Budget must allocate funds for multimodal logistics parks to maintain rapid growth of logistics sector: Expert

The logistics industry has grown rapidly at a CAGR of 15% and will continue to grow at a faster rate in the years ahead, he underscored.

PM Modi’s vision for India is to become a $5 trillion economy with the integration of technology, digitization, and infrastructural development in the logistics industry.

Multimodal connectivity would help to reduce its operational cost as low as to single digits and reduce delivery time, he said, adding that the government is also looking forward to more sustainable practices in transportation to cut down its carbon footprint to net zero by the year 2070.

Alternative fuel technologies such as LNG, Electric Vehicles, hydrogen-IC engines, and fuel cell trucks will play a significant role in future of the logistics, the Indian government must provide the right ecosystem and economic support to achieve its green emission targets.

“To ensure that logistics infrastructure and multimodal connectivity continue to develop, the government should allocate funds to multimodal logistics parks to improve the country's logistics efficiency in a time-bound manner,” he said.

This would help India to become a leading logistics provider delivering efficient, safe, and economical logistics solutions across all the modes, Road, Rail, Coastal and Air, he added.

CFO of Mahindra Logistics Ltd. Yogesh Patel said, “We are expecting Union Budget to further the initiatives to support the growth of our economy. Union Budget should continue to prioritize the improvement of logistics infrastructure across roads, warehouses, and ports.

The announcement of National Logistics Policy in this year has clearly laid out the direction to improve efficiency and transparency of operations.

Multiple interventions across the logistics ecosystem, that the National Logistics Policy defines, should be adequately funded by the budget so that its effects can be seen in the years to come. One of the focus areas for the budget can be on enhancing transparency and visibility, which can be attained through the Unified Logistics Interface Platform as and when it is integrated into the system, Patel said.

ESG has direct implications for the logistics sector, he underscored.

The government may also consider introducing concessions for EV infrastructure installation, such as charging stations in additions to concessions for new EVs which can expedite the adoption of EVs for commercial purposes and speed up its presence in the last-mile delivery services.

We anticipate that the budget will prioritise strengthening the infrastructure for logistics and related services and advancing connectivity initiatives in various economic zones thus creating enabling environment for reducing logistics costs and times and boosting productivity and economy.

Kami Viswanathan, Senior Vice President, FedEx Express, Middle East Indian Subcontinent and Africa (MEISA) Operations said, "While the National Logistics Policy will be pivotal to the development of the logistics and supply chain ecosystem, FedEx recommends a special focus on air cargo."

The development and expansion of airports to meet the rapidly growing demand for air cargo capacity and digitized systems to streamline surging cross border shipments, will be essential to ensure seamless freight movement in and from India, she said.

A more efficient air express infrastructure will improve global competitiveness, ensure just-in-time deliveries and fuel India’s ambition of becoming a $5 trillion economy by 2025, according to Viswanathan.     

"FedEx recommends allowing all categories of export and import shipments through express mode to boost MSME exports in the pos-Covid scenario. We also recommend eliminating value and weight restrictions for clearance under courier regulations," she said.

This will further boost exports from India, especially for MSMEs engaged in cross border e-commerce, and increase India’s competitive advantage as a manufacturing hub.

Furthermore, we recommend the implementation of zero rating of Goods and Services Tax for all international transportation services.

Most of the international GST/VAT legislations ‘zero-rate’ international freight transportation services. This would facilitate trade and align India with international tax practices as well as reduce logistics costs, she said.

Lastly, the budget should not only create a roadmap for sustainable growth in the logistics sector but also incentivize logistics players to adopt sustainable practices.