Indian Logistics Industry is expected to grow at a CAGR of 8.6 percent between 2015 and 2020, which grew at a CAGR of 9.7 percent during 2010-2015.

1. Impact of GST on Logistic company
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2. INDUSTRY OVERVIEW
Indian Logistics Industry is expected to grow at a CAGR of 8.6 percent
between 2015 and 2020, which grew at a CAGR of 9.7 percent during
2010-2015.
Transportation and Communication accounted for 7.0 percent of the
nation’s GDP in 2015, accounting for around US $130.44 billion.
The Indian logistics industry is fragmented and under developed. Logistics
costs are relatively high due to poor physical and communication
infrastructure; high dwell time at ports; low levels of containerization; and a
multi-layered tax system contributing to significant delays at border
crossing points.
With GST Government reform initiatives, promotion of manufacturing and
trade, improving investment climate are expected to transform the industry
and drive growth between 2016 and 2020.
Development of transportation and logistics-related infrastructure such as
dedicated freight corridors, logistics parks, free trade warehousing zones,
and container freight stations are expected to improve efficiency.

3. IMPACT OF GST IN GENERAL
INCREASE TAX BASE :
GST is a multi-stage tax, it
provides for an input tax credit
mechanism, and since every link in
the value chain, including dealers
and distributors, will require
evidence of compliance by its
preceding link to claim the required
set-offs, it is likely to broaden the
tax base by increasing voluntary
compliance.
GST WILL BOOST DIRECT TAX:
GST implementation is likely to result
in lifting direct tax collections as: (1)
GST payments by tax-payers will be
linked to their respective Permanent
Account Number (PAN); (2) the
National Securities Depository
Limited (NSDL), which maintains the
Tax information System (TIN), will
also look after the GST database.
This integration of the indirect tax
system with the income tax system
will enable authorities to triangulate
information, thereby automatically
leading to improved tax buoyancy.

4. IMPACT OF GST IN GENERAL
ADVANTAGES TO INDIAN
ECONOMY:
The structural nature of this tax reform
is likely to create a better environment
for doing business in India over time,
which would create a platform for
higher economic growth. It will bring
down costs within the system, give
better control to government on
taxation, reduce unaccounted part of
the economy, thus adding to
government resources. This benefit
could be then used to fund India’s
development and increase its
competitiveness within the global
economy.
INFLATION IN THE INITIAL STAGE:
Implementation of the GST in the near-
term could bring some upturn in inflation;
however, the impact should be transitory.

5. IMPACT OF GST ON LOGISTIC COMPANY
Goods and Services Tax (GST), which promises to integrate India’s multi-layered
indirect tax system into a single unified one, unshackling India from its bureaucratic
web and improving the ease of doing business.
Logistics companies in India have evolved over the years from being mere first-
party logistics providers (1PL) to second-party logistics providers (2PL) to
integrated fourth-party logistics providers (4PL) by providing a complete package of
logistics services, including transportation, warehousing, pool distribution,
management consulting, logistics optimization, etc. and complementing them with
advanced supply chain facilities

6. MODEL OF LOGISTIC INDUSTRY AFTER GST
The proposed goods and services tax (GST) will help companies reduce
logistics cost by redesigning their supply chains with four key structural
changes
India becomes one big market, there will be fewer and larger
warehouses.
GST will result in larger trucks on road while the overall number of
vehicles will go down. The new tax will result in greater adoption of a hub-
and-spoke model in segments such as warehousing, cold chain, container
freight stations and inland container depots.
GST will also bring in scale to logistics companies as there will be a lot of
savings, stoppage of wastage and lower delays,
These above changes will lead to greater economies of scale for
transport operators and lead to more companies outsourcing their logistics
operations.

7. ADVANTAGES OF GST TO LOGISTIC COMPANIES
COST / TIME SAVING:
Bigger warehouses and end market driven logistics planning is likely to result in
meaningful costs savings over time. On account of entry taxes and heavy paper
work at state check posts, there is an additional 5-7 hours added to the transit time
for inter-state transport of goods. Abolishment of entry tax and easier tax
compliance procedures is likely result in easier movement of goods across the
country.

8. ADVANTAGES OF GST TO LOGISTIC COMPANIES
FORWARD INTEGRATION :
As these companies gather scale, that will enable them to offer services at lower
costs. As a result, companies for whom transportation is not a core part of their
business will increasingly outsource their logistics operations to third party logistics
(3PL) and fourth party logistics (4PL) service providers.

9. ADVANTAGES OF GST TO LOGISTIC COMPANIES
SINGLE RATE:
Standard tax rates will allow corporations to move away from the practice of
building a warehouse in different states to adhere to each state’s tax code. A big
packaged consumer goods company could thus make do with one large mother
warehouse at critical points in the country and employ logistics companies to
manage distribution and supply chains

10. DISADVANTAGES OF THE PRESENT SYSTEM
State-border checkpoints, which are tasked with material scrutiny and location-
based tax compliance, negatively impact the overall production and logistics time
and account for roughly 60% of a truck’s transit time

11. DEMAND OF THE LOGISTIC INDUSTRY
After much deliberation, petroleum has been brought under the purview of GST
but it will be exempt until a date announced by the GST Council. For logistics
industry, petroleum is one of the major inputs and it would be a welcome move if
petroleum were to be ‘non- exempt’ right from the start. This would enable logistics
companies to avail credit for the petroleum used in the course of providing logistics
services.

12. ADVANTAGE OVER RIVAL( due to predictability )
With GST when all check posts are gone, a truck that departs from Kashmir to
Chennai ,will reach on time. Goods will be delivered on time. Predictability levels
post GST will significantly improve. For Example if you are moving goods by air
,the price differential between air and road is nearly one-eighth. Once logistics
manager sees that he can manage his inventory in a manner where it gets more
predictable by road, people will switch more volume by road.

13. MAIN CUSTOMERS OF THE LOGISTIC INDUSTRY
Healthcare and pharmaceutical industry.
Auto and auto components industry
Lifestyle and ready made garments,
High tech, engineering and
Mobile telephone including base towers and mobile telephones.

14. CONCLUSION
GST has the potential to accelerate growth in the logistics industry. However, its
complete impact can only be understood after the announcement of the final GST
Law and Rules.
With GST’s imminent implementation, the logistics industry should start exploring
different supply chain models with their clients and at the same time develop a
completely synchronized ERP accounting system to support inventory supply
management as required under the GST regime.
GST is the game changer for the logistics industry and the industry is eagerly
awaiting for the rollout of GST.