Business

GST’s E-Way Bill is Logistical Nightmare for India’s Air Express Industry

The numerous conditions and riders attached to how the e-bill system functions will almost certainly hamper ease of doing business.

The numerous conditions and riders attached to how the e-bill system functions will almost certainly hamper ease of doing business. Credit: PTI

The numerous conditions and riders attached to how the e-bill system functions will almost certainly hamper ease of doing business. Credit: PTI

India sits at number 35 on the World Bank Logistics Index, which takes into account multiple variables such as customs, infrastructure, international shipments, logistics quality and competence, tracking and tracing, and timeliness.

As Prime Minister Narendra Modi pushes for better standards in ease of doing business, bolstering the economy by way of the ‘Make-in-India’ initiative and looking to bring in increasing amount of foreign investment, it is important for us to analyse India’s logistics backbone accordingly.

While GST is expected to boost India’s ease of doing business rankings, it is still unclear if the big bang tax reform will yield similar results for the logistics sector in general and the air express industry in particular.

The following table represents India’s logistics performance rank under various categories.

2007 2010 2012 2014 2016
Overall Rank 39 47 46 54 35
Customs 47 52 52 65 38
Infrastructure 42 47 56 58 36
International shipments 40 46 54 44 39
Logistics quality and competence 31 40 38 52 32
Tracking and tracing 42 52 54 57 33
Timeliness 47 56 44 51 42

Source: World Bank

The Rs 20,350 crore Indian air express industry – which creates six indirect jobs for one direct job and handles roughly 30 million shipments on a daily business – has voiced concerns on the ‘e-Way bill’, which comes as part of the GST reform. The big boys of the express delivery services (EDS) industry, including DHL, Blue Dart and FedEx, believe that the very construct of e-way bill is contrary to the core competency of the express industry, i.e. time-bound guaranteed delivery of shipments.

As per the CBEC guidelines, any movement of goods exceeding the value of Rs 50,000 cannot be made by a registered entity without an e-way bill. This bill can be generated at the GSTN portal or through an SMS. However, with the extent of information solicited by the e-way bill, the industry sees existential challenges in complying with the process requirements.

Practical difficulties

Firstly, the bill aims to capture certain information such as vehicle registration number and driver details from express/courier and multi-modal transport operators prior to the movement of goods of consignment.

In the existing business models, multiple individual consignments are collected by the EDS operator (delivery boys on foot, e rickshaw, bicycle in addition to vans or motor bikes). Moreover, when these individual shipments are received at a hub, they are sorted and allotted vehicles depending on cost and time optimization algorithms. Not only is it impossible to give registered vehicle numbers for delivery boys on foot, allotting transport vehicles well before the shipments reach the sorting centre would hamper efficiency, hurt cost and impact delivery commitments.

Secondly, a new bill is required every time a shipment moves from one vehicle to another. In the express industry, which is dominated by real time decisions and cost optimisation, pronouncing the exact path and mapping the same to specific vehicle numbers will be a formidable operational challenge.

Exemptions, liability

All consignments of value less than Rs 50,000 are exempted from an invoice at the time of shipment. However, the express delivery service provider still needs to submit details related to the particular shipment on the common portal, before the shipment is moved. This creates an additional liability for the delivery provider, since the value is declared by the customer – the delivery provider is merely an agent to move goods from one location to another. It would be unfair to hold the delivery provider responsible for goods if the value is not the same as that declared by the sender.

It is imperative for us to appreciate the distinct way that India’s EDS model operates. Considering that its  services are extremely sensitive to time and accuracy, any lag in the delivery process on account of compliance would be insensitive to the industry as a whole. It is important to take cognisance of the role that the air express industry has played in facilitating India’s trade competitveness. 

Validity of e-way bill

As per the CBEC guidelines, e-way bills come with an expiry date. The validity period of a bill is dependent on the distance the goods have to be transported.

Distance Validity period
Less than 100 km One day
100 km < Distance < 300 km Three days
300 km < Distance < 500 km Five days
500 km < Distance < 1,000 km Ten days
More than 1,000 km Fifteen days

Once an e-way bill expires, its validity can be extended by notifying the commissioner.  

However, the very fact of assigning an expiry date to an e-way bill is incomprehensible for two reasons. One, the industry itself is based on tenets of time-bound delivery. Thus, prescribing a time limit for this business is absurd. Two, we all would agree that on multiple occasions, it is possible that these timelines are breached. Straightforward situations like a fallen tree on the road, metro rail repair, or even a VIP visit in a city can lead to unknowable delays. Inter-city delays in India are anyways commonplace and doomed.

So, what can be done?

If and only if the consignment needs to be tracked based on the vehicle number, it  should be done only from the first point of collection, up to the last collection node. Not only is the vehicle number not applicable in multiple instances of first/last mile delivery of individual shipments (delivery on foot/public transport), it will also impact business spontaneity, discourage exception handling (medicines etc.) and reduce resource optimisation.

Shipments where the declared value is less than Rs 50,000 should be excluded from consolidated e-way bill that the delivery provider is mandated to submit.

The ‘Way Bill’, a state-specific bill that was expected to die a natural death along with VAT, has transcended in its new avatar, the e-way bill.

Considering the modalities of e-way bill are expected to be discussed by the GST council on August 5, 2017, one can only hope the overarching objective of GST, that is the simplification of processes and enabling ease of doing business, will be continue to be the order of the day.

Gunja Kapoor is an associate fellow at the Pahle India Foundation.