Business

‘Draft policy on logistics ignores express industry’

Bring ATF under GST, says association

The draft National Logistics Policy, released by the government earlier this year, has overlooked the role of the express industry (courier and parcel) and air cargo sectors in the multimodal transport mix for faster and cost effective movement of cargo, Express Industry Council of India (EICI) said.

“We note that the policy document does not focus on the express industry and air cargo sectors, which are integral parts of the logistics network. The air express has also been overlooked in the multimodal mix even though air is an essential segment of the movement of goods,” Vijay Kumar, chief operating officer, EICI, said in a statement.

He said in developing countries such as India, an efficient air express infrastructure could contribute directly to global competitiveness of the country by ensuring just-in-time deliveries and reducing clearance dwell time.

The government had issued the draft national logistics policy with a target to bring down logistics costs from 13-14% of GDP to 10% “in line with best-in-class global standards.”

The policy also seeks to optimise the current multimodal 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).

For the air cargo sector, aviation turbine fuel (ATF) is the single largest component of direct operating cost with a share of 40%.

Excise duty and value-added tax, charged by central and State governments on ATF, add another 30-35% to the cost.

Making the matter worse, the GST regime disallows input credit on ATF, increasing the tax burden on express cargo airlines further, EICI said.

“The government should permit express cargo airlines to avail input credit of excise duty as was done before the GST regime. ATF should be brought under GST and input credit on GST paid on ATF should be made available to express cargo airlines,” Mr. Kumar added.

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Printable version | May 29, 2020 6:58:28 AM | https://www.thehindu.com/business/draft-policy-on-logistics-ignores-express-industry/article28977685.ece

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