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Effects of GST On Indian Logistics Industry

By UK Mahapatra
Director Supply Chain & Operations
Pavers England Limited

PAVERS ENGLAND CORPORATE


CURRENT KEY CHALLENGES OF LOGISTICS


Trade Regulations

Poor infrastructure

Trained Manpower

Lack of Training Institutions

Information and communication technology

Poor warehousing and Storage

PAVERS ENGLAND CORPORATE


What is the Impact of Current Tax Structure On
Logistics ?

Currently, the decision to base inventory and distribution
models are based on:

Levy of Central Sales Tax and varied

State-Value Added Tax (VAT) rates

Tax optimization and administration is considered over
the operational and logistics efficiencies.

Currently, each of Indias states taxes goods that move
across their borders at different rates results in multiple
taxation.

PAVERS ENGLAND CORPORATE


What is the Impact of Current Tax Structure On Logistics
CONTD.


There are long delays at inter-state checkpoints.

Approx 60% of Indias freight moves by road.

Truck delays average Four-Eight hours at inter-state
checkpoints this contains 60 to 65%of average Transit
Time.

PAVERS ENGLAND CORPORATE


What is the Impact of Current Tax Structure On Logistics
CONTD


High variability and unpredictability in delivery results in:
Higher logistics costs.
Increase in stock levels.
SLOB and Loss of sales.
As a result logistics costs in India is higher by two-to three times
global benchmarks, according to the World Bank.

PAVERS ENGLAND CORPORATE


How will this get better under proposed GST?


The planned GST system seeks to replace multiple taxes
and tariffs for a single tax at the point of sale.

GST will unleash a new era of developing logistics
infrastructure and take investments to the next level.

The regulatory reforms proposed in the GST presents an
opportunity to re-engineer logistics and transportation
networks.

PAVERS ENGLAND CORPORATE


How will this get better under proposed GST?


Current inefficient and longer supply chains with
warehouses in almost every state will now change based
on delivery and cost efficiency.

GST, when implemented, will free the decisions on
warehousing and distribution from tax considerations.

This will result in more efficient cross-state
transportation with improvement in transit time.

Reformation of paperwork for road transporters

Cost efficiency to optimum use of assets
PAVERS ENGLAND CORPORATE
How will this get better under proposed GST?


This will lead to changes in
Logistics Network Redefinition.

Logistics service providers to rethink their business operations.

Creating new warehousing in preferred logistics locations.


Optimum utilization of assets and cost re-engineering.

PAVERS ENGLAND CORPORATE


How will this get better under proposed GST?


Infrastructure Upliftment:
Increase Warehouse sizes, leading to a consolidation of the currently widely
spread warehouses across states.

This would translate into expansion of some of the existing warehouses.

LSPs and their end-users both would need to re-engineer their supply chains,
focusing on optimal locations for warehouses and logistics centers .

PAVERS ENGLAND CORPORATE


How will this get better under proposed GST?


GST will score over the existing regime
in the transportation and logistics
industry:
Emergence of the organized service providers since
taxes will no longer be added costs for the
businesses.
Logistic service providers in unorganized sectors will
be expected to improve their service levels.
PAVERS ENGLAND CORPORATE
THANK YOU

PAVERS ENGLAND CORPORATE

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