Budget 2020

Logistics sector seeks tax sops

Lalatendu Mishra MUMBAI 22 June 2019 22:42 IST
Updated: 22 June 2019 22:42 IST

Calls for fiscal incentives for digitisation, skill building

The logistics sector is looking for rationalisation of taxes in the forthcoming Budget besides fiscal incentives for in-depth adoption of digitisation and skill building in the sector.

“The input credit norms for warehouse construction and operations needs to be relooked at. Currently, there is an accumulation of input tax that leads to high incidence of tax on warehousing services,” said Rajesh Jaggi, managing partner, real estate at Everstone Group.

He said since warehousing and logistics are gearing up for an in-depth adoption of digital technologies, the government should incentivise the adoption of various technologies in the sector, which would help in effective packaging and material handling, besides improving efficiency.

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Mr. Jaggi said any announcement on the roll-out of the National Logistics Policy that entails an Integrated National Logistics Action Plan, would serve as an optimised master plan to define logistics’ priorities across various Ministries, including Road Transport Highways and Shipping, Railways, Civil Aviation, Department of Posts and user ministries such as Coal, Steel and Mines. This would be a positive for the sector, he said.

‘Top of agenda’

Experts said the logistics industry, with its potential for empowering economic growth, should be on the top of the agenda for the new government.

“Efficient logistics will not only provide better and cheaper mobility but also deliver quick and substantial employment opportunities to semi-skilled and skilled job seekers. The sector can also provide critical mass to make India a superpower in artificial intelligence,” said Rohit Chaturvedi, CEO, TransportHub.

“In my view, a tax credit for technology spends can go a long way in encouraging the industry for faster adoption of technology. In addition, there should be a specific training budget through Skill India to train the workforce for future jobs in the industry,” he said.

Mr. Chaturvedi said there should be smart budget allocation for infrastructure development which should be done based on better data analytics especially when so much of data is available from toll plazas, industry surveys and other statistical measures. “This will ensure better bang for buck in short period and prioritise the investment in most effective areas,”he said.

As per a JLL India report in 2019, the logistics and warehousing sector would absorb about 38 million square feet of space, which would be higher than the average annual demand of 32 mn sq ft in the last four years.

As a result of the high demand from 3PL/logistics, engineering, auto & ancillary, e-commerce, FMCG, retail and telecom & white goods, the logistics sector is expected to grow to $ 215 billion by 2020, the JLL India report said..

The implementation of GST has prompted private equity firms to take greater interest in logistics and warehousing sector. As per a report by Anarock Property Consultants, private equity funds altogether had pumped in $1.1 billion in logistics and warehousing sectors between Q1 2017 to Q1 2019 as against zero investments during 2015 and 2016 combined.

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