How GST Has Revolutionized India’s Logistics Sector
The Goods and Services Tax (GST) has emerged as a pivotal instrument in streamlining India’s logistics landscape, as highlighted in the Economic Survey released on July 22. Under the ‘One Nation, One Tax’ system, the cumbersome delays encountered by trucks at state borders have significantly diminished, thereby reducing travel time by up to 30%.
This transformative shift has yielded a marked decline in logistics costs and has notably extended the average distance traveled by trucks. The Economic Survey for 2023-24, presented in Parliament, indicates that the average distance covered by trucks has risen from 225 km to a range of 300-325 km, underscoring the substantial benefits ushered in by GST.
Moreover, a study conducted by the National Council of Applied Economic Research (NCAER) in December of the previous year unveiled a decrease of 0.8 to 0.9 percentage points in the logistics cost as a share of GDP between FY14 and FY22. This development reflects a positive impact on the ease of doing business and the burgeoning manufacturing sector within the country, as outlined in the survey.
Furthermore, India’s ascent in the World Bank’s Logistics Performance Index (LPI) is a testament to the tangible outcomes of reduced logistics costs and enhanced trade facilitation. Rising from the 44th position in 2018 to the 38th in 2023 out of 139 nations, India’s improved standing is a direct result of concerted efforts to modernize and digitalize logistics processes.
The implementation of cargo tracking has led to a drastic reduction in dwell time at the eastern port of Visakhapatnam, plunging from 32.4 days in 2015 to 5.3 days in 2019. This accomplishment underscores the substantial strides made in modernization and digitalization, further contributing to India’s elevation to the 22nd place in international shipments as of 2023, compared to the 44th place in 2018.
India’s ambitious goals are underscored by its aspirations to reach the top 25 ranks on the LPI by 2030. The nation’s upward trajectory is mirrored in its rise by five places in infrastructure score and a four-place improvement to the 48th position for logistics competence and quality.
In conclusion, the impactful role of GST in reshaping India’s logistics ecosystem is undeniable, paving the way for enhanced efficiency, cost reduction, and heightened international competitiveness. As India steers towards its goal of breaking into the top 25 countries on the LPI, the enduring impact of GST on the logistics domain is set to define the nation’s economic landscape for years to come.
