Exports Slowdown: GST Effect Or international Phenomena?

While some international airports have shown a dip in cargo volumes in the first year of the Goods and Services Tax, others have seen a rise. Tirthankar Ghosh talked to freight forwarders and airport cargo heads to find out what a year of GST has thrown up for the air cargo trade.

One year has passed since India’s ‘One nation, one tax’ Goods and Services Tax was implemented. While many users have accepted the fact that it may not be the perfect single tax system, anyone who has anything to do with it acknowledges that the GST has been working. Among the yea-sayers, for example, is veteran freight forwarder Shesh Kulkarni. As Managing Director India of MIQ Logistics India Private Limited, Kulkarni has wide experience of the business. He said that for years he had been speaking for the need of a standardised tax system for the country and how it would benefit the Indian logistics industry. Now that it has been implemented, he feels an urgent need has been fulfilled.

Unlike Kulkarni, however, there are many freight forwarders who feel that GST still remains a difficult nut to crack even though the 17-odd taxes and cesses have all been turned into one GST.

Perhaps, the biggest problem that forwarders face, according to Bharat Thakkar, a well-known freight forwarder and a past President of the Air Cargo Agents Association of India (ACAAI), is that GST is being levied on land side services in the country. Thakkar said that the measure had pushed costs up making India less competitive. The law mentions that all services other than export freight have to be taxed at 18 per cent.

Another obstacle that is slowing down of exports — and that has a direct bearing on freight forwarders — is one of refunds faced by exporters. Exporters can claim refunds on the taxes paid on both inputs and the finished goods. Apparently, in some case, refunds have not come through for a year leaving exporters to face problems because their working capital has got caught in the cumbersome refund process.