What the logistics Sector can expect from the Union Budget 2018

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.

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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 agriculture

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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