All around the world it seems like individual companies and sometimes even entire industries are pushing the limits, attempting to move past economic roadblocks and traditional trading constraints. One place on the planet where this is particularly obvious right now is India. The country is more than 100 days on from the introduction of its revolutionizing Goods and Services Tax (GST) – a long-overdue reform of its previously complex, multi-layered taxation system.
The biggest winners of India’s GST reform are logistics and the supply chain because multiple taxes levied at interstate checkpoints and countrywide toll booths represented a critical bottleneck for economic growth of the country’s logistics industry, worth $130 billion back in 2013.
Take, for example, the productivity losses incurred in trucking. Some 60% of all freight travels by road in India but archaic laws and tax complexities chronically impacted these journeys. While a truck driver in the USA might cover up to 700 km per day and the world average is about 400 km per day, a truck driver in India could at best clock only 250-280 km per day.
With the new unified tax system, goods can now move more easily between Indian states, transport cycle times and costs are reduced, and bureaucratic roadblocks (including masses of red tape and paperwork) are removed.