Transporting goods is still a bumpy ride

First the good news! Post-GST, the elimination of checkposts by almost all states has resulted in a significant reduction in waiting time. Reports indicate a reduction between 3 to 7 hours leading to a 10-16 per cent increase in road transport efficiency .

But this is only the first step towards developing a national regime that governs the movement of goods in the GST environment. The differences between the State and Central governments, and between the States, on the rules and format of a national document or e-waybill to be used for declaration of movement of goods, needs to be resolved. In addition, a national IT system for generation and administration of these e-waybills needs to be put in place. The official deadline for rollout of a uniform national e-waybill and associated regulations governing the movement of cargo is October 1, 2017. In the meantime, each State follows its own system of rules and enforcement.

What are some of the concerns around rule-making for goods movement in India? And how would that potentially help or create operational challenges in the future?

The e-waybill would emerge as the most intensively used declaration document in India. Since all goods subject to GST that move on the road would have to potentially create an e-waybill, this would means millions of such e-waybills being generated every day. Thus the rules and format from an ‘ease of doing business’ point of view is important.

Currently there are some challenges. First it requires generation of e-waybill even for intra-State movement. This means that even very short-haul movement of goods, or pick-up of shipments by courier from the door of individual shippers also fall within the ambit of the e-waybill. Since such movements were earlier exempt from the requirement in most States, it adds a layer of transaction costs that did not exist before. Imagine a courier at your door having to first prepare an e-waybill and submitting it to an IT platform before it can move with the product!

Second, the draft rules exempt shipments below ₹50,000 from the e-waybill. However, it still requires a truck that carries shipments collectively valued at more than ₹50,000 to generate e-waybills for each of the individual shipments in the truck, even if they are valued at less than ₹50,000. This would mean shifting the responsibility of generating the e-waybill from the shipper to the transporter. While this exemption is supposed to give relief to businesses from generating e-waybills for every small transaction, shifting this burden to transporters defeats the purpose.

Another challenge is for the transporter to change the vehicle number every time the shipment changes trucks. In a hub and spoke model, where a single shipment might change trucks several times, this substantially increases the data entry requirements and could potentially lead to delays as trucks assigned for a particular route are often decided on at the last minute.

While businesses can chose to file an e-invoice (called INV1) or a physical invoice for the actual transaction, the online e-waybill is mandatory. The logic is that the e-waybill provides an electronic trail and second check for all transactions. But this is counter-intuitive. Why not insist on only electronic invoices in first place?

If the idea behind not insisting that businesses file electronic invoices and retain the choice of generating physical invoices was to reduce the burden of online compliances, then the requirement of an online e-waybill defeats that objective, that is, businesses would still have to generate e-waybills online with the same data.

A better way forward would have been to insist on all invoices being filed online and using the online invoices as the de-facto e-waybill. A simple e-waybill would have been the truck manifest listing the electronic invoice numbers of the goods it is carrying. This would have not even required the vehicle number to be recorded, thereby eliminating the need for updating the vehicle number in the e-waybill every time shipments change trucks.

Trucks are not stopped only by tax-related check-posts. Seventeen different laws regulate the movement of goods in India. Transport-related regulations that check for fitness of the vehicle, overloading, and a host of other transport regulations is one major reason trucks are stopped and inspected. Regulations related to the transport of hazardous goods, forest produce, commodity-specific controls and so on are some of the other reasons why trucks could be stopped or inspected.

Is there a way by which we can move towards an integrated system of checks and inspections? Given the evolution of the GST e-waybill and the development and expansion of the VAHAN database of the ministry of road transport, an integrated system is definitely possible.

VAHAN database has all the relevant data related to the vehicle: fitness certificate, registration, permits, etc. Since all 17 regulations are concerned with either the goods a vehicle is carrying or the vehicle itself, the e-waybill declaration and VAHAN together can serve as a ‘comprehensive declaration’.

Imagine a system whereby a simplified RFID-enabled e-waybill, that is essentially a list of electronic invoices declared in the GST network, and RFID chip-enabled number plate of the vehicle tagged to the VAHAN database approaches a modern automated check-point. The check-point does not stop all trucks; it picks 10-15 per cent of trucks on a random basis for checks. All that a truck driver does is scan the e-waybill while the number plate is automatically scanned and read.

The officer would have all the information related to the truck and the shipments on her screen. Any violation would be backed by strict and heavy penalties. In order to check for overloading, the approach to this modern automated checkpost would be equipped with weigh-in motion technology that monitors overloading as the truck passes by.

A taskforce for the seamless movement of goods has been set up by the Government to consider reforms backed by technology solutions. This would revolutionise one of the most abused and opaque aspects of law enforcement in India.

However, technology integration is just one aspect of reform. Strict norms are needed to ensure fairness and transparency of enforcement. For this the following ground rules can be considered: all physical inspection of goods to be subject to CCTV camera recording; and all challans to be issued electronically. If an officer over-rides the systems-based, risk-managed, random check, and uses discretion to stop a vehicle, this needs to be registered with full reason and final outcome of all checks and inspections. Data related to such stops should be made subject to the RTI Act. Clearly, more work is needed in these reforms.

The writer is a senior director for Corporate Public Policy, responsible for South Asia region, Deutsche Post DHL Group. The views are personal

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