Post-GST, travel time of trucks has reduced by a fifth: Govt

Post-GST, travel time for long- haul trucks have reduced by at least a fifth, Ministry of Road Transport and Highways has said.

"A typical truck spent 20% of its runtime at interstate checkposts (pre GST)...Inter-state check posts removed, travel time of long-haul trucks, other cargo vehicles cut by at least one-fifth," the Ministry has said in a recent report.

On an average, a truck in India runs an annual distance of 60,000 kms, as against 200,000 km in the West.

The Ministry said trucks earlier took 50-65 hours in reaching Kolkata from Chennai and the travel time now stands reduced by 20%.

This was corroborated from interviews with transporters as well as GPS data of express transporters.

Road Transport and Highways Minister Nitin Gadkari, had last week said that India's logistics sector stands to gain the most under the GST regime as costs will dip by almost 20%.

The Ministry said that pre-GST, the complex tax structure and paperwork forced the transport industry to spend a lot of resources on tax compliance and deposit of inter-state sales tax.

Monitoring and collection of sales tax at inter-state check posts led to major traffic congestion at these points, resulting in slower movement of freight and passenger, and consequently higher costs and pollution, it said and added, an average Indian truck covers only about 50,000-60,000 km a year as against 3 lakh km done by a truck in the US.

The unified tax regime has obviated the need for inter- state check posts. This will result in reducing travel time of long-haul trucks and other cargo vehicles by at least one- fifth, the report said.

"This, coupled with the proposed E-way bill that will require online registration for movement of goods worth more than Rs 50,000, will ease the movement of freight further, and bring in more transparency to the whole process. Efficient freight movement will also boost the demand for high tonnage trucks, which will in turn reduce the cost of transportation of freight," the report said.

A single GST regime also means an optimised warehousing structure.

Earlier, companies had to maintain warehouses in every state due to different taxation slabs. GST does away with the need to have such separate warehouses. This means, a leaner and smarter logistics chain. This will also encourage more investment in the warehousing business.

Pre-GST, the statutory tax rate for most goods worked out to about 26.5%.

"Post-GST, most goods are expected to be in the 18% tax range," the government said.

India currently has very high logistics cost - about 14% of the total value of goods, as against 6-8% in other major countries.

GST will serve to bring down the logistics cost to about 10-12% by facilitating efficient inter-state flow of goods and accelerating the demand for logistics services.