GST 2.0-led demand may lose momentum in coming months; FTAs may boost domestic logistics sector: TCI MD Vineet Agarwal

Transport Corporation of India, which announced its Q2, FY26 results last week, has seen its supply chain division becoming the biggest revenue grosser this quarter on the back of GST reforms. In an interaction with Fortune India, TCI MD Vineet Agarwal discusses the demand scenario in the economy post GST 2.0 and need for further reforms in the upcoming budget.

Q. TCI’s PAT, EDIDTA and revenues have grown in 6-8% range in Q2, FY26. What were the key contributors?

Vineet Agarwal: One of the most important things that have happened is that our supply chain division has become the largest division for us in this quarter with 44% of the revenues. The freight business has traditionally been the largest businesses and now, for the first time, supply chain is the largest business.

It indicates that things have started gaining traction on the logistics side in the country also as a whole. A solution-driven business where you are providing end-to-end services as well as designing network is what companies are looking for and hence the growth and the demand is much higher. Supply chain growth in the quarter has also been quite high due to GST reforms. It had a very solid impact.

Q. A huge upsurge has been witnessed in the overall demand post GST 2.0 rollout from September 22. Your clients are spread across industry. What kind of traction did you witness?

Vineet Agarwal: Some stock building happened at the beginning of the quarter. Early September was also a little soft. It started picking up very fast once the customers understood how to do the billing. September was really quite crazy in terms of movement.

Q: In your view, will this momentum in demand sustain?

Vineet Agarwal: No, so this sustained till Diwali this month. I do not expect it to be as robust as it was then because some of it was pent-up demand.

Q: Would like to elaborate on the key demand trends you may be witnessing and why you believe that it may not continue in the coming quarters?

Vineet Agarwal: Our expectation is that there is going to be some level of fall in demand in the next month. A lot of movement has happened. And things have to be also absorbed in the system.  We sensed that the movement of finished goods movement in September and October has been very high.  But that going into production, etc, was lower because there's a lot of inventory in the system. So the kind of movement that we saw from mid of September to the end of October is not going to continue.

Q: So, what is your take on whether consumption is going to be one of the themes of the economy in the next one and a half to two years? We have seen personal income tax reliefs, GST and will have the next pay commission benefits next year. What are you anticipating?

Vineet Agarwal: So, I think the whole discussion around consumption has been that how the income tax cuts and subsequently the GST cuts can spur some amount of demand. But in last three years, what has gone down in terms of cost?

Take for example, milk, or rent, or transport. Barring few items like electronics etc, which have remained almost constant, nothing is gone down. So, when there is a certain level of inflation, then we have to also remember that the spending power has not really gone up that much. Definitely sentiments have changed a little bit, but whether it is playing out right away in terms of consumption, I doubt it. Based on festive and some small triggers here and there, things might start playing out but otherwise I do not feel there is a real spur that's coming.

See, some behaviour shift has started to happen essentially in quick-commerce etc. Some of that is starting to happen, but it's a trickle. It's not necessarily a major shift.

Q: Coming to the FTAs that are being signed, what advantages do these bring to the Indian companies?  UK is done and talks are going on with the EU and the US.

Vineet Agarwal: Well, clearly increase in trade has a clear-cut benefit for logistics because either products are coming in, or products are going out. Or if companies establish some businesses here, it is also a clear-cut benefit from a logistics perspective. It will depend on what products are really moving.

Q. Budget preparation has begun. What should be the next big move by the government?

Vineet Agarwal: Structural reforms should continue. I am talking about broad and big ticket moves. The reforms which will have an impact on ease of doing business, as ease of doing business has thousands of things under its umbrella that can be done.