Despite GST issue, Ashok Leyland packs off 185 trucks to Bangladesh by sea; second automaker in India to use this route

In a fillip to the government’s coastal shipping initiative, Ashok Leyland (ALL) on Tuesday sent a second batch of 185 trucks via the sea route to Mongla Port in Bangladesh, a growing market for the company. FE had first reported on October 26 when ALL had sent the first batch of 188 trucks via the coastal route to Bangladesh. The company’s exports to Dhaka has gone up from 500 commercial vehicles (CVs) per year over the last many years to 5,000 per year at present. However, a senior ALL official told FE the cost of sending the vehicles via the sea route is slightly higher versus road transport, but of late, the company had been facing some delays at the India-Bangladesh border on land. He said, “Border crossing was taking additional days/weeks and we had to park the trucks which cost more money. We are now working with the government and concerned agencies on bringing down costs via the sea route.” But the official also said the advantages of the sea route include a transportation time of just two and a half days, compared with over four days to reach Bangladesh via road, less damage to the vehicles during transit and a reduction in pollution levels. Binu Joshua Thomas, a consultant for shipping firm LFonds India, said the sea route would result in a savings of 10 lakh km of carbon footprint by the end of November.

Till date, Hyundai Motor India (HMIL) is the only other auto manufacturer to have used the sea route, having shipped 12,805 vehicles along the western coast from Chennnai/Ennore to Kandla/Gujarat Pipavav ports in the west. The last shipment was in April this year, prior to the implementation of the GST. Anand V, senior general manager, sales logistics at HMIL, told FE the GST has complicated issues. He said, “It is still unclear as to what is the GST that needs to be charged when cars are shipped by a coastal route when the first mile and last mile operations are by road. In this form of multi-modal transportation, where two modes (road/rail) are involved, the present GST law is subjective and left to interpretation of consultants.”

Nailesh Gandhi, president, Association of Multimodal Transport Operators of India (AMTOI), said, “To remove the complexity, the shipping ministry needs to take up the issue with the GST committee and support the trade with one single GST rate on an end-to-end basis. The services of a third-party logistics service provider who provides comprehensive service needs to be facilitated by the government. These services cannot be seen in isolation or silos and necessitates uniformity in charges to help the service provider to use a single bill for end-to-end services.”