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Entrenched border bureaucracy puts off dreams of Indian borderless trade
WAITING trucks in both directions along the interstate highway await clearance by tax inspectors that can take days to complete at the Kerela state's Walayar checkpost in southern India, reports Reuters.
Textile producer D Bala Sundaram has stopped sending trucks to the nearby port of Cochin and instead sends his containers to foreign ports in Sri Lanka.
"Our containers would get stuck for four to five days," said Mr Sundaram, who runs a firm with annual revenues of US$150 million. "Officials at the checkpost are finicky."
The rollout of a nationwide goods and services tax (GST) from April was supposed to sweep away hundreds of checkposts at India's state borders, paving the way for the seamless movement of goods from the tropical south to the Himalayas in the north.
But political opposition to the introduction of the law mean hopes are fading that the checkposts will be demolished any time soon, a major blow for Prime Minister Narendra Modi's reform agenda.
The rollout of the long-delayed GST regularly tops the list of demands made by CEOs of Indian and foreign companies. The GST was supposed to be "game changer" that would end a slew of federal and state levies.
But opposition parties prevented a vote on the GST in the last session of parliament, making a rollout next April unlikely.
Even when the tax is eventually implemented, concessions made to win support from states mean many of the obstructions to a customs union will stay.
For example, while the GST will be collected in states where goods are consumed, Indian Finance Minister Arun Jaitley allowed a one per cent levy on the cross-border transport to please states with big manufacturing sectors.
Items such as alcohol, tobacco and petrol have been kept out of the new tax bill. States have also been given the flexibility to fix their GST rates within a band, providing arbitrage in the interstate movement of goods.
"Enforcement is definitely required, we cannot do away with it at any point," said a senior state government official in Tamil Nadu. "We will need checkposts."
Textile producer D Bala Sundaram has stopped sending trucks to the nearby port of Cochin and instead sends his containers to foreign ports in Sri Lanka.
"Our containers would get stuck for four to five days," said Mr Sundaram, who runs a firm with annual revenues of US$150 million. "Officials at the checkpost are finicky."
The rollout of a nationwide goods and services tax (GST) from April was supposed to sweep away hundreds of checkposts at India's state borders, paving the way for the seamless movement of goods from the tropical south to the Himalayas in the north.
But political opposition to the introduction of the law mean hopes are fading that the checkposts will be demolished any time soon, a major blow for Prime Minister Narendra Modi's reform agenda.
The rollout of the long-delayed GST regularly tops the list of demands made by CEOs of Indian and foreign companies. The GST was supposed to be "game changer" that would end a slew of federal and state levies.
But opposition parties prevented a vote on the GST in the last session of parliament, making a rollout next April unlikely.
Even when the tax is eventually implemented, concessions made to win support from states mean many of the obstructions to a customs union will stay.
For example, while the GST will be collected in states where goods are consumed, Indian Finance Minister Arun Jaitley allowed a one per cent levy on the cross-border transport to please states with big manufacturing sectors.
Items such as alcohol, tobacco and petrol have been kept out of the new tax bill. States have also been given the flexibility to fix their GST rates within a band, providing arbitrage in the interstate movement of goods.
"Enforcement is definitely required, we cannot do away with it at any point," said a senior state government official in Tamil Nadu. "We will need checkposts."
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