With investment into India’s supply chain infrastructure gaining momentum from five years of significant investment on roads, railways, water, irrigation and urban infrastructure, the next five years, according to Reuters reports on Sitharaman’s announcements, will see a series of projects as part of a plan to invest INR1trn (US$1.39bn) in the infrastructure sector.
This capital injection is not before time. Mumbai alone has a population of 25 million but getting to work in the city is literally a matter of life and death – most conference delegates had travelled to the event in gridlocked traffic by minicab. It’s a mode of transport most city workers use, despite average speeds rarely exceeding 8km an hour. In 2018 although the number of deaths on the suburban railway system had reduced by 10% from the previous year it was still 2,734 ; overcrowding and trespassing on tracks being the main factors. With India’s labour force being such an important element of the country’s means of achieving the US$5trn growth target, giving it safer commuting is a good place to start.
Moderated by Mayank Gupta, Head of Trade at Citibank, a panel session exploring India’s supply chain opportunities noted that such increased government spending, along with the liberalisation of foreign direct investment (FDI) rules has helped spur growth as the country aspires to become a global manufacturing powerhouse. But is it doing enough to attract global supply chains to set up shop there?
Manpreet Kaur, Founder and CEO of Vivantaa Capital pointed out that a study of India’s mobile and electronics industry segment offered grounds for optimism. In 2012−13 the industry was 100% import based. “Now we are contributing US$20bn in terms of mobiles manufactured locally,” she said. It was important that the sector matched international standards for its exports to arrive at a level of quality such that India “will be the top manufacturer in the world”. Another panellist observed that while the Coronavirus was “very regrettable” it did present certain opportunities for Indian manufacturing a
By July 2019, India’s goods and services tax reform (GST) had been in place for two years and e-invoicing becomes mandatory as at 1 April 2020 in a bid to improve transactional transparency and reduce tax evasion. In an e-invoicing environment, the moment an invoice is created, it has to be uploaded onto the Goods and Services Tax Network (GSTN) portal for pre-validation and assignment of an invoice reference number. Once the invoice reference number (IRN) is issued, the tax invoice is shared with the recipient.
GST and e-invoicing have brought opportunities, noted the panel and India has risen 14 places to #63 in the World Bank’s Ease of Doing Business ranking on the back of these and other economic reforms.
Kaur explained that when a truck travels from Mumbai to a North-Eastern state in Assam it crosses eight states. “The truck has to stop at each boundary at each state, clear the documentation, pay the taxes and absorb a waiting time of one to three days.” Pre-GST that typically led to a loss of 20 working days and increased the costs. In addition the opacity of the old taxation system led to arbitrage between the states, with the same product costing more in one state than another.
With the implementation of GST, “everyone knows where the goods are moving and everyone can pre-calculate the tax,” she said. In Kaur’s view this was “a great reform” and has given much transparency to supply chains when trading with India.
She also made the point that India is one of the largest producers of fruit and vegetables, but around 30% to 40% of the crop gets damaged in transit. “Infrastructure needs to support our agriculture with cold storage and at the point of origination, “she said