A fair GST will help reduce logistics cost: Abhijeet Logistics

“The proposed Goods and Services tax (GST) will help companies reduce logistics cost by 1.5-2.5 per cent as they reconfigure their supply chains and bring in three key structural changes to the logistics industry. First, as India becomes one big market, there will be fewer and larger warehouses. Second, it will lead to a larger number of bigger trucks on road as there is greater adoption of the hub-and-spoke model. Third, these changes will lead to greater economies of scale for transport operators. Hence, more companies will outsource their logistics operations,” explains Abhijeet Verma, MD & CEO, Abhijeet Logistics.

Eliminating delays at check posts will yield an additional savings of 0.4-0.8 per cent of sales. When implemented, this tax will free the decisions on warehousing and distribution from tax considerations and here the technology will play its role in tracking of consignments, managing complete hub and spoke model, centralised accounting, managing warehouses effectively as warehouses will be fewer but larger, and most importantly this will result in more efficient cross-state transportation with improvement in transit time.