Budget 2020: Over the last few years, the logistics sector has witnessed an enhanced focus from the government. With the introduction of GST, e-Way bill, various infrastructure upgradations and also setting up a separate logistics department, the logistics sector has undergone tremendous transformation.
We continue to have an optimistic view from this year's budget as well for the Indian logistics industry.
The adoption of national logistics policy will further have a positive impact on the country's logistics industry as it will help to increase, upgrade and standardise the warehousing capacity and in identifying gaps that could be bridged to bring down the cost of logistics for the industry at large.
High logistics cost impacts the competitiveness of domestic goods. Currently, the cost of logistics for India is about 14 per cent of its GDP and it is far higher as compared to other countries.
We are confident that the policy will help in reducing the cost significantly in the coming years. Being a leading third-party logistics (3PL) service provider in India, we are confident that this move will further enhance India's position as a preferred country for manufacturing.
Besides, the government also needs to consider creating a national logistics e-marketplace as a one-stop marketplace for all stakeholders including exporters and importers thereby setting up a separate fund for start-ups in the logistics sector in order to double the employment in the sector.
FULL COVERAGE: Union Budget 2020
To keep this momentum going and spur it further, we expect an enhanced focus on the sector from the Union Budget. We would urge the government to bring fuel under GST. This will help in getting standardisation in the sector and provide cost-effectiveness.
We also expect the government to simplify the GST administration across, including enabling online real-time reconciliation, better manage the input credit process and optimum utilisation of credit ledgers.
The government needs to realign some of the policies. The effective implementation of the policies will go a long way to in providing an impetus to trade, enhance export competitiveness, and improve India's ranking in the Logistics Performance Index.
While the changes made in the indirect tax laws are surely appreciated, there is also a requirement to iron out the issues that have remained post-implementation. Further, the following will be helpful to address as well:
Fitness certificate for trucks should not be every year but every 3 years for up to 6 years old trucks and after that every 2 years. For new vehicles, it should not be required to be given by RTO and OEM should issue that.
Factory license norms to be eased - post-GST manufacturing footprint needs to change, but procedural delays are impacting the process (CTE, CTO, FL etc).
Specifically, make multimodal logistics a reality.
As a logistics service provider, we end up creating/utilising infrastructure across the country. There should be identified geographies, where promoting employment, hiring for skilled/semi-skilled manpower is incentivised.
MLL is working with CII National Council for Logistics and Department of Logistics for issues of standardisation in the logistics industry. This standardisation process should be taken on priority by the government.
(The author is CFO, Mahindra Logistics Ltd)
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