As India’s economic engine roars ahead, the logistics sector finds itself at a pivotal crossroads. From bustling ports to last-mile deliveries, a web of challenges and opportunities awaits. As the world navigates through dynamic shifts in trade patterns, technological advancements, and sustainability imperatives, the logistics industry stands at the forefront of transformative change.
With the Union Budget 2024 just around the corner, logisticians are eyeing for multimodal expansion, while digital whiz-kids champion AI and automation. As sustainability has become the buzz word, industry experts are seeking for a focus on green logistics and renewable energy.
Infrastructure
Investment in multimodal infrastructure: The backbone of efficient logistics lies in robust multimodal infrastructure encompassing roads, railways, airports, and ports. Experts emphasise the need for increased investment to meet burgeoning demand and enhance operational efficiency across transportation modes.
Last-mile connectivity: Addressing the last-mile challenge is paramount for improving delivery times and cost-effectiveness. Expansion of warehousing and transportation networks can bridge the gap, ensuring seamless connectivity from distribution centers to end consumers.
Modernisation of ports and airports: With international trade being a cornerstone of global commerce, modernising cargo handling facilities and expanding capacity at ports and airports is imperative. Upgrading infrastructure not only facilitates smoother trade flows but also enhances competitiveness on the global stage.
Digitalisation
Adoption of advanced technologies: Embracing cutting-edge technologies such as AI, machine learning, blockchain, and big data holds the key to optimising logistics operations. These innovations promise to streamline customs clearance processes, bolster risk management capabilities, and drive operational efficiencies throughout the supply chain.
Workforce upskilling: As logistics undergoes digital transformation, reskilling the workforce becomes essential to harness the full potential of emerging technologies. Equipping employees with relevant digital skills ensures organisational agility and competitiveness in an increasingly tech-driven landscape.
Unified Logistics Interface Platform: Simplifying logistics processes through ULIP adoption can significantly enhance operational efficiency and interoperability. Accelerating the uptake of this unified platform promises to minimise waste and streamline logistics operations across the ecosystem.
Sustainability
Incentivising green logistics: The imperative to curb carbon emissions necessitates incentivising sustainable practices within the logistics industry. Encouraging the adoption of renewable energy sources, electric vehicles, and eco-friendly practices can significantly mitigate environmental impact.
Focus on energy efficiency: Investing in energy-efficient infrastructure and promoting green energy initiatives emerges as a win-win strategy. Not only does it reduce carbon footprint but also yields economic benefits, driving overall efficiency and sustainability in the logistics sector.
Circular economy initiatives: Embracing circular economy principles can revolutionise logistics practices, promoting resource efficiency and waste reduction. Loosening import restrictions and fostering collaboration with other nations can catalyse the transition towards a more sustainable and circular logistics ecosystem.
Other considerations
Regulatory reforms: Simplification of regulations and facilitation of cross-border trade are pivotal for enhancing business ease and efficiency. Streamlining regulatory frameworks can unlock growth opportunities and foster a conducive environment for logistics operations.
Skill development: Bridging the skill gap through targeted training programs is essential for nurturing a skilled workforce equipped to navigate the evolving logistics landscape effectively.
Focus on Tier 2 and Tier 3 cities: Infrastructure development in smaller cities can alleviate congestion in urban centers and foster the emergence of new logistics hubs. This decentralisation strategy not only enhances logistical efficiency but also promotes regional economic growth.
Support for SMEs: Recognising the pivotal role of SMEs in the logistics ecosystem, initiatives to bolster manufacturing and trade can fuel sectoral growth. Providing tailored support and incentives to SMEs can unlock their potential as key contributors to logistics innovation and competitiveness.
Here’s what industry experts have to say:
Kami Viswanathan, President – MEISA, FedEx Express
“FedEx advocates for a strategic allocation towards infrastructure development for more efficient multimodal logistics. Additionally, we emphasise a focus on digitisation in the logistics sector to accelerate speed and ease of doing business.
Recognising the impact of the National Logistics Policy and PM Gati Shakti National Master plan, alongside prioritising 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 optimise 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. This approach promises improved risk management, compliance, efficiency, and analytics.
