Infrastructure And Trade Practices - Are They Customer Friendly?

The first session of Smart Logistics Summit held in New Delhi raised several concerns of the industry including the impact of GST on shipping cost, imbalance in import and export cargo moving at ports that complicates the positioning of empties, the need for establishing rail transshipment hubs to manage the rise in cargo when DFCs become operational and logistics challenges faced by customers in hinterland.

GST tax was not a new levy, but was a combination of various taxes that had been subsumed into it. The purpose was to create a unified common national market and this move was expected to contribute to the growth of the GDP as well as increase industrial production, clarified S K Rahman, Additional Director General of Goods and Service Tax, as he spoke of the impact of GST on shipping industry. He stated that the the endeavor of the Government is to simplify the GST rules as much as possible.

With regard to impact of GST on shipping charges he clarified that the cargo whether export or import is taxable, the tax would be applicable on the shipping charges too. A distinction has been made on the GST rate for national and international transportation.

In order to minimize the Government interaction with the trade, a special purpose vehicle called GSTM has been created to facilitate the people.

Sanjay Swarup, Director (International Marketing & Operations) Container Corporation of India, spoke of the problems faced by the industry. He said that 60 percent of the container business were concentrated in the northern hinterland for the west coast ports. Even though there was a network of terminals, direct connectivity, rolling stocks and state of art handling equipment, they have not seen a proportionate growth of cargo by rail from this region. Reasons attributed for the laggard growth in the container business are as under.

Imbalance of cargo import and export and high logistics costs There is disproportionate movement of cargo in the ports as well as the ICDs (Inland Container Depots). Some ports are more import oriented whereas other ports have large volumes of export cargo. Due to this skewed ratio empty containers need to be re-positioned to cater to the export cargo. This incurs additional expenditure which is passed on to the customers.