The government’s move to impose an 18% Goods and Services Tax (GST) on logistics services is set to strain the sector, with ripple effects expected across businesses, gig workers, and consumers.
Industry bodies warn that higher tax outgo will squeeze margins of logistics companies already grappling with high fuel and operational costs. Smaller fleet operators and gig workers, who form the backbone of India’s delivery ecosystem, are expected to be hardest hit as demand for low-cost transport tightens.
Analysts say companies may pass on the burden to end users, raising freight rates and, in turn, the cost of goods and e-commerce deliveries. “This will ultimately make essentials and daily-use products more expensive for consumers,” one logistics association said.
The move comes at a time when the government is pushing for faster, more efficient logistics under the National Logistics Policy. Industry players are seeking relief measures, warning that the tax hike could slow growth in a sector seen as critical to India’s $5 trillion economy target.