“GST”:ThreelettersthatspelldramaticchangeforIndiaandforeverycompanypartofasupplychainintheworld’sseventhlargesteconomy。

Theysaythatnothingissureinlifeexceptdeathandtaxes。

India’smanufacturerscannowadd“digitalization”tothatlist。

OneofthebiggesttaxreformsinIndiasinceitsindependencein1947representsahugeleapinIndia’squesttodigitalizeitseconomy。

Whatsoundslikeahumdrumaffair–theintroductionofanewGoodsandServicesTax(GST),sentshockwavesthroughthecornerofficesofIndia’smanufacturingcompanies。

GSTwillstreamlineacomplextaxationprocess,saveone-sixthoftheworld’sconsumersmoneyintheshops,andforcethemorethan10millionproducingcompaniesinIndiatoreconsiderhowandwheretheybuild,storeanddistributetheirproducts。

“GSTisacornerstoneofthecountry’sdigitalizationefforts,andwillcauseamarkedriseofdigitalusageinIndia’sbusinesses,”saysArunSubramanian,VicePresident,GlobalizationServices,SAPLabsIndia。

“Whilethelargerconglomerateshavebusinessapplicationsoftware,thereexistsalargegroupofSMEswhoeitherhavenoITinfrastructureinplacetosupporttheirbusinessesorareinaverynascentstage。



Datascientists’dream

ThebasisofIndia’snewGoodsandServicesTaxisataxofficeconsistingofanITbackbonethatdigitizeseverythingonlinefromregistrations,determiningandawardingcredits,filingreturns,paymentstoauditsanddisputessettlements。

AfterbeingissuedtheirGSTregistrationnumbers,companieswillberequiredtouploadsalesinvoicedataintothemassivesystem,operatedbyGSTNetwork,anotforprofit,privatelimitedcompany。

“Altogether,we’retalkingabouthundredsofmillionsifnotbillionsoflineitemspermonthbeingenteredintotheGSTNetwork,”saysArunSubramanian。

Sincealltaxdatawillbeavailableinadigitalform,theIndiangovernmenthasahugeopportunitytoanalyze,forecastandmanagetheeconomy。

Forexample,whatwouldbetherevenueimpactbyraisingtaxes,orhowistheconsumptionofgoodsfluctuating?

Rethinkingthesupplychain

Becausethefinaltermsandconditionsofthenewgoodsandservicestaxwillbedecidedrightuptothelaw’spassing,thereisstilluncertaintyamongorganizationsastoitsfullimpact。

What’sclear,however,isthatthenewlawwillupendmanymanufacturers’supply-chainandproductdistributionstrategies。

Here’swhy:Underthecurrentlaw,firmsbenefitedfromsettingupwarehousesordistributionhubsinstateswhereconsumptionwasheaviest–otherlogisticalarrangementswereeffectivelypenalized。

“Byeliminationofthecascadingeffectoftaxesongoods,especiallyininter-statemovements,theplayingfieldwillbelevelledforproducersnomatterwheretheymanufacture,storeorselltheirproducts,”saysRajamaniSrinivasan,HeadofDigitalEnterprisePlatformChannelsatSAPAPJ。

“Thiswillhelpreducetheoverallcostofgoodssold,thusentailingalowerpriceforconsumers,andatthesametimeincreasingprofitabilityforfirms。



Frompanictopanacea

Foroveradecade,Indiahasbeenmovingtowardsreformingitsindirecttaxesrelatedtogoodsandservices,butreportsin2015indicatingthenewgovernmentunderShriNarendraModiwasgoingtofollowthroughwithitsplanputIndianCEOsandCFOsonhighalert。

“ItwasabitofapanicsituationforourcustomerswhoneededasolutionforGSTsoonerthanlater,”saysManjushaNair,SeniorDirector,GlobalizationServices,SAPLabsIndia。

“Wehadabroadideaofwhatthelawwouldlooklike,butnooneknewtherulesorthetimeline。



Waitingforthetaxlegislationtopasswasnotanoption,soSAP,withover5,500customersinIndiaandthemarketleaderinenterpriseresourceplanningsoftware,immediatelytookatacticalstepbyengagingcloselywithitslargecustomersandpartners。

“TheSAPLocalizationteamamongstotherdevelopments,builtatoolthatfacilitatesmigrationtotherequiredtaxprocedureandwereabletoshowcustomersthatthemigrationwasnottoocomplex,”saysManjushaNair。

“Inaddition,toscaletheecosystemenablement,wecreatedane-learningprogramonthecodeandconfigurationneededtomakethemigration,whichwasapre-requisiteforGSTchangeimplementation。



Tospreadtheword,SAPinIndiaheldtheGSTIndiaForuminMayof2015,invitingcustomerswhowereleadingthechargetosharetheirexperienceandchallengestoover1500participantsacrossitscustomerbase。

Downtothelasttweak

RicharddeSouza,VPandHeadofCorporateITforoneofIndia’slargestautomotivesuppliersMahindraMahindra,feelsreadyforthenewtaxwhenitcomes。

Histeamsupports80companiesactivein18differentindustries。

“GSTisaverymajorchange,andwillimpactalmostallofourcompanies,”saysdeSouza。

Mahindra’ssupplychainprocessesaroundtwomillioncomponentspermonth,anumberwhichrequiresfullintegrationandautomationwithrespecttotaxreconciliation。

RatherthandevelopacustomsolutionforGST,deSouzacollaboratedwithSAPonastandardsolutionwhichcanthenberolledouttomultiplecustomers。

“Werefrainfromanycustomdevelopmentunlessitisabsolutelyessential,”heemphasized。

“WiththesupportofSAP,webuiltanapplicationthatmatchesitsownpurchaseswiththetaxpaidbythesuppliersandreconcilesitautomatically。

Anymismatchesgenerateautomatede-mailcommunicationswithsuppliers。



RicharddeSouzasaysthatthereisariskthatthelawmaybedifferentthanexpectedandsomeadditionaltimewillbeneededforhisteamtoadaptthealgorithms,buthe’snotexpectingit。

“IhopethatourpreparationstogetherwithSAPhavepaidoffandwewillonlyneedtomakemarginaltweaksinthesystem,”heconcluded。

ContributingtothisstorywasNamitaGupta-Hehl,headofMarketingandCommunications,GlobalizationServices,basedinWalldorf。

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