2022 was a year of recovery and growth for the Indian logistics industry, with tangible signs of revival and resilience demonstrated in the development of demand and supply across the country. The recovery was driven mainly by demands from end-users for national and international customers.
The logistics industry has welcomed the government’s proposal to increase the capital investment outlay by 33% to Rs 10 lakh crore in the union budget 2023-24, claiming that the emphasis on building infrastructure will strengthen India’s position in the global supply chain.
We bring you viewpoints of industry players in the logistics sector.
Deepak Tiwari, COO, KSH Logistics
A significant allocation of Capex of 10 lakh crore in infrastructure, roads, and railways will help the industry to accelerate its growth. This initiative will ensure the timely creation of exceptional transportation infrastructure and improve logistics throughout the country. On the other hand, the emphasis on green energy and skill development demonstrates a commitment to sustainability and growth, positioning the industry for a more efficient, environmentally conscious, and skilled future.
Coen van der Maarel, Managing Director of Kuehne+Nagel India, Sri Lanka, and the Maldives
The Union Budget 2023 has unequivocally outlined the nature of India’s macroeconomic trajectory for years to come. The budget heavily emphasises structural realignment and strengthening the macroeconomic environment through prioritising investments in infrastructure, green industry, and transitioning to cleaner energy.
Infrastructure-wise, we note with optimism the capital expenditure dedicated to the construction and development of 50 new airports and heliports, 100 transportation infrastructure projects, and dedicated freight corridors. Additionally, the promotion of coastal shipping through viability gap funding builds on the strength of the outlined infrastructural developments. These infrastructural investments strategically position the Indian economy for increased investments and overall growth. Furthermore, in alignment with Kuehne+Nagel’s core businesses, the implied increase in freight transportation and revenue generation would help in strengthening the sector’s productive capability.
The significant capital outlay dedicated to increasing clean energy’s role in India’s energy mix, with the removal of customs duties on capital goods critical to the production of lithium-ion batteries, significantly contributes to decarbonisation. The government’s emphasis on this will likely spur investment and skill development in relevant industries.
These investments are vital spearheads in India’s efforts to achieve net-zero carbon emissionsby 2070. Kuehne+Nagel’s ambition and efforts to achieve a zero-carbon future closely align with India’s goals. Our own investments and goals with energy-efficient solutions, carbon offsetting, and renewable energy usage, mirror the key green and clean investments and outcomes desired by the Union Budget 2023.
Gayomard Driver, Group Chief Financial Officer and Board Member, Jeena & Company
It is a welcome budget as the focus on infrastructure improvement is apparent. Improvement through the revival of airports, helipads, water aero drones, and advanced landing grounds will support quick and efficient logistics. It could also simplify and improve regional air connectivity, further increasing the growth across the logistics sector.
The industry is poised to increase commitment towards developing green logistics infrastructure and an increase in green job avenues as a result of the government’s strong focus on green energy and sustainability in the 2023 budget.
Karan Shaha, Co-founder and CEO, Vahak
In line with our expectations, Budget 2023 has focused on incentivising state governments for infrastructure development. The centre’s support with an enhanced outlay of Rs. 1.3 lakh crore will act as the accelerator toward logistics policy creation at the state level. With this in place, we hope to see good traction in transportation infra creation, especially related to top freight routes, logistics parks and highway development. Additionally, opening opportunities for private investments in infra will pump in efforts toward roads, urban infrastructure and power sector developments, which are critical for efficient transportation and transition to green mobility.
We also welcome the decision to extend the income tax benefits for startups and the formation of the National Data Governance Policy.
Nishith Rastogi, Founder & CEO, Locus
It is encouraging to observe Green Growth as a priority pillar of the Union Budget 2023. The logistics sector will play a crucial role, as non-electric vehicles are one of the major contributors to carbon emissions in India and worldwide. To that end, special attention must be paid to the Indian supply chain and logistics sector, especially the last mile. By adopting new-age solutions driven by AI, ML, etc., this sector will be able to reduce vehicle emissions drastically and improve operational efficiency.