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 incentivising SMEs. We also anticipate initiatives towards greater trade facilitation and further fostering a business-friendly environment aligning with the USD 5 trillion economy goal.”
Mahendra Shah, Chairman Director, V-Trans (India)
Attention of the current government has been substantial on enhancing logistic and supply chain efficiency. We expect policymakers to support the same further and also take steps to reduce supply chain costs. Many measures taken to boost manufacturing have started showing results and an efficient supply chain will boost the cause further. In the forthcoming budget, we look forward to improved outlay for logistics Infrastructure. Regulatory and budgetary support for Fast-tracking multimodal logistics infrastructure projects is needed. In the last year, ULIP has already been operational, but the need of the hour is its faster adoption across the stakeholders. In the forthcoming budget, steps for easy usage of ULIP will help in waste reduction and improve interoperability in logistics.
Logistics is a sector that has a significant contribution to carbon emissions. We look ahead towards the initiatives for faster adoption of green logistics. Incentives and easier access to funds for the adoption of sustainable logistics can be a good option to move forward.
Being a major player in road transportation, we would like to draw the attention of the Government towards issues related to drivers. The government needs to introduce some schemes in the logistics industry for drivers.
Last but not least will be bringing petroleum products under the purview of GST. Fuel is the largest component of our expenses. Once the industry gets input credit benefit on fuel, it will be a major boost.”
Sandeep Kulkarni, Chief Operating Officer, Allcargo Gati (formerly GATI)
As the country’s economic growth is gaining accelerated momentum and the key sectors are witnessing strong domestic and global demands, the logistics industry requires a robust infrastructure and policy push from the interim budget to build superior operational and efficiency to meet the growing demand and enhance overall competitiveness in the global logistics landscape. As the country is making significant progress towards becoming a global manufacturing hub, the logistics industry has an enabling role to play to catalyse the rise. In addition, an efficient logistics infrastructure and operational framework will eventually strengthen the ease of doing business narrative. Apart from continuing the capex push for multimodal transport infrastructure development consistent with National Logistics Policy, the budget needs to propose incentives in terms of tax benefits to attract private sector investments to strengthen last-mile connectivity in the form of building warehousing and transportation networks. As the growth of the digital economy is driving e-commerce progress, the budget should propose measures, provisions or policy support which will encourage new-age data-driven technology adoption to enhance supply chain agility, responsiveness and resilience. With environmental sustainability emerging as a dominant theme in the logistics and supply chain industry and more and more logistics companies adopting the principles of green logistics, the interim budget needs to propose incentives to encourage renewable energy adoption, EV deployment, etc.
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 prioritisation of logistics infrastructure development across roads, warehouses, and ports, has garnered enthusiastic support. The industry anticipates the Union Budget to further solidify the Digital India Act, promoting digitalisation 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.
Mayank Bindal, Founder & CEO, Snap E Cabs
Over the past 5 years the government has focused a lot on building strong infrastructure. It is expected to continue improving and make efficient investments in energy, especially green energy and sustainable energy. The focus is on transitioning from carbon dependent to energy efficient policies. The new transport policies being adopted by the state govt is a testament to this shift. Many state transport authorities have announced the conversion of Petrol/Diesel cabs be converted into EV’s by the end of this decade.
One of the most anticipated schemes to be continued is the FAME II subsidy (Faster Adoption & Manufacturing Electric Vehicles). This subsidy was announced in 2019 having a validity for 3 years. It is expected that the govt will continue this for the next few years in response to decarbonising the environment and achieve the targets of net 0 goals.
Along with this, there is a proposal to reduce the GST on the Li-ion batteries from 18 per cent to 5 per cent overall, reducing the cost of acquiring EV’s. Since batteries are a major cost component in EV’s, the move to reduce the cost of batteries will make the product more lucrative for buyers.
We look forward to EV financing getting priority sector lending status as the government’s ambitious target of 30 per cent penetration to be achieved by 2023.
