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'Industry Status & Integrated Policy For Logistics'
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TCI hails the decision of the government to bring surface transport and shipping under one umbrella as a big and bold step that will lead to faster decision making by ensuring better co-ordination among ministries and departments. The government should now focus its attention on making the sector more competitive. However, the logistics infrastructure of the country needs urgent refurbishment. The sector is plagued with inefficiencies and high costs.
The priority areas that we feel that can take the sector forward include:
• An industry status and an integrated Policy for the logistics sector. Logistics itself is a large industry but is plagued with various inefficiencies and high costs. An integrated approach across multiple stakeholders across central and state governments is required. TCI suggests setting up a separate ombudsman for the logistics sector on the lines of the Insurance Regulatory & Development Authority or Telecom Regulatory Authority of India.
• Multimodal Policy for domestic market: Logistics Infrastructure is a critical enabler of India’s economic development. The country’s network of roads, rail and waterways will be insufficient as freight movement is set to increase about 3 fold in the coming decade. This shortfall in logistics infrastructure will put India’s growth at risk. Since a large part of India’s future logistics network is still to be built, an integrated and coordinated approach in which the development of each mode- railways, waterways & roads- is matched to the needs is the need of the hour.
We commend formulation of multi-modal policy for domestic market which addresses issues of GST,insurance, service tax, carriers act, railways act across modes. This will encourage adequate linkage of different modes of transportation. Uniformity and rationalization of taxes across modes is also recommended to promote optimum utilization of different modes of transportation thus making the sector efficient and competitive.
• Regulatory Framework: Abolition of Petrol/Diesel Cess: In view of the toll taxes paid by road users, there is no justification for cess on petrol or diesel in the name of Road Infrastructure Development Expenditure in Cash Disallowance of Sec 40A (3)
The existing limit fixed under Sec 40 A (3) of the Income Tax Act 1961 for payment of expenses at Rs 35000 is inadequate. as it is difficult to keep expenses in this range when transporters are plying vehicles across the country. The same should be enhance to around Rs 75000.
Law of Subrogation: The Insurance companies charge a premium and then go on to recover the same from Transporters under the Law of Subrogation. The carrier is not being paid anything besides freight and yet he is made liable for the goods. This is unjustified . If the carrier is paid a premium he can take liability for the goods. As the Insurance company is paid premium they should be liable for any losses.
Load Rating of bridges: The bridges do not display the maximum permissible load to be carried on bridges situated in India. This makes it difficult to estimate the loads that hydraulic trailers can carry while travelling over these bridges.
• Infrastructure Focus: The thrust on infrastructure to enable multimodal transportation would decongest the roads, reduce burden on the roadways, increase efficiency and overall reduce logistics costs.
Road transportation is very costly so the focus should be on creating multi-modal logistics hubs to give transporters choice of best modes. This will not only lead to efficient back-hauls from such hubs but will also make the cost of logistics more stable.
Given that India has a vast coastline and transportation by sea is cheaper in comparison to other modes of transportation TCI commends development of multi-modal ports on a priority basis to bring in efficiency to the sector. We also recommend creating multi-modal logistics hubs to give transporters choice of best modes. This will not only lead to efficient back-hauls from such hubs but will also make the cost of logistics more stable.
Coastal shipping and railways should be integrated with country’s road network to reduce pressure on the road infrastructure. This will lead to decongestion of roads thus making its safer apart from positively impacting carbon footprint of the sector.
• Long Term Planning and Financing for the sector: Presently, Transportation and Logistics Cos are not eligible to go for cheaper Foreign Currency funding by way of External Commercial Borrowing. ECB borrowing should be allowed to transportation/logistic companies for the purpose of investment into commercial vehicles, ships, construction of logistics warehouses, etc. Access to ECB will help save on interest part as margins in this highly competitive & fragmented industry are already too low and under pressure.
There is also a need to treat warehousing for non-agricultural commodities at par with infrastructure projects to encourage investment in warehousing industry.
GST should be implemented with immediate effect to enable the creation of the common market to permit free and unimpeded movement of goods and services across the country.
TCI being a pioneer in transportation and logistics sector recommends development multimodal logistics services. We look forward to extend all possible cooperation to the concerned Ministry or department in formulation of effective multimodal transport policy that will facilitate development of multi-modal transport network in the country for unimpeded movement of goods across the country.