Home / Knowledge / News / Textiles / GST to help logistic cos reduce cost, time up to 20%
GST to help logistic cos reduce cost, time up to 20%
25
Jul '16
Caught in a bind over high operational costs and complex tax levies, the Indian logistics industry which is projected to grow at CAGR of 15-20% during FY 2016-2020, can perform even better under the new GST (goods and service tax) regime which is expected to reduce its operational costs by one fifth of the current costs.

The rollout of GST, in India would dissolve the existing indirect tax structure, ie, multiple taxes that is being split between center and state governments leading to reduction of about 20% of current logistic costs, says a report on the expected impact of proposed GST amendment bill, which is pending clearance in the Rajya Sabha.

An assessment of the Impact of GST on the logistics industry by Care ratings, a market research agency, besides the 20 % savings on operations, there is going to be an invaluable saving in terms of logistic time that could be as high as 40 % of their schedule.

Citing industry estimates that vehicles lie idle due to trade barriers such as entry taxes, local body taxes, OCTROI and other hurdles for 30 to 40 % of their delivery schedule, the report said there would be vast improvement in the logistic time after phasing out the border check posts leading to operational efficiency through quicker and increased number of deliveries along with reduction in logistic cost during the transit.

As per World Bank estimation Indian corporates can save upto 30-40% of logistic costs incurred due to stoppages at various tolls and check posts. Currently, each of India's 29 states taxes goods that move across their borders at different rates. Apart from that Corporate state tax of 2% is levied for inter-state goods transfer. The implementation of the proposed GST would put an end to all this as no varying structures would be allowed across states.

Besides getting rid of interstate tax burden which saw the emergence of lots of unorganized players in the sector, the new GST regime would usher in a consolidation in the industry that could see the emergence of major large players who can span the entire logistics chain.

Another fall out for the industry post-GST, would be in its warehousing segment, in which the existing interstate taxation system has forced companies to create and maintain warehouses in each state. At present, there are around 20-30 warehouses per company, one in every state, in addition to this 20-30 Carry & Forwarding agents per state making the supply chain longer and inefficient.

In the proposed GST system tax will be levied on transportation of goods and full credit will be available on interstate transactions. Logistic costs are expected to be decreased by 1.5-2.00% of sales on account of optimization of warehouses leading to lower inventory costs which are set up across states to avoid paying 2% corporate sales tax and phasing out of interstate sales tax.

Must ReadView All

President Donald Trump; Courtesy: White House

Textiles | On 23rd Jan 2017

US textile industry eager to work with President Trump

The US textile industry is eager to work with President Donald Trump...

Textiles | On 23rd Jan 2017

LyondellBasel expands Texas plant ethylene capacity

US based producer of petrochemicals and speciality chemicals...

Textiles | On 23rd Jan 2017

China’s cotton imports down 39% in 2016

China’s total cotton imports declined by 39.1 per cent to ...tons in...

Interviews View All

Angelina Francesca Cheang
MY ANJE

'Consumers in the age-group 21 to 38 are driving the activewear trend'

Kamlesh Vaghela
RK Textiles

Very few machinery manufacturers have R&D units

Mukesh Agarwal & Rajesh Agarwal
Madhuram Fincap Pvt Ltd

Increasing prices and lack of demand main issues facing industry

Marcel Alberts
Eurofibers

Coating at a fibre level is a practice not usually seen in the...

Lynda Kelly
Suominen Corporation

Suominen Corporation is a manufacturer of nonwovens as roll goods for...

Eric Scholler
Groz-Beckert

The Indian market has huge potential in technical textiles, and by far,...

Tony Ward
Tony Ward

"You have to truly understand what your client wants, know her needs, what ...

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Bani Batra

Bani Batra’s couture wedding collection is inspired by traditional Indian...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
January 2017

January 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search