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Budget 2022 should focus on implementing reforms to boost sustainability, digitization in Indian logistics

What we need is a strong regulatory push and incentives to easily adopt these new technologies across the value chain.

Budget 2022 should focus on implementing reforms to boost sustainability, digitization in Indian logistics
FM Nirmala Sitharaman will be presenting the Budget for FY 2021-2022 on February 1.

By Ravi Jakhar

As we hopefully set foot in the post pandemic world, this budget should aim at reigniting our growth ambitions for the Indian economy. The plans for manufacturing led growth are however not possible to achieve without bringing efficiencies in logistics sector. It is therefore imperative to push on digitization and infrastructure development. It is also desirable this budget offers us the opportunity to set a few long-term goals around sustainability. The onus should be on unveiling radical policy reforms for promoting green logistics. 

On the short-term front, there is a long wish list from the budget 2022-23. The industry is hoping for a strong push to infrastructure development. We need concrete announcements towards effective implementation of the National Logistics Policy. There should be subsidies to promote integrated logistics and multi-modal connectivity to reduce cost and time. Clear allocations are required on the Prime Minister’s visionary Gati Shakti Master Plan. On infrastructure, there is a good progress on transport side with development of highways and the dedicated rail freight corridors. However, on the storage and hubs, there is a need for greater support from government in setting up multi modal logistics parks. It will be good to see focus on the same, particularly for development in tier 2 cities and around the agricultural hubs. It is also important to accelerate the implementation of projects and any budgetary support to expedite road and rail freight corridors will be very good for the country.

Government should allocate resources to bolster logistics connectivity in smaller towns, both as enabler for trade facilitation as well as job creation. These towns hold significant growth potential and carry a lot of expectations from the Union Finance Minister. It is also important to improve our EXIM supply chains and enable greater role for container freight stations, which played a critical role in decongesting Indian ports during the pandemic crisis. There could be budgetary proposals for support to expand their scope of services to facilitate trade and drive growth. 

Though it is important to achieve economic goals, we can no longer afford to scale the trade growth in a conventional manner with fossil fuel vehicles at the core of transport. We must also be mindful of protecting our environment. India’s goal of becoming carbon neutral by 2070 may seem 50 years away, but in reality, a lot needs to be done to achieve the same. The budget should make provisions for incentives and initiatives to drive green logistics. We need to build green infra, use EVs, increase renewable energy capacity and ensure net zero carbon emission for the entire distribution activity. There is a need to increase investments in carbon-neutral projects and allocate funds for developing alternative sources of energy. The government must provide a supportive regulatory roadmap to match the ongoing efforts by the industry players, who have taken many key initiatives to cut the carbon footprint on their own.

Digitization should be a key focus area of the budget. There should be suitable budgetary allocations to set up national portal and platforms to bring transparency around assets and vehicles to drive collaboration across the industry. Incentives should be offered to drive adoption of digital freight payments that will accelerate the move towards efficient, organized, lower cost logistics in the country. A discount on digital freight payments can potentially also increase the tax revenue for the government. 

We are further witnessing how a new set of smart technologies from cloud to blockchain, from machine learning to Internet of Things, from automation to AI are playing a vital role in the logistics industry. What we need is a strong regulatory push and incentives to easily adopt these new technologies across the value chain. That should positively happen in the upcoming budget. Overall, there is a huge focus on manufacturing led growth in the next decade and we must ensure that we are building the right logistics infrastructure to make that growth possible.

(Ravi Jakhar is Chief Strategy Officer at Allcargo Logistics. The views expressed are author’s own.)

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