REMOVE GST ON INTERNATIONAL FREIGHT AS IT WILL STIFLE AIR CARGO GROWTH: PHD CHAMBER

PHD Chamber of Commerce and Industry on Wednesday urged the government not to impose GST on international freight as air cargo trade is already facing many challenges and that such a taxation is also not in vague in economies of scale and therefore, why make India an exception on this front.

The Chamber has argued that at a time when domestic civil aviation industry anticipates that India will be among the 10th largest international freight market by 2018, with domestic Indian air cargo increasing by 7.3% as per current estimates over the 2016 rate, subjecting international freight at 18% GST is totally unfair as it will stifle the growth of air cargo.

The aforesaid recommendations were made by the Chamber at its Air Cargo Summit-2017: Growth of Air Cargo Logistics in Changing Times which was presided over by Chairperson, Airports Economic Regulatory Authority of India, Mr. S Machendranathan and moderated by President, PHD Chamber, Mr. Gopal Jiwarajka in which Economic Advisor, Ministry of Civil Aviation, Ms. Vandana Aggarwal; Chairman, Civil Aviation Committee, PHD Chamber, Mr. K Narayana Rao and its Co-Chairmen, Mr. Vipin Vohra and Mr. Bhupesh Joshi were also present along with its Director, Mr. Yogesh Srivastav.

The Summit pointed out that all over the world,  International freight is not taxable adding that Indian exporters need not be burdened with wrongly interpreted GST tax on International freight.  This is based on well accepted principle that goods and services are exported but not taxed.

“Why would the government of India want Indian exporters to pay extra 18% GST on freight and make our goods non-competitive in international market”, asked the Summit,  stressing that even if GST to exporters are refundable by CENVAT credit, it is incorrect as again cost of export go up by financing GST and taking the refund as an administrative and financial cost.  Indian exporters are again at a disadvantage if this is the case. Hence GST should not applicable on international freight, further contended the Summit.

The Chamber further held that the aviation logistics in the country today, particularly for export cargo, and equally for the domestic cargo, is confronted with multitude of serious issues like inordinate dwell times, missing and non-traceable cargo, damaged cargo, lengthy cargo processing times and queues of trucks at the cargo terminals, etc. Air cargo infrastructure in India is woefully inadequate and overloaded.

It has further highlighted that the procedures mandated by multiple agencies stifle innovation and growth besides causing inefficiency in the system.  Existing procedures have not yet been aligned with the technological progress which has become international best practices. Missing Cargo/non-traceability of cargo in terminals has assumed undesirable proportions. This has serious implications for not only timely delivery of cargo but also in terms of security and image of the country in international trade.

Thus, the need of the hour, therefore, is to streamline the procedures for movement of domestic air cargo and simplification of procedures for safe transit and timely delivery. Also, the Govt. should encourage competition by introduction of Domestic Freighters on trunk routes, where at the moment only one airline is operating. This step will also reduce the cost of carrying the goods and the bottlenecks in the present system.