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Draft National Logistics Policy Should Incentivize Express Industry: EICI

Posted On: 2019-08-12 10:51:16

Express Industry Council of India (EICI), which represents leading express companies in the country, today said the government has overlooked express industry, especially air cargo segment, in the draft national logistics policy. EICI also said that air cargo delivery needs special focus to reduce logistics costs in the country.

"We laud the efforts in preparing the draft policy covering a broad spectrum of focus areas to drive the growth of Indian logistics sector. However, we note that the policy document does not focus on express industry and air cargo sectors, which are integral parts of the logistics network. The air express has also been overlooked in the multi modal mix even though air is an essential segment of the movement of goods," EICI Chief Operating Officer Mr. Vijay Kumar said.

He added that "in developing countries like India, an efficient air express infrastructure contribute directly to global competitiveness of the country by ensuring just in time deliveries and reduced clearance dwell time. Further, efficient express delivery industry acts as an economic catalyst by opening up new market opportunities, moving products and services with speed and efficiency".

The government had issued the draft national logistics policy early this year, aiming to reduce the logistics costs from 13-14% of GDP to 10% "in line with best-in-class global standards". The policy also seeks to optimize the current multi-modal mix, where road has a share of 60%, while railways account for 31% and waterways 9%, to bring the sector on par with international benchmarks (25-30% share of road, 50-55% share of railways, 20-25% share of waterways).

Aviation Turbine Fuel (ATF) is the single largest component of direct operating cost with a share of 40%. Excise duty and VAT charged by central and state governments, respectively, on ATF add another 30-35% cost. Making the matter worse, the GST regime disallows input credit on ATF, increasing the tax burden on express cargo airlines further.

"Such exorbitant costs severely affect the sustainability of express air cargo operations and excludes access into this reliable and speedy form of air transportation of items like perishables that would benefit both the producer and customer across the country and globally," Mr. Kumar said.

"The government should permit express cargo airlines to avail input credit of excise duty as was done before GST regime. ATF should be brought under GST and input credit on GST paid on ATF should be made available to express cargo airlines," he added. EICI represents both domestic and international express companies operating in India including Aramex, FedEx, Blue Dart, DHL, DTDC, First Flight, GATI, TNT and UPS.

EICI also suggested measures to streamline E-Way Bill system. "The onus of the EWB should shift from the transporter to the shipper as they have complete control on the content of the shipment. This will ensure that the right EWB is being generated and also impact the transit time positively as time bound delivery is a critical aspect in the express business industry."

"We also urge the government to introduce single window clearance for courier clearances to reduce EXIM dwell time. Skill development plans and training programs are required for the training of new roles such as last mile delivery associates, operations processing staff that work mainly with Express and Third party logistics (3PL) players, the government should focus on this aspect as well." Mr. Kumar said.

As per a Deloitte Report entitled 'Indian Express Industry - 2018 A multi-modal play in building the ecosystem', India's logistics sector is projected to be worth $215 billion by 2020-21. The industry's growth will be fuelled by the strides in manufacturing, retail, fast-moving consumer goods and e-commerce sectors. Development of logistics related infrastructure, like dedicated freight corridors, logistics parks, free trade warehousing zones and container freight stations, are expected to improve efficiency, the report added.


Source: Equity Bulls

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