Pushpank Kaushik, CEO of Jassper Shipping
The interim budget on February 1, necessitates a focus on reforms and advancements in India’s logistics and sea trade. With our current count of 13 major ports, it’s imperative to exceed the six planned under the Sagarmala project. The surge in foreign trade, particularly in e-commerce, demands more than the designated six major ports, considering the projected cargo traffic of ~2,500 MMTPA by 2025, surpassing the current port handling capacity of 2,400+ MMTPA. Therefore, allocating a sum greater than the previously assigned US$ 223.31 million (Rs. 1,709.50 crore) from the Union Budget 2022-23 to the Ministry of Shipping is critical for enhancing port operational efficiency, expanding existing ports, and instigating the development of new ports in India. This will improve the sea trade and enhance the logistics sector, with faster turnaround time and more business opportunities in the country.
Gurdeep Singh, Founder & Chairman, Jujhar Group
We expect an upward trajectory for the logistics industry in FY 24-25. The predicted growth is based on dynamic expectations, which are supported by increased expenditures in infrastructure, technology-driven equipment, and a competent workforce. These strategic expenditures are critical for increasing efficiency and meeting the shifting demands of the supply chain. After the National Logistics Policy came into the picture, India is not only striving to streamline operations but also emphasising technology-driven solutions. Thus, with this year’s budget allocation, the growth in the sector might be foreseen to outpace the GDP expansion, with the logistics market expanding 1.5 times the size of the GDP. Our budget expectations revolve around a comprehensive approach that supports the entire logistics sector’s journey toward a more resilient, flourishing future, with an added focus on aligning with the booming real estate opportunities in 2024.
Eugene Panfilov, General Manager, Borzo
The interim budget is expected to be short and concise addressing important sectors only. However, we expect that the robust budget in the new cabinet will specifically address Ecommerce and Logistics Technology. Ecommerce landscape in India has experienced tremendous change in the last 3 years. With the ‘Make in India’ initiative several SMEs and D2C brands have gained prominence by bypassing domination of major marketplaces and creating their own digital store. Though e-commerce policy will look to bring a balance between players across scale intending to minimise anti-competitive practices, but it needs to address digital adoption of MSMEs and D2C brands and encourage independent stores
Hopefully this year’s Union budget would address issues pertaining to data privacy within e-commerce policy and present an executable solution that has clarity of different ministries and does not burden the businesses through added costs. Also the policy should entail fulfilling of only necessary compliances and certifications on a single window to ease solving of grievances.
Now with the ONDC evolving, what needs to be observed is that will the government explore possibilities to connect individual digital stores to the ONDC network to come full circle in the creation of an extensive level-playing marketplace. We hope that the recently launched National Logistics Policy will be fast tracked to connect different corridors and improve last-mile connectivity, resulting in logistics costs going down.
Darshan Ghodawat, CEO and Managing Director, AVA Global Logistics
As we look forward to the Union Budget, the logistics sector sees it as a significant opportunity to enhance productivity, formalisation, and overall growth. The upcoming budget should align with the government’s focus on boosting domestic manufacturing. This necessitates preparing the logistics sector for increased service integration, substantial growth in fulfillment logistics, and a greater reliance on multi-modal transportation. Anticipating the budget, our expectation is for a concentrated effort on fortifying logistics and related infrastructure. Speeding up connectivity projects in different economic zones will be pivotal, aiming to reduce logistics costs and time, ultimately boosting productivity and the overall economy.
Vipin Vohra, Chairman, Continental Carriers
In the forthcoming budget, Finance Minister Ms 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.
Rationalising and simplifying cargo movement costs, fostering an ‘open sky policy,’ 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.
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.
Vivek Lohia, Managing Director, Jupiter Wagons
As we eagerly anticipate the forthcoming budget, our industry envisions a governmental emphasis on cultivating a robust railway network. Our expectations for the budget revolve around advocating decongestion measures and strategic planning, fostering indigenous manufacturing, thereby contributing to a resilient and self-reliant Bharat. We anticipate a carry forward of the previous year’s postulates with undeterred throttle. The infrastructural boost towards improvement of the National Rail Network needs to continue and the 3000 MT mission must not get diluted by any means. Rolling stock-up upgradation and modernisation need to fast-track for better efficiency in revenue generation. Procurement of rolling stock assets to remain a high-priority subject. The number of wagons going to be overaged between 2024 and 2031 is anticipated to be around 45000 and it is essential that the new stocks must be added at a much higher rate.
