BRICS New Delhi Declaration: Unpacking the GST, Supply Chain Compliance, and PPP Tax Implications of the Sustainable Transport Blueprint

The recently issued New Delhi Declaration by the BRICS nations marks a pivotal shift toward structured multilateral cooperation, focusing heavily on establishing sustainable transport systems, resilient supply chains, and robust infrastructure. Representing approximately 40 percent of global GDP and nearly 26 percent of global goods trade, the decisions made by this bloc carry immense economic weight. However, behind the grand vision of cross-border corridors, urban mobility hubs, and decarbonized transit networks lies a complex web of fiscal, tax, and regulatory compliance challenges that member nations—particularly India—must address to turn these plans into reality.

The BRICS Infrastructure Blueprint: A Quick Overview

The New Delhi Declaration formalizes several initiatives developed during ministerial meetings held in July and August. Key milestones integrated into the final declaration include:

• The establishment of the BRICS Logistics Supply-Chain Cooperation Framework to enhance multimodal connectivity and logistics coordination.
• The creation of the BRICS Urban Mobility Hub, designed to foster knowledge exchange regarding smart, inclusive, and affordable urban transport.
• The introduction of a Framework of Cooperation for Exchange of Knowledge on Transport Decarbonisation.
• A comprehensive technical report by a dedicated task force on Public-Private Partnership (PPP) models and de-risking mechanisms.

While these initiatives aim to streamline physical trade, they simultaneously trigger deep structural shifts in tax administration, customs procedures, and domestic Indirect Tax (GST) systems.

GST and the Logistics Supply Chain: Resolving the Multimodal Friction

The BRICS Logistics Supply-Chain Cooperation Framework focuses heavily on multimodal connectivity. In India, multimodal transportation—where goods are moved via a combination of road, rail, air, or sea under a single contract—has historically faced significant GST compliance friction. Under the Indian GST regime, different modes of transport attract varying tax rates, creating administrative hurdles for logistics operators trying to claim Input Tax Credit (ITC).

To support a seamless BRICS-wide supply chain, the Indian tax administration must address several critical bottlenecks:

• E-Way Bill Synchronization: Seamless cross-border and multimodal transit requires real-time tracking. Any unexpected delay in multimodal transit points can lead to the expiration of e-way bills, exposing transporters to heavy penalties under Section 129 of the CGST Act. Integrating BRICS logistics data with India’s GST e-way bill system could mitigate these compliance risks.
• Place of Supply Rules: Determining the Place of Supply for international logistics, especially when multiple domestic and foreign entities are involved, remains a highly litigated area. Clearer guidelines are needed to ensure Indian logistics providers do not lose out on export-of-services benefits when participating in BRICS-led corridors.

Taxing the Green Transition: Decarbonisation and Capex Compliance

The declaration’s emphasis on transport decarbonisation and renewable energy alignment points to a massive influx of capital into green technologies. However, executing this transition requires navigating a highly fragmented tax landscape. India’s ongoing new-age capex surge demonstrates that green infrastructure projects face unique GST and customs duties, particularly on imported components like lithium-ion cells, solar panels, and EV charging infrastructure.

Currently, electric vehicles attract a concessional GST rate of 5%, whereas hybrid vehicles and fossil-fuel-powered commercial transport face much higher tax brackets, often exceeding 28% plus cess. Furthermore, the cascading tax burden on energy inputs—where petroleum products remain outside the ambit of GST—creates a stranded tax cost for logistics companies that have not yet transitioned to green fleets. The BRICS decarbonisation framework must be backed by domestic tax reforms that allow logistics companies to offset these stranded fossil fuel taxes against their outward GST liabilities, incentivizing cleaner transport adoption.

PPP Models and De-Risking: Navigating Works Contract GST

The BRICS task force on Public-Private Partnerships submitted a technical report detailing PPP models, modalities, and de-risking mechanisms. In India, PPP models in infrastructure (such as the Hybrid Annuity Model or HAM used in highway construction) have been hotbeds of tax litigation.

The taxability of annuity payments received by concessionaires from government authorities has undergone multiple shifts. Initially, the GST Council exempted these annuity payments, but subsequent clarifications restricted the exemption, leading to disputes over whether the payments constitute a supply of service or are exempt capital grants. For the BRICS PPP models to attract private capital successfully, India must establish stable, long-term GST rules for works contracts, ensuring that de-risking mechanisms do not get bogged down by retrospective tax demands and blocked Input Tax Credits.

Customs and Cross-Border Trade Compliance

Because BRICS nations control over a quarter of global goods trade, physical connectivity must be matched by digital customs integration. Implementing the logistics framework requires harmonized customs procedures to prevent bottlenecks at ports and border checkpoints. Much like other major cross-border infrastructure projects, a unified BRICS supply chain will necessitate digital customs clearing houses, standardized electronic bills of lading, and automated tariff classifications to ensure compliance without delaying cargo movement.

Conclusion

The BRICS New Delhi Declaration outlines a transformative vision for global logistics, smart urban mobility, and green infrastructure. However, the ultimate success of this sustainable transport blueprint depends on how effectively member states align their tax and regulatory frameworks. For India, this means simplifying multimodal GST compliance, resolving PPP works contract tax ambiguities, and offering clear fiscal incentives for transport decarbonisation. Only when the tax hurdles are cleared can the physical wheels of BRICS trade roll smoothly.

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