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1.Market Observations, 8.Was Sticky

9 Jan 2018 (AFR) – India’s tax overhaul unleashes logistics revolution

(9 January 2018, AFR, p31, by Simon Mundy in Nagpur)

‘Indian lorries are perhaps the world’s most colourful, typically smothered with gaudy artwork depicting anything from peacocks to Bollywood stars. But for all its aesthetic richness, India’s trucking system has long been a laggard in efficiency. A damning 2014 World Bank report warned that up to 60 per cent of an Indian truck journey consisted of time spent stationary – much of this resulting from state border checks often more arduous than those at international crossings. India’s historic goods and services tax, which came into force in July, aimed to address this chronic drag on the economy. With the value-added taxes imposed by India’s 29 states now subsumed under a single national system, the need for tax enforcement at state border checkpoints has vanished, and most have been shut. The results have already been dramatic, says Shivkumar Rao, co-founder of R&Y Logistics, a freight-forwarding company. “Warehousing in Nagpur never made sense, because every time you crossed a state boundary, you had to pay sales tax,” Mr Rao says. “But GST is likely to change the whole warehousing and distribution paradigm.” ‘

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