business to Consumer.
      “For Business to Business, the place of manufacture/supply would be the location of the factory or business while for Business to Consumer supplies, the place of supply would possibly be the airport or warehouse where the goods are handed over for transportation,” a forwarder confided. Simply put, this means that cargo for export would have to pay the GST tax; earlier, a service tax was being paid.
      Those managing links in the supply chain are optimistic about GST.
      The apex body of the express services in the country, the Express Council of India (ECI), believes that GST would really help the economy in general and the logistics industry in particular to shake off the inefficiencies and lower transaction costs.

GST & Express Council Of India

      Commenting about GST’s effects in a national daily, Vijay Kumar, COO of Express Industry Council of India, said, “For GST to be a game changer in the express delivery sector (and the logistics industry) it is critical that the importance of this industry be recognized by the government while framing the legislation, which can translate India into an efficient logistics hub.”

In From The Cold

      A number of forwarders that ACNFT spoke to said GST would help in the long-term. They said that with the government nod for Foreign Direct Investment (FDI) in retail, the country would see more cold chain storage facilities coming up.
      Consensus is with GST coming in, there would be a number of companies that will set up large cold chain facilities in major locations that would help grow the pharma and other industries dealing with perishable goods.

Need For Speed

      The Federation of Freight Forwarders’ Associations in India (FFFAI) believes that GST “will not only speed up the movement of freight but also in turn increase the volumes both on the domestic front as well as the international front.
      However, FFAI also said that freight forwarders should be exempted from the service tax (later it would be the GST) that they are subject to now.
      “This will make India exports really competitive,” FFAI said.
Tirthankar Ghosh