GST on Logistics Industry

The Logistics industry of a country is often referred to as the backbone of any economy. It is known to play a critical role in developing countries such as India, where the consumption of goods is always growing, and the demand for the same is always high. Hence, one can fairly assume that a well-organized logistics industry can help the "Make In India" initiative of the Government of India in a significant way by propelling it forward.

 

Logistics can be defined as the movement of goods from their point of origin to consumption. A well-oiled logistics chain essentially ensures the delivery of the items in the correct quantities to the right place, at the right time, in the right condition, and for the right price. The logistics and supply chain is, in fact, so crucial that a single step of mismanagement can have a ripple effect of the negative kind and consequently harm the reputation of an establishment. Hence, the stakes remain high for both the consumer as well as the supplier.

The implementation of the Goods and Services Tax (GST) regime impacted various Indian industries in more ways than one. Unsurprisingly, one of these industries is logistics. This article will give you an overview of the GST regime's expectations by some industry stalwarts and take you through the impact of GST on the logistics industry.

As per V. Ramaswamy, the CEO of Cargowings Logistics, the implementation of GST on the logistics sector was supposed to bring a lot of alignment in terms of value-added services all across the realm of Indian logistics. Ramaswamy also said that the same would pave the path for investments of cutting-edge nature and the proliferation of mergers and acquisitions among such companies on the grounds of the country. But now, fast forward to today, the observations made during the various studies which were carried out in the recent past state that there has been a total of 20% reduction in turnaround trucks post the dismantling of the same at the checkpoint of the border. Implementation of the Goods and Services Tax, as per the studies, has also benefited e-bills.

• Helped Logistics and E-commerce achieve their Potential

It is believed that putting the GST regime into effect has made the practice of conducting business easier, courtesy of the integration of a multi-layer goods and service tax, has turned the Indian system into a singular form of taxation. The process of question has also supposedly reduced the overall transportation tax, helping in enhancing the logistics-related decisions that are undertaken on multiple levels. These advantages are believed to have facilitated the pace of growth of the logistics industry and the use of the existing facilities to their maximum potential.

• Reduction in Time of Transit

It is believed that the transit time has been cut down as well, which has benefited the Over-The-Road transporters significantly. It is one of the most preferred modes of transportation by players across the country. The same has also minimised the intervention of regulatory authorities, causing the likes of in-transit delays to be significantly reduced.

Additionally, other forms of organizational dysfunctions are also believed to have reduced considerably. Previously, the relevant parties faced a lot of hassles along the way, which ended up decreasing the overall efficiency of the logistics part of the marketing mix. As per the studies, GST has turned the obstacle in question on its head by increasing efficiency almost across the board in logistics.

• Significant Reduction in Paperwork

The positive effects of GST on logistics can be felt on the paperwork side of things. Due to the evolution of this unified tax structure, the players have witnessed a significant reduction in paperwork and consolidation. In the past, a myriad of trucks used to be stopped due to the lack of one document or the other. Now, since the concerned people only need to carry one single document, things have become easier for logistics carriers, helping them carry out deliveries much faster.

• Eased out Synchronization Between Buyer and Seller

With the implementation of GST, the logistics industry has started exploring new forms of innovative ideas for their respective supply chain models, helping build a better relationship between a customer and a seller.

In the recent past, the perks have been believed to be great, and it is hoped that the sector keeps on benefitting from the same in the years to come. However, longevity and the consistency of these benefits can only be understood with time. The bottom line is those warehouse operators and e-commerce players alike are already showing interest in setting up warehouses at strategic locations such as Nagpur, which is also famously known as the zero mile city of India, as it is well connected throughout.

People have also shown certainty over the fact that more transformations will be witnessed as time passes. It is also believed that GST holds an exciting time for every stakeholder group in the e-commerce and the logistics sector. Hence, it will be fair to say that the GST will disrupt the current ecosystem and transform it into a more competitive and efficient future.