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