With Finance Minister Nirmala Sitharaman all set to present the interim Budget for fiscal year 2024-25 on February 1, 2024, the logistics industry is expecting government proposals towards a continued capex push for transportation, port and digital infrastructure development to boost logistics efficiency and competitiveness in line with the vision and goals of National Logistics Policy. Rampraveen Swaminathan, MD & Chief Executive Officer, Mahindra Logistics Ltd, said, “The upcoming interim Budget offers a unique opportunity to balance economic growth priorities and fiscal consolidation. Prioritizing capital expenditure in key infrastructure projects, alongside financial incentives like PLI, tax benefits, and subsidies, can drive innovation in logistics. Building a ‘One India’ logistics ecosystem and integrating initiatives like the National Logistics Policy and Sagarmala Project are crucial to enhancing India’s global Logistics Performance Index ranking.”
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Nirmala Sitharaman will present her sixth consecutive Budget since 2019. Being an interim Budget, it is said to have no major announcements as it is coinciding with the general elections year which is scheduled for early this year. The full budget for the fiscal year 2024-25 will be presented after the formation of the new government following the general elections.
Here is what major logistics companies are expecting from the interim Budget…
Ravi Jakhar, Chief Strategy Officer, Allcargo Group
As India is emerging as a viable alternative for the global multinational companies for diversifying their manufacturing base, the accelerated development of logistics infrastructure and favourable policy formulations will play an enabling role in helping the country garner a larger share in the global manufacturing value chain. Therefore, we expect the upcoming budget to propose a continued capex push for transportation, port and digital infrastructure development to boost logistics efficiency and competitiveness in line with the vision and goals of National Logistics Policy. We expect the budget to support persistent efforts of the logistics industry to develop last-mile connectivity to facilitate the transformative growth of the SMEs through effective local and global value chain integrations, as they are the key growth drivers of the economy. In addition, we expect the budget to propose incentives to drive large-scale green or renewable energy adoption so that the industry can play a pivotal role in achieving the country’s net zero target.
Rampraveen Swaminathan, MD & Chief Executive Officer, Mahindra Logistics Ltd
The upcoming interim budget offers a unique opportunity to balance economic growth priorities and fiscal consolidation. Prioritizing capital expenditure in key infrastructure projects, alongside financial incentives like PLI, tax benefits, and subsidies, can drive innovation in logistics. Building a ‘One India’ logistics ecosystem and integrating initiatives like the National Logistics Policy and Sagarmala Project are crucial to enhancing India’s global Logistics Performance Index ranking. To reinforce India’s potential as a manufacturing powerhouse, the budget needs to focus on domestic manufacturing and prepare the logistics sector for service integration, growth in fulfilment logistics, and multi-modal transportation adoption. The government should also consider automation investments, especially in technologically advanced warehouses, which can position India as a logistics innovation leader.
We anticipate government announcements for the EV industry, which may include tax incentives, charging infrastructure subsidies, and financial support for R&D. A holistic regulatory framework for last-mile delivery and formal recognition of the gig workforce under labour laws are essential for fair employment practices in the digital economy.
Aneel Gambhir, Chief Financial Officer, DTDC Express
The logistic industry is a crucial driver of economic efficiency, and we look for some transformative measures from the budget to bring innovation and inclusivity in the sector. We urge the government to address the logistics sector’s unique needs by enhancing the strategic allocations toward infrastructure development, tax reforms, and other governance policies. Besides this, the importance of digitally advanced processes through cutting-edge technologies including artificial intelligence, machine learning, IoT, and big data are also required.
Additionally, the inclusion of diesel under the GST ambit is a critical move that we hope the government will consider in this budget. With India aiming to reduce its logistics costs and become more competitive in the international market, this will help the logistics players to regulate costs by cutting on the tax outflow.
Last but not least, facilitating a strong policy framework is essential to reduce expenditure, improve transportation, and warehouse facilities to continue the growth achieved by the industry. Further strengthening the National Logistics Policy (NLP) can bring a massive change and streamline operation for the industry in the future.
Kami Viswanathan, President – MEISA, FedEx Express
FedEx advocates for a strategic allocation towards infrastructure development for more efficient multimodal logistics. Additionally, we emphasize a focus on digitization in the logistics sector to accelerate speed and ease of doing business. Recognizing the impact of the National Logistics Policy and PM Gati Shakti National Master plan, alongside prioritizing road, sea, and rail cargo infrastructure, we see the expansion of airports as exciting avenues for growth. We urge a consistent budgetary emphasis on expanding airport infrastructure for cargo, strengthening regional airports and developing dedicated transhipment hubs to optimize belly and freight capacities. We underscore the importance of digitally advancing customs clearance processes through cutting-edge technologies such as artificial intelligence, machine learning, blockchain, and big data. As India targets lowering of logistics costs and a top 25 global rank by 2030, we anticipate budget initiatives that will sustainably boost manufacturing and trade, particularly benefiting and incentivizing SMEs.
Vineet Agarwal, Managing Director, Transport Corporation of India Ltd
As we await the release of the Interim Budget, the logistics sector stands poised for transformative measures that will fuel our journey to a $5 trillion economy. The forthcoming budget presents a significant opportunity to reinforce our commitment to enhance the ease of doing business. India’s logistics cost, as highlighted by DPIIT, is encouraging, but our gaze must extend beyond mere cost considerations. A strategic allocation of resources towards infrastructure, competence, and traceability is essential for sustained progress. In the budget, continued focus on advocating for a long-term perspective to build physical & digital infrastructure, incentivize multimodal logistics for carbon reduction, and robust skilling initiatives for the 22 million employed in the sector should be the key priorities. To boost EXIM trade and improve competitiveness, we need to maintain the momentum in investments and digitalization. With this approach, we’ll be able to move fast towards a more resilient and sustainable transport and logistics ecosystem for India.
