This article originally appeared on Livemint.com.
The country expects the goods and services tax (GST) to be implemented shortly, and companies need to prepare to capture potential gains and avoid the pain of internal and external mis-alignments. Many firms have already started. In a 2014 survey of chief financial officers in the Indian retail sector, 88% reported they were at least partly prepared for GST.
Observers have said GST will be the single-biggest reform since the opening up of the economy in 1991. It will likely reduce price distortions, encourage capital investment by eliminating cascading taxes, enhance export competitiveness and help create a seamless national market. By cleaning up India’s morass of entry taxes and easing the nightmare that companies face at octroi and state checkpoints, GST will make logistics simpler and more efficient. One estimate suggests that by reducing the time that freight spends in transit, for instance, and by eliminating long delays at inter-state checkpoints, this reform may quickly cut inventory on wheels by four to seven days.
Adapting to GST, which means ensuring compliance and an automatic share of post-GST benefits, will itself require extensive changes. However, winning companies should look beyond merely adapting. In an economy expected to be on an upswing, acting now can deliver a boost to companies’ competitive positions. We suggest that companies act proactively across five focus areas.
The first focus area is programme management. Firms can set up a dedicated programme management office to oversee the change process. The programme management office will involve key employees and stakeholders in a structured way, engage in external liaising and ensure internal alignment across the company’s departments. It will steer the design and adoption of new processes, drive the upgrade of IT systems, manage overall reporting on metrics and stakeholders’ communication, as well as address employees’ concerns about the impact on their jobs.