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Safexpress praises the Union Budget 2009

13 Jul '09

6 min read

“Introduction of GST will play a very important role in the growth of Warehousing business in India. It would enable the manufacturers to manage Distribution Centers (DCs) across India at very few strategic locations. At present, to save on Central Sales Tax (CST), manufacturers have to maintain warehouses at multiple locations to show the movement of goods from one company warehouse to another. However, with implementation of GST and phasing out of CST by April 2010, manufacturers will readily outsource their Warehousing requirements to the Third Party Logistics Service Provider. This will not only help the manufacturers to save costs, but they will also be able to focus on their core business.”

“Also, the Government's initiative, of providing Tax benefits to companies investing either in Warehousing for agricultural produce or in Cold Chain Infrastructure, is a welcome move. This will result in an exponential growth of Warehousing business in India, as well as fuel the faster growth of the entire Supply Chain & Logistics sector.”

“Moreover, in this budget the Government has initiated a uniform Service Tax for all the modes of transportation in the Supply Chain Sector. Till now, the Service tax was levied only on Road and Air Cargo. However, Railway and Coastal Cargo are also being brought under the Service Tax ambit. This would bring further uniformity in Taxation across the entire Supply Chain & Logistics sector.”

Speaking about the need for providing industry status to Supply Chain & Logistics, Mr. Kanaujia said, “One of the key recommendations we had made to the Government before the budget, was to provide Industry status to the Supply Chain & Logistics Sector. We had requested the Government to form a single Regulatory Body to look into the concerns of this Sector. We are grateful that the Government has considered our proposal and indicated towards the formation of a single Regulatory Body for the entire Supply Chain & Logistics sector. This is a huge step by the Government in the right direction.”

Speaking about the growth of Service sector over the last few years, Mr. Kanaujia said, “The structure of our Economy has changed radically over the last with Service sector now contributing over 50% to India's GDP. Our Economy is heavily dependent on the Service sector for growth, and the livelihood of millions of people depends on this sector. Therefore, the Government's initiatives towards strengthening the Service sector further in this Budget are appreciable.”

“It was expected that the Government would increase the Service Tax in this budget. However, there has been no hike in Service Tax, which has been maintained at 10.3% vis-à-vis 12.36% in the previous year. This will definitely aid the continuous growth of Service sector in India.”

Speaking about the dearth of skilled professionals in Supply Chain & Logistics Sector, Mr. Kanaujia said, “There is an enormous shortage of skilled manpower in the Supply Chain & Logistics sector, as well as the overall Service sector. With the Government's drive to provide interest-free education loans to students, this will not only help in creating employment for innumerable people, but also the country will be able to create a massive supply of skilled manpower, which is a very big requirement for the growth of Service sector in India.”

From a Direct Taxes perspective, Mr. Kanaujia added “Removal of FBT is a very good step. This will lead to companies offering higher perks to their employees, resulting in increased motivation at workplace. Also, removal of surcharge on income tax will result into an increase of up to 5% in the income of salaried employees giving them a big reason to cheer.”

Speaking about the effect of FBT abolition on his company's marketing plans, he said, “Abolition of FBT will provide a fillip to our Marketing activities. This will help us in further augmenting the Brand Equity of Safexpress and improving our business volumes.”

Mr. Kanaujia concluded by saying that, “For India Inc to grow at the rate of 9%, Supply Chain & Logistics sector will need to contribute the maximum, otherwise growth can't be achieved at those levels. The roadmap provided by Government in this Budget is very promising for our sector. This sector has far reaching implications on the economy, and going forward it will keep playing a pivotal role in the overall growth and development of our economy.”

Safexpress

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