Zaiba Sarang, Co-founder, iThink Logistics
A greater focus on sustained investment in multi-modal infrastructure development is expected, with emphasis on dedicated freight corridors, inland waterways, and intelligent logistics parks to enhance efficiency and reduce costs. We also expect the upcoming budget to incentivize green initiatives, such as electric vehicles, green warehousing, and renewable energy adoption, aiming to reduce the carbon footprint and attract sustainable investments. Since the logistics sector has long suffered from a skill gap, it is high time that this issue is addressed as well, through targeted training programs and promoting digitization with AI-powered logistics platforms, paving the way for transparency and competitiveness. Streamlining regulations, simplifying GST processes, and providing tax breaks for logistics startups can also contribute to an improved ease of doing business. Moreover, special schemes and subsidies for MSMEs operating in the logistics sector can empower them to compete effectively, fostering overall sector growth.
Cyrus Katgara, Partner, Jeena & Company
The government’s substantial capital expenditure on infrastructure, particularly in roads, railways, and airports, has already spurred momentum in the logistics sector. This, coupled with the ongoing prioritization of logistics infrastructure development across roads, warehouses, and ports, has garnered enthusiastic support. The industry anticipates the Budget to further solidify the Digital India Act, promoting digitalization through artificial intelligence, data analytics, and 5G technology. Higher investment in digital upskilling and reskilling programs for the workforce to ensure the logistics industry remains competitive and resilient in the global digital age is anticipated. Additionally, enhanced regulatory frameworks that facilitate seamless cross-border logistics operations would be greatly welcomed, promoting smoother international trade and connectivity.
Vipin Vohra, Chairman, Continental Carriers Pvt Ltd
In the forthcoming budget, Finance Minister Nirmala Sitharaman faces the challenge of charting India’s economic trajectory in an election year. Acknowledging the nation’s aspirations to become the third-largest economy by 2030, this interim budget serves as a pivotal guide for the road ahead. With favourable conditions of low inflation and robust GDP growth, the government’s focus on the Make in India, Digital India, and Start-Up India initiatives has attracted multinational corporations, propelling economic expansion.
The logistics industry, a crucial driver of economic efficiency, anticipates key policy measures to streamline operations. Expectations include simplified regulations, a ‘single window’ for approvals, and a reconsideration of permanent GST exemptions for international transportation services. The budget strategy must align with the PLI schemes and infrastructure investments to mitigate domestic logistics costs and enhance India’s supply chain efficiency, addressing current disparities in global Logistics Performance Index rankings.
Additionally, the implementation of the National Logistics Policy under PM Gati Shakti National Master Plan and Make in India schemes necessitates the alleviation of congestion at international airports. The budget should incentivize off-airport cargo handling locations to ease this strain. Furthermore, a growing call for increased budgetary allocations towards upskilling and vocational training highlights the need to bridge the skill gap and empower the workforce for effective utilization of emerging technologies in the logistics sector. Rationalizing and simplifying cargo movement costs, fostering an ‘Open Sky Policy’, for international Cargo freighters to facilitate movement at all international Indian Airports and tapping into the commercial potential of Tier II and Tier III cities are essential components for India to achieve its ambitious 10 MMT annual cargo throughput target by 2030.
Nishith Rastogi, Founder, and CEO, Locus
As we approach the 2024 Budget, the focus for India’s logistics sector is clear: a forward-looking budget that champions technological integration and robust infrastructure development. Initiatives like PM Gati Shakti and the National Logistics Policy have marked significant strides in this direction.
This budget represents a crucial opportunity to future-proof our logistics. Beyond just infrastructure enhancements and tax reforms, there’s a need for strategic resource allocation that adapts to market dynamics, including fuel price fluctuations and supply chain disruptions. By investing in technology and aligning with global digitalization and sustainability standards, we aim to not only mitigate current challenges but also position India at the forefront of a tech-driven, efficient logistics sector globally.
As we eagerly await the unveiling of the budget, it is crucial to recognize the potential for transformative policies and investments that can propel the logistics sector into a future defined by efficiency, sustainability, and competitiveness. The convergence of innovation and fiscal planning is essential for fostering an environment where the logistics industry can thrive and contribute significantly to the broader economic landscape.
Deepak Tiwari, CEO, KSH Logistics
In the 2024 budget, we look forward to transformative measures that can propel the logistics and warehousing industry into a new era of efficiency and inclusivity. Labour law reform is a critical aspect of streamlining operations. Also, reduced interest rates for investments in capex, automation, and technology will not only stimulate growth but also drive innovation within the industry. We hope for financial incentives that promote gender neutrality, encouraging the employment of more women and the third gender, and fostering a diverse and inclusive workforce. Furthermore, an infrastructure push in Tier 2 cities will not only decongest urban centres but also create new hubs for warehousing, facilitating better regional connectivity.
As we await the budget announcement, we look forward to a roadmap that supports our vision for a progressive, technologically advanced, and inclusive future in the warehousing sector.