Harinder Singh – Managing Director & CEO, Yokohama India
The upcoming interim budget, coinciding with elections, will set the tone for the government’s future plans. The 2024 budget is crucial for aligning tire manufacturing and EVs, steering the industry toward innovation and sustainability. The tire industry hopes for strategic allocations that drive innovation in durable and eco-friendly tires. Simultaneously, the EV segment would expect incentivising development of the ecosystem, including charging infrastructure investments, and research support, fostering a greener automotive landscape.
Sameer Aggarwal, CEO & Founder – Revfin Services
Embracing a sustainable future requires bold steps, and in the upcoming budget, I advocate for a visionary approach towards renewable energy adoption. Investing in renewable energy infrastructure is not just an environmental imperative; it’s an economic opportunity that can power our nation forward.
In the drive towards a greener tomorrow, the government can catalyse change by incentivising renewable energy projects and R&D initiatives. By allocating resources to enhance solar and wind power capacities, we not only reduce our carbon footprint but also fortify our energy security.
Crucially, as the electric vehicle revolution gains momentum, integrating renewable energy into the national grid becomes paramount. A strategic allocation in the budget for renewable energy will not only power homes but also fuel the burgeoning electric vehicle segment. By creating an ecosystem where clean energy sources power our transportation, we pave the way for a sustainable and resilient future.
We envision a budget that aligns economic growth with environmental responsibility, driving the nation towards a future where renewable energy propels both our homes and our vehicles. It’s not just an investment in power; it’s an investment in a cleaner, brighter tomorrow for generations to come.
Jay Deepak Shah, CEO & Managing Director, Jay Wood Industry
As we approach a new fiscal year, M/s Jay Wood Industry eagerly anticipates the forthcoming budget’s potential to catalyse transformative growth within India’s wooden pallet manufacturing sector. Our foremost concern lies in emphasising the critical need for infrastructure development and logistics support, as these pillars form the bedrock for seamless operations and cascading growth across the value chain.
With a strategic emphasis on exports and streamlined trade policies, India can fortify its standing as a prominent global manufacturing hub. Additionally, loosening the threads of imports will strengthen circular and trade economies with other countries, fostering international collaboration and sustainable business practices. At M/s Jay Wood Industry, our commitment to excellence and sustainability underscores our optimism for a future defined by unparalleled growth and success, awaiting the transformative impact of the upcoming budget.
Furthermore, a keen focus on digital transformation is imperative, propelling innovation and positioning domestic manufacturers, such as M/s Jay Wood Industry, at the forefront of global competitiveness. The budget must champion sustainability, aligning our practices with global eco-friendly standards. Skill development initiatives are indispensable, shaping a workforce adept at meeting the dynamic demands of the industry.
Darshan Rana, Chairman and Managing Director, Erisha E Mobility
Contributing significantly to the economy, the electric vehicle industry has demonstrated a sizeable potential to strengthen the economic growth and progress of the country. As we look towards the upcoming Interim Budget 2024, we expect the finance minister Nirmala Sitharaman will revisit GST rates on the vital spare parts of the EVs besides extending the Faster Adoption and Manufacturing of Electric Vehicles (FAME) subsidy scheme for widespread adoption of EVs which offer environmentally friendly and sustainable transportation solutions.
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
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. A forward-thinking budget aligned with these expectations will enhance the logistics sector and contribute to India’s global competitiveness and economic prosperity.
JB Singh, Director, MOVIN Express
The logistics industry stands at the forefront of transformative change, and the government has undertaken various initiatives to implement forward-looking measures in advancing multimodal projects and fortifying infrastructure. The future relies on the efficiency, resilience, and resource optimization of supply chains. It is imperative for the industry to adopt changes backed by robust technology to thrive in the fast-paced environment. Looking ahead, effective budgetary strategies, coupled with financial and regulatory incentives like Production-Linked Incentive (PLI) schemes, and strategic investments in infrastructure, will be instrumental in reducing domestic logistics costs. The government’s commitment to substantial infrastructure projects, such as PM Gati Shakti and the National Logistics Policy, positions India as a pivotal hub for manufacturing. The budget should emphasize connectivity projects in various economic zones, thereby helping to reduce logistics costs and time, improving productivity and the economy.
