Executive Briefings

New Tax Will Transform Face of Indian Logistics Industry

India's greatest tax reform - replacing an array of provincial duties with a nationwide goods and services tax - is transforming the logistics industry in a country where moving stuff around is notoriously difficult to do, executives say.

The advent of organised retail and e-commerce began modernising warehouses in India a decade ago, but most firms still rely on musty, dilapidated "godowns," as storehouses are known colloquially.

The unified tax system is expected to bring change on a far grander scale, removing distortions created by differential taxes and duty structures imposed across India's 29 states and 7 union territories.

"When we moved from one state to the other, it felt like moving from one country to another," said Ramesh Agarwal, chairman of New Delhi-based Agarwal Packers and Movers.

From July 1, the new Goods and Services Tax, or GST, introduced by Prime Minister Narendra Modi's government, will change all that, with the biggest tax reform seen since India won independence from British colonial rule 70 years ago.

Companies that have previously based storage models on tax efficiency can move to the much more cost efficient, demand-based hub-and-spoke model used globally.

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The advent of organised retail and e-commerce began modernising warehouses in India a decade ago, but most firms still rely on musty, dilapidated "godowns," as storehouses are known colloquially.

The unified tax system is expected to bring change on a far grander scale, removing distortions created by differential taxes and duty structures imposed across India's 29 states and 7 union territories.

"When we moved from one state to the other, it felt like moving from one country to another," said Ramesh Agarwal, chairman of New Delhi-based Agarwal Packers and Movers.

From July 1, the new Goods and Services Tax, or GST, introduced by Prime Minister Narendra Modi's government, will change all that, with the biggest tax reform seen since India won independence from British colonial rule 70 years ago.

Companies that have previously based storage models on tax efficiency can move to the much more cost efficient, demand-based hub-and-spoke model used globally.

Read Full Article