Union Budget for Logistics Sector

The logistics sector, which is one of the key players in the Indian economy, has some key expectations from the Union Budget 2021. Among these are infrastructure funding, digitisation of processes, changes in taxes and rules for e-commerce, etc.

The logistics industry is one of the key sectors of the Indian economy that has seen immense growth in the last couple of years. Infrastructure spending has been given a major push and the logistics industry in India, as per the ICRA report, is expected to grow at the rate of 9-10% per annum. The recent index published by the World Bank Logistics Performance Index (LPI) saw India’s position rise from the 54th position in 2014 to the 35th position in 2016.

The Union Budget is observed to allot major chunks towards the development of the logistics industry. The Union Budget 2017 made massive provisions of over Rs.2 lakh crore towards the transportation sector.

Logistics Sector Key expectations from the Union Budget 2021

Finance Minister Nirmala Sitharaman during the Union Budget 2021 announced that the expenses related to infrastructure spending will be increased as there will be more importance levied on improved road and railways, new economic corridors, and push towards digitilisation. This move has definitely made a majority of logistic company become happy.

Some of the key takeaways from the Union Budget 2021 with regards to the Logistic Sectors are:

  • The national highways planned to be built in Tamil Nadu, Assam, Kerala, and West Bengal will get the final push and move towards completion. Road infrastructure will improve considerably according to logistic companies.
  • The budget also put an emphasis on pumping more money into commissioning of the eastern and western dedicated freight corridors (DFCs). The government has decided to allocate Rs.1,10,055 crore which will help in bringing down the logistic cost.
  • Digital technology will also get a push as Rs.1,500 crore scheme on digital payment was introduced which will ease the customer interface for various logistics companies in India.
  • A new scheme will be launched for flagging of merchant ships in India where Indian ship owners will be provided subsidy support. A total fund of Rs.1,624 crore has been allocated.
  • There will be more intent towards increasing the green energy and transcend towards zero-carbon environment.

Logistics Sector Key expectations from the Union Budget 2019

Finance Minister Nirmala Sitharaman, on 5 July 2019, presented her maiden Union Budget for the year 2019-20. She highlighted that the transport infrastructure in the country will improve with the help of government schemes such as Sagarmala, BharatMala, and UDAN. These schemes will also help in bridging the divide between rural and urban India.

Logistics Sector Key expectations from the Union Budget 2018

The central government recently created a separate division for the logistics sector under the Ministry of Commerce and Industry. And in November 2017, it was granted the infrastructure status. Hence, the logistics sector is expected to hold high relevance in the Union Budget 2018.

Huge infrastructure funding

The logistics division is expected to get access to infrastructure funding in the form of commercial borrowings, infrastructure policies, pension funds and long-term funding insurance companies. A few mega projects focused on logistics have already been announced by the government. The Sagar Mala Project and the Mumbai Trans Harbour Link Project require significant funds from the Union budget 2018.

Digitisation of processes

Experts from the industry are of the opinion that digitisation can further the logistics sector and introduce convenient methods to manage processes. Introduction of Electronic Logging Devices (ELDs) that record the movement of trucks would help automate the billing process and therefore automate the taxation process too.

Allocation of funds for logistics

Since the domestic consumption is on the rise, a larger inflow of funds from the Union Budget 2018 will benefit the logistics sector. This would also create opportunities for logistics startups.

Change in rules and taxes for the e-commerce industry

Lately, the limelight has been on the data penetration boom in the country. The e-commerce industry thus creates an opportunity for the logistics sector. Significant reforms with regard to the e-commerce industry in the Union Budget 2018 could boost the entire logistics sector.

The recent times have seen a rise in consumerism through the retail and e-commerce industry. This has made the logistics process pave way for value creation which will help further the economy. Increasing the transparency in the regulation of the logistics sector, pushing the digital drive for the logistics movement, focusing on the development of logistics hubs, and increasing the investment to eliminate the roadblocks of the logistics movement should be the aim of the Union Budget 2018.

Further, the logistics startups face major challenges in bagging government tenders since contenders are well-established and can bid for a low price. Hence, the upcoming budget should provide for a special window for such startups, which will help them play a significant role in mega government projects.

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