MUMBAI: Calls are getting louder for freight carriers to immediately lower cargo-handling rates after the GST overnight removed interstate check posts and octroi gates, speeding up goods movement across India. Any tangible reduction in costs may, however, take longer to materialize.
Executives at leading companies say that they have requested their logistics service providers (LSPs) to reduce tariffs. Senior executives at four top logistics providers in India and a transportation company confirmed that clients have requested price cuts.
“Yes, customers have been asking us for a cut,” said Anshuman Singh, Chairman of the Warburg Pincus-backed Stellar Value Chain Solutions. “Union Minister Nitin Gadkari recently spoke about a 10%-20% reduction in logistics costs due to GST in the long run. Customers have taken a note of that and have immediately asked the LSPs to pass on the benefits.”
The GST replaces at least seven indirect tax heads including countervailing duty, special additional duty of customs, excise duty, service tax, Central sales tax, value-added tax, octroi and State cesses. Interstate movement of goods is now easier, with the check posts demolished.
Stellar Value Chain’s Singh said that there will likely be a 10%-20% cost reduction in the long run, but it was too early to gauge the extent of the savings and pass the benefits on to consumers.
Others concurred. “Road efficiencies should come through finally, but businesses will need to evaluate how much and when. For now, businesses in India are grappling with the first return filing and this could see a big cash flow out for all as credit pools are yet to build up,” said Amit Dawar, Senior Director, Value Added Services, South Asia, at DHL Global Forwarding.