Budget 2015: Expect industry status for the logistics sector, says Vineet Agarwal, TCI

By Mr. Vineet Agarwal, Managing Director, Transport Corporation of India Ltd
TCI hails the decision of the government to bring surface transport and shipping under one umbrella as a bold step that will lead to faster decision-making by ensuring better co-ordination among ministries and departments. The government should focus its attention on making the sector more competitive. The following recommended initiativeswill take the sector forward:

1) Industry status and an integrated policy for the logistics sector

A separate ombudsman on the lines of TRAI, or industry status to address sector issues effectively.

2) Multimodal Policy for the domestic market

-A national level policy to define the blueprint of infrastructure development to encourage adequate linkages of different modes of transportation and hence achieve holistic and balanced multimodal mix.

-Uniformity and rationalization of service taxes across modes to promote optimum utilization of all modes of transportation.

-Development and integration of multimodal logistic parks to improve storage facilities, reduce transport costs, and enhance efficiency of the entire logistics network of the country. Large scale projects such as the development of large container terminals should be integrated with hinterland connectivity projects and emphasis should be placed on last-mile connectivity network. We also recommend continued privatization of container operation by Indian Railways.

-Comprehensive policy framework for the air freight sector to meet the growing demand and improve efficiency of off-airport facilities for cargo processing, handling for clearance and customs procedures.

3) Regulatory Framework

-Tax benefits for expenditure on skill development for skill set like driving, loading, picking, packing, etc.,logistics infrastructureup-gradation.

-Currently there is a high duty for liquid bulk tanktainer which needs to be reduced.

-CENVAT credit for road transport services and coastal shipping services and relaxation in norms for point of taxation for payment of service tax by Goods Services Transport Agency (GTA).

- Enhance the existing limit fixed of cash payments under Sec 40 A (3) of the Income Tax Act 1961 for payment of expenses from Rs. 35000 to 75000 as it is difficult to keep expenses in the existing range when transporters are plying vehicles for long distances across the country.

- Treat warehousing for non-agricultural commodities at par with infrastructure projects to encourage investment in warehousing industry.

- Implement GST to enable the creation of the common market and permit free and unimpeded movement of goods and services across the country.

- Service Tax - Reverse Charge Mechanism should be applicable only in the case of Import of Services from outside India.

- PAN no. should be mentioned in RC, Permit and Insurance for transporter to save time in engaging vehicles.

- Working GPS & Speed Governors should be mandatory in all vehicles.

- High Security Registration plate should be made compulsory in all states.

4) Infrastructure Focus

- Createmulti-modal logistics' hubs to give transporters the choice of best modes.

- Man inter-state check post adequately and creategovernment warehousesto ensure safecustody of goods which are not allowed to enter into states due to sales tax documents.

- Separate warehousing space for cargo handling and storage apart from vehicle waiting facility at airports.

5) Long Term Planning and Financing for the sector

- Access to ECB borrowing to fund capital expenditure plans of logistics firms.

6) Law of Subrogation

- Modify law of subrogation to protect the interest of logistics service providers. Currently, transporters liability is fixed under Carrier Act and they are made liable for goods for which they are paid only freight charges while Insurance companies charge a premium from the client for insuring goods.

The new government has already taken many steps to stimulate growth since it assumed office in May 2014. We hope that this trend will continue and that many more initiatives will be announced in the Union Budget of 2015-16 to bring the sector on a sustained growth path.