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V Balaji, CEO of Mumbai-based Avvashya CCI Logistics, an end-to-end logistics, contract logistics, and supply chain management firm, on the impact of GST on the logistics business:
How has GST impacted the logistics industry?
The long-term story of GST is promising: e-compliance has brought in transparency in taxation, and as a result some products cost less to the final customers. This tax regime has definitely benefited the industry as compared to the earlier one: it has ended the cascading tax effect. Post-GST, demand for warehousing space in large markets such as Mumbai, Delhi, Chennai, Bengaluru, and Hyderabad has increased by about three times. But this is expected to normalise over the next six months. The removal of check-posts and octroi stops has led to a significant reduction in the transit time for trucks; the lead time of truck routes has improved by 25-27 per cent. Earlier, vehicles had to wait seven hours at octroi stops to get into Mumbai. Simultaneously, vehicle utilisation has dropped by about 15 to 18 per cent due to faster turnaround times. We are exploring ways in which this downtime of trucks can be used fruitfully.
Has filing GST returns been easy?
Companies are still mapping their accounting software and IT systems to the new taxation provision.
Since it is a new system, there is extensive congestion, with IT systems hanging and servers not responding.
Seamless implementation will require about six million enterprises of all sizes to adapt to new invoicing methods. So, robust IT systems are needed for companies and the taxation department.
Another issue is e-permits for goods transport, which has still not been introduced. Such e-permits will expire within a few hours or days, which will create confusion in the market. Any change will have a certain element of discomfort in the beginning, but the long-term benefits of GST are bigger than these teething problems.
What has been your customers’ feedback about GST?
Most of our customers are in favour of GST. Those who oppose it are usually SMEs. The automotive industry has been positively impacted as the cost of making medium-range hatchbacks and sedans has come down.
In smaller car segment, the GST benefits are substantially high.
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