June 03 , 2017
“Sagarmala can bring down logistics costs”
Prakash Tulsiani, Executive Director & COO, Allcargo Logistics Ltd, says that the smooth rollout, implementation and execution (with minimal or no business interruption) will be the deciding factor for the success of GST.
How much of an impact do you think the rollout of the Goods and Services Tax (GST) will have on the sector as a whole?
Our country currently spends around 14 per cent of its GDP on logistics compared with developed countries where this percentage is around 8-9 per cent. Implementation of GST will create a single window clearance and uniform tax structure across the country, thereby creating a common ground without differentiating (between) interstate and intrastate sales. GST implementation will compel manufacturing and retail companies to restructure their warehousing policies. As such a move will be very capital intensive, companies will the same to professional and experienced logistics solution though we have 2.6 million sq ft of warehouses across 20 locations in India, we continue to identify suitable locations to increase our footprint. From the preparedness point of view, we continue to monitor policy announcements which may have business implications of GST implementation. With the GST Council the GST rate structure, internally we have started prepping with the possible revised tax and accounting system. The smooth rollout, implementation and execution with minimal or no business interruption will be the deciding factor for the success of GST, one of the radical reforms productively.
How is the government giving a thrust to the shipping & logistics sector?
The Union Budget of 2017-18 has laid a 25 per cent increase in allocations for infrastructure over last year. There has also been a renewed focus on transportation, development of port infrastructure and its automation. Rather than lead to reduction in delays, improve cost- heightened pace of road construction would lead to connectivity to major production and consumption centers, thereby aiding business and the sector. The dedicated rail freight corridor and implementation of GST will help improved customer experience. project are set to play a shipping. For the project to realise its full potential, there is a need for development of industries in and around ports which will ensure there is cargo movement both ways. The the government and other infrastructure-led are a positive reinforcement in this direction.
Around 15 per cent of a product’s landed cost is made up by logistics. Will this scenario ever change?
Our country is moving at a good pace in dedicated rail freight corridors (DRFC), and development of roads and coastal routes in addition to implementation of GST, which will translate to bringing down the overall logistics costs in India and (bring them) closer to costs prevailing in developed/fast-developing economies.
What is your assessment on the Indian Railways’ efforts for seamless connectivity of shipments, or will the roads sector continue to account for the maximum movement?
The government has had a renewed focus on the issue of connectivity through railways — if one is to go by the recent announcements. With 21 port-rail connectivity projects under the Sagarmala programme, the rail ministry will invest close to Rs 20,000 crore to develop and improve the railways for better connectivity of shipments. This in turn would be complemented by the Bharatmala project which aims to improve port connectivity in the country by improving the connectivity of national highways to coastal and border areas. One of the major hindrances to move cargo by rail is the high cost, as compared to road and coastal movement. Hence, the popularity of movement through roads. The testimony to the fact that seamless connectivity through railways is on the cards.
Has the government done enough to address the road safety situation?
Road safety has been one of the major areas rule out corruption. The new Motor Vehicles (Amendment) Bill 2016, once passed into law, other safety violations. The law would also de-of continuous driving, besides increasing awareness amongst the corporates to hire and train them with improved standards of living. permit raj in the road sector. Online vehicle registration, Aadhaar-based licensing and a national vehicle registry are prominent (moves) to reduce the discretionary powers of the state and curb rampant corruption.
Lack of adequate draught and absence of portside connectivity have been the two major challenges impacting port-led development. Can these obstacles be overcome?
Deep draught ports are the need of the day, especially with increased vessel sizes and increased Indian trade volumes. We are seeing port — JNPT — has in the last 18 months increase the draught. Port-side connectivity is also being addressed with rail and road connectivity better inland transportation. been initiated.
How can schemes like Sagarmala bring down the logistics cost in the country?
A study released by the Ministry of Shipping estimates that the Sagarmala project can save up to Rs 40,000 crore per year on of cargo using the coastal shipping line — rail transport. Sagarmala aims to leverage to drive industrial development, thereby reducing the load factor of goods transported through roads.