Draft national logistics policy overlooks express industry: EICI

August 9, 2019: The Express Industry Council of India (EICI) has noted that the draft national logistics policy overlooks the express industry, the tax burden caused by Aviation Turbine Fuel (ATF), and suggested measures to streamline E-Way Bill system.

EICI also said that air cargo delivery needs special focus to reduce logistics costs in the country. EICI represents both domestic and international express companies operating in India including Aramex, FedEx, Blue Dart, DHL, DTDC, First Flight, GATI, TNT and UPS.

According to the draft national logistics policy issued by the government early this year, the aim is to reduce the logistics costs from 13-14 percent of GDP to 10 percent “in line with best-in-class global standards”.

The policy also seeks to optimise the current multi-modal mix, where road has a share of 60 percent, while railways account for 31 percent and waterways 9 percent, to bring the sector on par with international benchmarks (25-30 percent share of road, 50-55 percent share of railways, 20-25 percent share of waterways).

“We laud the efforts in preparing the draft policy covering a broad spectrum of focus areas to drive the growth of Indian logistics sector. However, we note that the policy document does not focus on express industry and air cargo sectors, which are integral parts of the logistics network. The air express has also been overlooked in the multi modal mix even though air is an essential segment of the movement of goods,” EICI said. It also stressed on the role of efficient express delivery industry as an economic catalyst.

EICI also raised the issue of Aviation Turbine Fuel (ATF) being the single largest component of direct operating cost with a share of 40 percent, with excise duty and VAT charged by central and state governments adding another 30-35 percent cost. The GST regime disallows input credit on ATF, increasing the tax burden on express cargo airlines further.

“Such exorbitant costs severely affect the sustainability of express air cargo operations and excludes access into this reliable and speedy form of air transportation of items like perishables that would benefit both the producer and customer across the country and globally,” EICI said.

“The government should permit express cargo airlines to avail input credit of excise duty as was done before GST regime. ATF should be brought under GST and input credit on GST paid on ATF should be made available to express cargo airlines,” EICI added.

Among other suggestions, EICI advised on shifting the onus of the E-Way Bill from the transporter to the shipper as they have complete control on the content of the shipment. It also urged the government to introduce single window clearance for courier clearances to reduce EXIM dwell time. "Skill development plans and training programs are required for the training of new roles such as last mile delivery associates, operations processing staff that work mainly with Express and Third party logistics (3PL) players, the government should focus on this aspect as well.” EICI said.

The EICI report quoted a Deloitte Report entitled ‘Indian Express Industry – 2018 A multi-modal play in building the ecosystem’ which projects India’s logistics sector to be worth $215 billion by 2020-21.