PERISHABLE shippers in India have begun to feel the pinch from the additional Goods and Services Tax (GST) that became applicable on freight charges from October 1, reports London's Loadstar
PERISHABLE shippers in India have begun to feel the pinch from the additional Goods and Services Tax (GST) that became applicable on freight charges from October 1, reports London's Loadstar. Some trade groups have threatened to suspend exports, stating freight charges are 'unaffordable' due to a tax of 18 per cent on air freight costs and five per cent on the ocean.
The All Kerala Vegetable and Fruits Exporters' Association has urged members to halt exports to exert more pressure on the government to return GST relief.
'Despite presenting an urgent plea to the union ministers, no decision has been taken in this regard,' said a Cochin-based exporter.
The source stated domestic reefer exporters could not compete with their counterparts from other low-cost countries like Sri Lanka, Pakistan, and Bangladesh.
Jet Freight Logistics (JFL) head of perishables trades Mohnish Arora declared that fruit, vegetables, meat, and seafood shipments to the UK and the Middle East had declined recently.
Although air freight rates out of India have tapered off amid slowing volumes, the GST eroded the pricing slide.
'The 18 per cent levy triggers competitive disadvantages amid falling export orders,' said a Mumbai fruit trader.
JFL CFO Arvind Talan stated the GST had come on top of an already increasing credit-line curve and continually rising interest rates for exporters.
'The tax burdens the trade community and has an impact on airlines, shipping lines, freight forwarders, and the industry, as a whole,' said Mr Talan.
'It is worth mentioning that most countries, including Australia and Singapore, have zero-rated exports, and our government should reconsider its decision.'
The tax burden has also thwarted Indian grape growers now in their harvest season.
'The government should look into the request of the export sector for continuing with the GST exemption for exports, which lapsed on September 30, particularly as freight rates are still at much-elevated levels,' said Federation of Indian Export Organizations president A Sakhtivel.
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