Chinmaya IAS Academy – Current Affairs Chinmaya IAS Academy – Current Affairs
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In pre-GST era, the industry was struggling to add value to its customers, compared to global peers
It has been 15 months since the rollout of what is considered one of India’s biggest tax reforms — the Goods and Services Tax (GST). But, we are already witnessing a major positive transition in the logistics sector. Outsourcing and the value addition in the logistics sector is set to take off post GST. Considering the double-digit growth, the logistics market would exceed $250 billion in the next two years. As per a recent survey, the Indian logistics sector provides livelihood to 22 million-plus people, which is expected to be over 40 million by 2020. The high rate of growth in the next couple of years is expected largely due to implementation of GST. GST has replaced at least 7 indirect tax heads and has eliminated the need for warehouse hubs across States. Further, GST has eliminated check posts across the nation and thereby waiting time, leading to at least 12-15% reduction in the turnaround time of trucks. Better utilisation of assets like vehicles and warehouses will lead to efficiency and increased productivity thus lowering overall cost. This would considerably benefit the supply chain directly and India’s growth indirectly. The manufacturing and other services sectors have now started planning their supply chains, bearing in mind fleet cost and fast delivery, rather than tax structure and compliance. The much-awaited ‘infrastructure’ status to the sector was conferred in November 2017, which is helping the sector avail cheaper finance (2% lower) for its warehousing and cold storage needs. This will bring in a lot more players with an integrated service approach that would again help Indian manufacturers. New investments in this sector is good news as it could create a lot more jobs in the near future. Together, the implementation of GST and other reforms have already started bringing efficiencies into the supply chain of various firms. Digitisation, asset utilisation and visibility enhancement are facilitating better value-added outsourcing to logistics firms. The government, too, has realised that aspirations for economic growth, employment generation, manufacturing and exports are all inextricably linked to efficient management of logistics.
Source : https://www.thehindu.com/todays-paper/tp-business/gst-a-game-changer-reform-for-logistics-sector/article25533910.ece
