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Freight Forwarders & Logistics practitioners all set to embrace GST

After having series of discussions with the Government of India and awareness programmes jointly organised by the Federation of Freight Forwarders’ Associations in India (FFFAI) and allied logistics associations, customs broking/freight forwarding community and logistics companies in India are all set to comply with the revolutionary Goods and Services Tax (GST) regime, effective from July 1, 2017. It is a well-accepted fact that there would be direct and immediate impact of GST on the logistics industry that includes customs clearance, freight forwarding, warehousing, distribution and supply chain industry in the country.  It is also truly estimated by the government that GST would save companies around $14 billion because it would allow them to organise their warehouses and supply chains more efficiently. Firms can now move to demand-based "hub-and-spoke" models used globally, rather than operating state-by-state. As a result, there would be price corrections owing to reduced logistics cost, reduced transaction costs and transit time, and hassle-free transportation for domestic as well as international shipments. Hence, beneficiary would be Indian manufacturers, exporters and end users owing to Indian products being very competitive. 

“The implementation of GST has been at a very appropriate time. Thanks to the Government’s initiatives on Make in India, Trade Facilitation, Single Window Customs Clearance, Ease of Doing Business, Startup India and impetus on domestic consumption as well as cost effective export cargo would definitely receive tremendous boost in long term. Need is to further strengthen those initiatives through appropriate infrastructure, seamless cargo movement and rational/uniform tax policy across the country with proper implementation. GST would not only reduce the cascading tax burden it would also accelerate seamless cargo movement supported by a robust warehousing and distribution mechanism,” said Mr Samir J Shah, Chairman, FFFAI.

Study reveals, due to trade barriers such as entry taxes, local body taxes, OCTROI and other hurdles, trucks lie idle for 30 to 40 per cent during their delivery schedule.  GST is expected to improve transit time because of phasing out the border check posts. According to World Bank, Indian business houses can save up to 30-40 per cent of logistic costs burden due to stoppages at various tolls and check posts.

According to Mr Shah, now the concern area is implementation of e-way bill across the country in respect of reaping the logistical benefits of GST. FFFAI believes the Government would take quick and pragmatic decision in this regard to fully implement the much desired and long debated tax reform. FFFAI, however, welcomes the government’s decision on two-month relaxation in initial filing requirements to abate teething issues for the larger interest of $2 trillion Indian economy, making it more organised. At the same time, FFFAI urges for sensitising its implementing authorities/officers pertaining to GST for a smooth transition to the new era or “New India”. 


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