The E-Way Bill will give a shot in the arm to the logistics sector

Anjani Mandal, Co-Founder/CEO,Fortigo Network writes for BW CIO in an exclusive on why the E-way bill is the need of the hour.

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In 2017, India jumped 19 places on the World Bank Logistics Performance Index (LPI) over the previous year, improving to 35. The government expects the Indian logistics sector to grow to $360 billion by 2032 from the current $115 billion (KredX, 2017). Facilitating this improvement of the sector would be the implementation of the E-Way Bill. 

The recent discussions on the E-Way Bill have left the players from the logistics industry in a conundrum. Road Transportation being a largely unorganized industry, information and misinformation has been used to push and pull in different directions by different vested interests. The initial move towards execution of E-Way Bill was made in mid-2017, and was followed by a series of iterations and has now been finally set for 2018. The mandatory compliance for inter-state movement will be in force from February 1 next year. As per the schedule for its implementation, the nationwide law is set to be rolled out on a trial basis by January 16, 2018. Trade and transporters will now be able to use it on a voluntary basis, from January 16. 

With this, it is expected, that the organized part of the long-distance logistics industry shall finally be nudged in the right direction viz., towards the E-Way Bill, thereby supporting the move to expand the organized share of the Indian Economy. 

Marching towards the E-Way Bill 

The introduction of the E-Way Bill, has been projected by many as a possible impediment to the easy movement and a potential cause for significant delays enroute -- it might very well be the opposite. It has the potential to further reduce the time to delivery in long-distance transportation. This can be possible if (a) the consignors / consignees pre-declare their consignments on the GST portal, (b) insist on Transport Service Providers to use "RFID-tagged and identifiable" trucks and (c) the Regulatory Bodies uniformly give a “free pass” at check-points to the extent of 99% of the time. 

From the Regulatory perspective, significant "leakage" of taxed production from a factory is possible in the absence of  a "chain-of-custody" through the production and distribution chain i.e., from declaring a sale to the actual movement along with the delivery, followed by the actual receipt by recipient; and claiming input credit by the recipient.  The E-Way Bill helps provide a mechanism for this “chain-of-custody” and can be made very effective if such organizations and Logistics Service Providers with a reputation for compliant and “clean” business operations are given a preferential treatment by Regulatory Bodies – and get a “free-pass” at all check-posts in 99% of instances. This is not a new concept to the Indian Regulatory bodies. This preferential treatment would be akin to the “Star Trading Houses” that Customs practices – but would be on a much large scale and with significantly higher impact.

 

This practice will weed out the service providers, largely unorganized, that caters to the segment moving goods without paying requisite taxes - thereby supporting the increase in the share of the compliant section of the Indian economy. Post the bold move of demonetization and GST, the implementation of the E-Way Bill will put the logistics sector on a path to progress. 

Ensuring a smoother travel 

The identification of trucks would be smooth with the combination of RFID (Radio-frequency identification) linked to the truck registration number. This, along with consignments on the truck identifiable with invoice and goods being carried through would be smooth sailing. As a result of the bill, there may not be many cases of tax evasions and they would thus get a "free-pass" during movement. 

Summary 

While many are still apprehensive about the move, it would only benefit the sector and lead to its further growth. A move in this direction would certainly aid India's logistics ecosystem and will lead to a reduction in cost of road freight. Players in the organized sector should have a positive outlook when it comes to the implementation of this law.

 


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