Union Budget and its impact on logistics

1. March 2015 by
© 2015, ECFY Consulting Pvt. Ltd.
ISSUE
THEME
VOL 000
MARCH
2015
presents
Your monthly extract of the logistics world
Need of the hour : Identify Indian Logistics
as a Separate Industry
Page 02
GST is Finally Here
Page 04
India's Future : Logistics Parks
Page 06
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2. March 2015 by
Identify India Logistics
as a Separate Industry
• Viewing Logistics as a separate
industry will help in addressing
sector issues effectively.
• The decision of Government to
bring surface transport and
shipping under one umbrella is a
bold step. This will ensure faster
decision making and better
coordination among departments.
• Currently, the logistics
infrastructure of the country needs
urgent refurbishment.
Facts: Indian
Logistics Sector
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Valued at US $130bn
CAGR of 16% in 5 years
Total Freight Traffic
Road – 60% Rail- 32%
Shipping- 7% Air – 1%
Employs 45 mn people
Revenue - $385bn
(Expected by 2015)
Priority Areas to be looked
upon
• Multiple toll points on highways
reducing efficiency and adversely
affecting the turnaround time of
trucks.
• No uniformity in sales tax structure
on processed foods. Moreover
there is a high import duty on cold
chain equipment.
• No proper attention given to
develop facilities in warehouses.
• Too much documentation at check
posts/offices

3. March 2015 by
Here’s what Government urgently needs
to do for Indian Logistics Industry?
• An integrated policy for the sector
• Multi-Modal policy for the domestic market to
ensure adequate linkages of different modes of
transportation
• Tax benefits for expenditure on skill development
for skill set like driving, loading, picking, packing,
etc., logistics infrastructure up-gradation.
• Create multi-modal logistics' hubs to give
transporters the choice of best modes
• Modify law of subrogation to protect the interest of
logistics service providers
• Working GPS & Speed Governors should be
mandatory in all vehicles
Desired Logistics Infrastructure
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Roads
Provision for last-
mile connectivity to
terminals
Economic/Trade
Zones
Free Trade
Warehousing Zones
Ports
Presence of coastal
terminals at 200 km
terminals
Logistics Parks
Multi-modal parks
serving inaccessible
areas

4. March 2015 by
GST is Finally Here
The eagerly awaited reform has finally
got a thumbs-up in this year’s Union
Budget.
Been in the highlights for a while now,
Goods and Services Tax (GST) will be
introduced in India from April 1st 2016.
It is an effort by the Government of
India towards implementing a unified
taxation system.
What is GST?
Simply put, with GST, tax will be levied
only on the value added, which in turn
eliminates the current multi-stage
(Centre and State) taxes.
This avoids duplication of taxes, which
eventually reduces the final price to
the end consumer (who bears this tax),
making all related players competitive.
GST will play a critical role in next level
of growth and to truly realize the
country's potential as a global trading
hub.
Reforms
The implementation of GST
will subsume the following
taxes at the Central and State
level leading to simplification
of the Indian tax structure
4
# Subsumed
under CGST
Subsumed
under CGST
1 Central
Excise Duty
VAT/Sales
Tax
2 Additional
Excise
Duties
Entry Tax/
Octroi
3 Service Tax

5. March 2015 by
How GST is poised to change logistics
Standardization of tax rates will allow corporations to
move away from having warehouses in different states
to adhere to each state tax code
GST will make Indian Logistics competitive to meet the
international standards of cost of inventory holding and
transaction cost - one of the major weak links in global
competitiveness of Indian logistics companies
GST will facilitate the bringing up of logistics parks and
warehouses across India
“GST was the best way to mobilise revenue and reduce the
fiscal deficit.”
CRISIL
“Roll out of the tax would boost the GDP growth by anywhere
between 0.9-1.7 per cent.”
National Council of Applied Economic Research
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With GST coming in place, we can expect that it would be easier to supply goods and services
uniformly across the country

6. March 2015 by
India's Future:
Logistics Parks
India is uniquely positioned in terms of
its geographical size thereby generates
many big opportunities for domestic
distribution as well as manufacturing
for exports.
Growing business opportunities in
India is driving the need for Logistics
Parks in India. Their development
across the country for speedy delivery
has been expected from logistics
companies.
Hence, it becomes essential to grow
the domestic and international
distribution strength of the country.
Logistics Park
A logistics park is a development
concept in which distribution centers
are built in a park like setting providing
an inter-modal traffic-handling facility
Logistics parks include logistics centre,
distribution centre, transportation hub
facilities, transport organisation
management centre and logistics
information centre and offer many
value-added services.
Government has proposed Rs.1-trillion
investment in station revamp and
logistic parks (Rail Budget 2015)
What Logistics
Parks will offer?
 Large amount of
warehousing space at
specific place
 Ample truck and office
parking space
 Strategic location with
good road, rail and air
connectivity
 Reduce price in case of
perishable commodities
 Storage facility will
reduce cost of
production
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7. March 2015 by
Impact on supply chain
The existence of logistics parks has various impacts:
 Reduces transit time and processing time
 Optimizes use of all modes of transport minimizing
overall cost
 Provides easy access to value added logistics
services
 Improves service levels
 Introduces professionalism
 Leads to reduction in inventory and damages
“Facilities provided in logistics parks are better as compared
with standalone warehouses and if 3PL companies transfer
their operations to such parks then there will be significant
reduction in their logistics cost.”
Milind Shahane, Executive Director & CEO, Drive
India Enterprise Solutions Ltd - A Tata Enterprise
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