The logistics sector in India has four segments– transportation, warehousing, freight forwarding and value-added logistics. Transportation through land, air, rail and water and warehousing (industrial and agricultural storage) comprise logistics. In India, logistics is bogged down by higher costs and a complicated tax structure. The underlying reason for the same is that every state levies taxes on goods moving across their borders at different rates. This leads to a situation wherein freight is taxed many times over. A new report by CARE Ratings on the Logistics industry titled ‘Impact of proposed GST on Indian Logistics Industry" says that the industry is expected to clock a CAGR of 15-20% in the period 2015-16 to 2019-20.

1. GST Bill: A
Transformative Step
for Logistics
Industry in India
The logistics sector in India has four segments–
transportation, warehousing, freight forwarding
and value-added logistics. Transportation through
land, air, rail and water and warehousing (industrial
and agricultural storage) comprise logistics. In
India, logistics is bogged down by higher costs and
a complicated tax structure. The underlying reason
for the same is that every state levies taxes on
goods moving across their borders at different
rates. This leads to a situation wherein freight is
taxed many times over. A new report by CARE
Ratings on the Logistics industry titled ‘Impact of
proposed GST on Indian Logistics Industry" says
that the industry is expected to clock a CAGR of
15-20% in the period 2015-16 to 2019-20. This
means that with application of GST, the logistics
costs will come down by up to 20 per cent.
According to the report, “The planned dual GST
model (central GST and state GST) proposes to
replace around 29 state and federal taxes and tariffs
for a single tax at the point of sale. The current
combined Centre and State statutory rate for most
goods works out to be 26.5 per cent (Cenvat of 14
per cent, and VAT of 12.5 per cent), whereas post
GST implementation the same is expected to
reduce to standard rate of about 18-21 per cent
which will be levied on most goods and all
services.”In addition to passage of the GST bill, it
is equally important to implement measures as
introduction of dedicated freight corridors,
effective warehouse management, development of
consolidated warehouses at strategic locations,
skill training pertaining to the logistics industry and
a supportive business environment for the
emergence of the e-commerce industry.But, it is
the passage of the proposed GST bill that will have
the biggest positive impact on the logistics industry
in India. It will ensure that India becomes a major
manufacturing hub, create jobs, lead to
corporatisation of the logistics sector and fasten the
process towards making India an economic
superpower.
UmangSingh
[Course title]