‘Removal of GST on exports will ensure financial liquidity & business sustainability’

Dinesh Krishnan, Chairman, ACAAI Southern Region says, “The global and Indian freight forwarding industry operates within a framework of strict national and international regulations. A significant proportion of the industry comprises SME’s, dedicated to addressing the diverse and dynamic needs of the export and import communities which are again a major SME sector. In recent years, GST administration and compliance regulations have imposed considerable challenges for the logistics industry in tax administration and compliance. A lack of nuanced understanding of the sector’s unique operations by policymakers, coupled with poor coordination between central authorities and state level tax administrators, has left the industry grappling with uncertainties and inconsistencies. The introduction of GST on international freight has particularly disrupted the industry’s financial stability. It is a revenue neutral manufacturing / trading EXIM customer’s tax burden, imposed on the freight forwarding community in the form on GST on air and ocean freight.  This has created an artificial financial crises and fund flow strain by locking freight forwarders business funds with the government and waiting for GST credit offset or refunds on GST for overseas billing. Crores of freight forwarders funds are stuck with GST refunds, beside rampant notices from the authorities, creating a liquidity tsunami and more expenses on tax administration across the country. The consequences have been severe since the GST on freight, numerous freight forwarders have shut down, while others are being driven out of business unbale to a bare this burden on blocked funds & tussle with GST authorities. This attrition risks leaving the burgeoning EXIM (export-import) trade reliant on a limited number of service providers, potentially creating monopolistic conditions and supply chain inefficiencies in the long term. Immediate action is required to address these pressing issues. Specifically, the logistics industry calls for:

1. A thorough review of taxation policies to align them with the unique dynamics of the logistics sector
2. Removal of GST on international freight, ensuring financial liquidity and sustainability for businesses.
3. Streamlined compliance processes across the sector, to enable us to remain focussed  on the core mission of facilitating smooth EXIM operations in India.

The Indian logistics sector is a vital enabler of trade and economic growth trigger. Instead of being bogged down by bureaucratic hurdles & unproductive tax regimes it deserves robust governmental support and policies that promote ease of doing business.A financially stable and thriving logistics industry is essential for India to maintain its position as a global trade hub and to unlock the full potential of its EXIM trade.”