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.
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
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”.