Letter to FM: There is a need for GST to improve efficiency in supply chain management
Dear Mr Finance Minister,
There are many lacunae in the e-commerce sector pertaining to the last mile operations (delivery of goods) that need to be addressed, but let me start with the biggest concern—service taxation and infrastructure. Each state has its own tax system making it complicated to cross the borders. In case of bulky goods, especially, we are forced to set up warehouses in each state. This often adds to the overall costs, besides limiting our capability of servicing potential customers.
How will GST help e-commerce?
The best alternative to this form of taxation is the introduction of Goods and Services Tax (GST), which is already pending with the government. We feel the impending regulatory reforms in GST taxation are favourable for the growth of the e-commerce sector as it will rationalise supply chain and create common staking points, thereby offering better value.
GST would essentially simplify the tax structure and make India one single common market by eliminating state-specific barriers. It will promote interstate commerce and allow a more efficient supply chain. An integrated taxation policy will also allow faster movement of goods across the country.
For better delivery systems, we also require efficient transportation systems through roadways and railways. It takes two days to travel from Delhi to Mumbai while in the US it takes 10 hours to travel a similar distance. Inefficient road network has forced us to ship via air which is an expensive proposition. Implementation or speedy completion of the infrastructure projects can ease transportation of goods significantly.
Introduction of FDI
Finally, 100 per cent foreign direct investment (FDI) in B2C e-commerce will be a very positive step to infuse capital in the industry. The increased availability of capital will lead to more job creation across the country. SMEs will also benefit from being able to reach consumers more efficiently.
(Singh is CFO of HomeShop18.com. As told to Techcircle.in's Nikita Peer)
(Edited by Joby Puthuparampil Johnson)