Indian Road Logistics Sector:

Has GST been a game-changer?

June 2018

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Executive Summary
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The GST regime,
Railway’s marketwhich got implemented
share in from July 2017, was expected to have significant impact on the road logistics sector.
By doing away with state-level check-posts, GST was expected to reduce turn around time, lead to consolidation of
overall freight movement has
warehousing network and thereby bring in efficiencies in road transportation. With greater tax compliance and introduction of
contracted
E-Way bill,over the
a shift years of organised logistics companies was also expected to be another outcome of GST regime.
in favour

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With almost a year into its implementation, we conducted a comprehensive channel check with approximately 50 transporters
across all regions in India and 15 consumer-oriented companies to gauge the ground level impact of GST. Some of the key
findings from our channel check are as follows:
a. Turnaround Time: Post GST, turnaround time has certainly reduced by almost 18-20% as abolition of check points at state
borders have reduced waiting time. Over 90% respondents reported positive impact on their truck journey time post GST.
b. Warehouse Consolidation: Companies across sectors have either begun or are in the process of consolidating their
warehousing network to reduce the logistics cost, primarily warehouse maintenance and loading/unloading expenses.
c. Warehouse consolidation trends have been pronounced in sectors like tile manufacturing, while sectors such as FMCG and
consumer durables have not altered their supply chain network to maintain customer servicing and product availability.
d. Cost Reduction: Costs savings due to logistics efficiencies post GST are yet to be realized and approximately 40% of
respondents reported increased costs with compliance requirements of GST proving to be an additional cost burden.

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Implementation of E-way bill from April 2018 has had a positive impact on the road logistics sector, as reported by 80% of
respondents. In the two months since implementation, there has been significant reduction in paper work, improvement in
operational efficiencies and time-savings without significant technical glitches, benefiting the players across the value chain.
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 Contact Details

Subrata Ray Shamsher Dewan

Senior Group Vice President Vice President

subrata@icraindia.com shamsherd@icraindia.com

022-2433 1086 0124-4545 328

Sreejan Dutta Sruthi Thomas

Senior Analyst Senior Analyst

sreejan.dutta@icraindia.com sruthi.thomas@icraindia.com

0124-4545 396 0124-4545 822

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