It was indeed a proud moment for India when the prime minister made a compelling speech at the World Economic Forum, and promised a red carpet welcome for all those who wanted to explore Indian markets. His term has been marked with consistent reforms tethered firmly to providing an investor-friendly climate and vanquishing corruption.
However, implementing any of these forward-looking reforms appears to be an uphill task for his government’s technocrats. Less than two weeks after the prime minister made a strong pitch for a ‘New India’ in Davos, replete with mentions of India’s digital economy and an increased ease of doing business, we were back to square one. The much-awaited launch of the ‘e-way bill’ failed miserably on the very day of its launch – that is, February 1, 2018.
My first reaction was of complete disbelief. It was hard to believe that the e-way bill portal had crashed on the day of its launch. For a nation that exports its tech brains to all parts of the globe, this was much more than just a technical glitch.
Crucial part of GST
The e-way bill is a critical piece of the Goods and Services Tax (GST) framework. Its primary goal is to ensure that all goods which move within the length and breadth of India comply with the GST. Detailed modalities pertaining to the e-way bill are crafted to check for tax evasion and facilitate monitoring throughout the journey of goods. Last year, when the Bill’s framework was announced, it faced severe push back from the logistics sector for two reasons. One, it makes doing business very tedious. Two, the logistic services provider is imposed with additional liabilities which are beyond their capability and business requirements. Unfortunately, concerns of industry stakeholders continue.
Also read: India’s GST, Hyped as Another Tryst With Destiny, Remains a Half-Way House of Disruptions
Moreover, the separate deadlines for inter-state and intra-state e-way bills made matters worse, clearly increasing difficulties in doing business.
One nation, one bill, many dates
After much deliberation, the e-way bill was launched on February 1, 2018, but it failed to take off yet again, primarily on account of lack of foresight.
The GST council had initially announced two deadlines for transition to the new system. For movement of goods from one state to another, the date of implementation was February 1, 2018. For movement of goods within a state, the council had set a deadline up to June 1, 2018.
In the era of federal competitiveness, states decided to up the ante by launching the inter-state Bill on February 1, 2018 itself. As both central and state volumes piled up, the e-Way portal, developed by the National Informatics Centre (NIC), crippled and crashed. It’s unclear why we did not encourage more states to launch the inter-state Bill in line with the initial projections. This would have ensured consistency in bills, and better projection of server load. Even if there were states that bargained for additional time, it is hard to believe that the GST council was not notified by these 15 states of their plans to launch the inter-state portal.
Also, the two-week trial-period, which commenced from January 15, 2018 was unable to foresee the volume of transactions or stress test the system for extreme use cases.
A host of other problems
Traditionally, the logistics business has been the torch-bearer of agile business models. Globally, this industry works on the tenets of shortest path and fastest delivery. It involves real-time decision making in terms of choice of mode of transport, allotment of vehicle bundling of consignments etc.
Contrary to the very DNA of logistics the industry, the e-way bill provisions posted by the Central Board of Excise and Customs (CBEC) state:
A waybill is a receipt or a document issued by a carrier giving details and instructions relating to the shipment of a consignment of goods and the details include name of consignor, consignee, the point of origin of the consignment, its destination, and route.
The Bill itself consists of two parts: Part A (details of sender, recipient, value of goods etc.) and Part B which requires transporter details. This will be impossible for enterprises that use sub-contracted fleet of vehicles for delivery of goods in few/all geographies. As enterprises move towards asset-light models, logistic companies do not need to necessarily invest in recording micro details such as vehicle number.
There is no logistics algorithm that predicts the exact route of consignment movement. The next intermediate destination/route of a consignment is decided only when the goods in transit are sorted at a collection centre.
On comparing the objective of e-way bill with the strains it poses on the logistics industry – like asking for details such as complete route and vehicle route – it appears to be a demand of excesses. After all, in case of an alert – if the location of a consignment needs to be mapped – it can be done by tracing the geographical location of the consignment through GPS technology. Moreover, at any point, if a consignment is audited, it is accompanied by the e-way bill which anyways carries details of consignor, consignee and transporter. A simple GPS tag on every consignment, which is mapped to the e-way bill ID should have sufficed.
By attaching a deadline, for example validity, measured in hours/days for an e-way bill, it attempts to address the issue of timely delivery of goods. As per the latest notification, the e-way bill is valid for one day for 100 km, and one day for every subsequent 100 km.
This was expendable and I hope it will soon be done away with. Including such a clause for an industry that earns its bread and butter by timely delivery of goods is just unintelligent. The provisions state that “in general”, the validity of the e-way bill cannot be extended and another e-way bill will be required, in case one expires. In a country that is yet to achieve 100% physical connectivity, the timeline expectations of the e-way bill are rather ambitious. On a larger scale, this is a dangerously foolproof opportunity for rent seekers.
Additional liabilities imposed on logistics providers
Every time I send a parcel, I am asked to declare the value of contents in the parcel. The logistics provider records that value and processes my request. Understandably, the liability to declare the right value should rest with me, and not with the transporter. However, the e-way bill seems to think otherwise.
If the goods are handed over to a transporter for transportation by road, an e-way bill is to be generated by the transporter. Where neither the consignor nor consignee generates the e-way bill and the value of goods is more than Rs 50,000, it shall be the responsibility of the transporter to generate it.
It poses the liability of valuation with the transporter, who is merely acting as a medium to move goods from one place to another. In the event of an inspection of goods in transit, if the inspector questions the valuation of goods, the transporter is liable to answer. This is misplaced accountability, as we are expecting a transporter to be a valuation expert. In a time-sensitive industry like the Air Express, where service providers are also liable to provide demurrage to the customers in case of delayed delivery of goods, this is an additional responsibility, for which they neither have the capacity nor skills. On second thoughts, as a last resort, aggrieved parties may be forced to pay rent and get out of the situation than impair client relationships.
We as a nation cannot be prepared for long-term reforms if every reform fails the basic use case. The e-way bill system has not just turned out to be a logistical nightmare, it has yet again exposed our inability to translate great ideas into seamless actions.
With ample room for rent seeking, technical glitches and fine print yet to be finalised, this reform will have its share of iterations. Hopefully, we will get it right eventually.
Gunja Kapoor is an associate fellow at the Pahle India Foundation.