S.C.O.P.E 2016 – Day 1 SOCIUS – Panel discussion – GST Reform: A path-breaking legislation for logistic sector: Perspective on Industry readiness in reaping its benefits

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Excerpts from the discussion:

Mr. Padmanabha Holla – Vice President– Products at Forus Health Pvt. Ltd

Mr. Padmanabha Holla began by saying that GST (Goods and Service Tax) would impact the sale of medical devices since the current tax rate (Excise and VAT – 11.5%) will increase to around 18%. The medical fraternity is lobbying to exempt medical devices from falling under the purview of GST.  Since medical devices are low volume products, there are no significant logistics challenges faced by the industry.

Further, he said GST will help reduce red tape and make the taxation system more transparent. It will also ease operations and reduce the resources required to maintain tax records and compliance. He concluded by saying, hospitals and vendors have developed a nexus where the decision makers get a cut which is a major challenge.

Mr. Raj Sivakumar – Corporate Senior Vice President and Head Travel Strategy and Technology at WNS Global Services

Mr. Raj Sivakumar said there are still many questions which are unanswered regarding the impact of GST in the aviation industry. Carriers such as IndiGo have increased capacity much to the benefit of consumers. Low affordability and a price sensitive market have strained the profit margins of the aviation industry. This is the only industry which is the most taxed in the world. 45% of the operating cost is due to fuel and taxes levied by the central and state governments.

With the implementation of GST service tax would go up from 6-8% to 18% and tax would be levied on both inbound and outbound flights. He said the aviation industry must re-invent itself by increasing capacity, reducing distribution costs, and selling more tickets. He emphasized that support is required from a regulatory standpoint.

Prof. RamaKrishna T S- Associate professor at TAPMI

Prof. RamaKrishna started the discussion by sharing his view on the contribution of agriculture towards the GDP. As a country develops, the share of agriculture in GDP decreases. He said that, though the service tax is 14.5%, we as customers are paying 24% tax on the price of products. Tax on manufacturing sector is higher and that in the service sector is comparatively lower.

He carried on the discussion by saying that GST has two major impacts.  First, it will terrifically boost the manufacturing sector. Second, it will improve the logistics, especially in transport. He stated that the challenge India is facing in the logistics system is not due to poor roads but due to excess state levies. GST will contribute towards the reduction of this problem. Trucks will travel 260-460 km a day, whereas in U.S.A trucks travel 650 – 800 km a day.  He concluded by saying that, as logistics cost reduces, input cost will also reduce.

Mr. Rohit Sarma, Manager – Supply Chain Consulting at Chainalytics

Mr. Rohit Sarma started by stating the impact of GST in various domains in the coming future. The short term effects include training and logistics of the company, network and trading are affected on a medium term while manufacturing and military industries are typically impacted by the long-term effects.

He went ahead by suggesting the various initiatives that can be introduced to cope up with the post-GST scenario. A successful integration and implementation of various systems post-GST measures is one such important initiative.

Mr. Rohit highlighted the importance of such measures in the inland shipping industry. Multi-model systems comprising end to end travel and transportation need to be installed. He concluded by saying inland shipping is one of the most cost effective and sustainable methods which, when fully operational, would provide a major relief to the supply chain management process.

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