Zaiba Sarang, Co-founder, iThink Logistics
Adopting green and sustainable practices is the way toward future, which has been acknowledged by the government quite profusely in today’s budget. The Union Budget 2023 places a strong emphasis on environmental responsibility. Continuing to provide the impetus for EV adoption in India, the government has taken robust steps through exemptions on customs duty levied upon the machinery imported to manufacture lithium-ion cells for EV batteries. The budget has also adequately covered infrastructure development by allocating INR 75,000 crore, including private investment, towards improving first- and last-mile delivery. As part of the logistics sector, we are elated at the announcement of these provisions since they will help solve the industry’s current connectivity issues while building a more sustainable future for logistics, where efficiency and environmental responsibility come together to form a sustainable ecosystem.
Vineet Agarwal, MD at Transport Corporation of India Ltd.
Union budget is holistic, optimistic and fleshes out the ambitious schemes announced by the government to boost all critical segments. For the logistics Sector, a committed focus on all tenets under NLP, will definitely lead the country from recovery to resurgence.
The increased Capital Outlay for critical Infra projects under the “Inclusive Development” priority will further boost sectoral development. The steep investment increment in digitisation and automation to develop smart warehousing and an announcement of 100 critical transport infra projects for steel, ports, rail, and road will strengthen the much-needed multimodal connectivity. Provisions like coastal shipping with Viability Gap Funding (VGF) for people & freight movement will further facilitate seamless cargo movement while reducing logistics costs.
The Government’s Green Growth Priority outlines a relentless sustainability vision. ‘National Green Hydrogen Mission’ targets the transition from fuels to green energy. This movement will enable a smooth shift toward the Net Zero Carbon Emission goal. Moreover, the PM Gati Shakti Vishwavidhyalaya facilitates the “Youth Power Priority”, emphasising on upskilling and creating opportunities for industry partnership.
The 2023 budget outlines a futuristic glide-path for improving the supply chain ecosystem in India.
Mahendra Shah, Chairman, and Group Managing Director, V-Trans (India) Ltd.
The significant progress with many sustainable development goals has increased the Indian economy size from the 10th biggest to the 5th biggest in the last 9 years. The government has taken several encouraging steps to boost the infrastructure and transportation industry. Logistics, infrastructure, and transportation is the future of our country. This year’s budget has shown the government’s commitment to the logistics and infrastructure sector. This highlights India’s futuristic growth and commitment to elements like the Data Governance Policy, Centres of Excellence on AI, Green Growth, and the conventional thrust areas of infrastructure have also received a big boost. The Union Budget 2023 provided little specific attention to the logistics and transportation sector. However, the government did announce various initiatives aimed at improving the country’s overall infrastructure, which could positively impact the logistics industry. These initiatives include the allocation of ₹1.97 trillion for infrastructure development, plans to build new airports and modernise existing ones, and investments in the development of the National Highways network. Additionally, the government’s focus on increasing the use of technology in various sectors, including transportation, could also benefit the logistics industry. However, the industry has called for specific measures, such as tax incentives and investment in technology, to boost its growth and competitiveness.”
Rizwan Soomar, CEO & MD – India Subcontinent & Sub Saharan Africa, DP World
Budget 2023 has focused on fiscal consolidation while prioritising infrastructure creation, last-mile connectivity and skill development. The substantial increase in capital outlay for infrastructure projects across centres and states, coupled with the specialised focus on improving last-mile connectivity, will lead to the creation of important last-mile linkages. The record outlay for the Indian Railways will provide the necessary impetus to programmes like the Dedicated Freight Corridor project that are critical to bringing the cost of freight movement down.
These concurrently align with the goals envisioned under the National Logistics Policy. Development of private participation will also be crucial in implementing the 100 critical first and last-mile transportation projects identified by the government and helping India achieve its efforts towards net zero emissions by 2070. The rationalisation of custom duties on specific products, extending credit access to the MSME sector, and easing SEZ regulations will help Indian products become price competitive globally.
We are confident that the Budget FY24 will attract private investment for capital expenditure, will spur economic growth and position India as one of the fastest growing nations in the world.”
Christian Roeloffs, co-founder and CEO, Container xChange
The Indian government’s commitment to promoting coastal shipping as an efficient mode of transportation, along with its focus on improving infrastructure and streamlining logistics operations, positions the country as a competitive player in the global market.
The National Logistics Policy, customs duty reductions, investment in digital infrastructure and the development of digital skills, are key initiatives aimed at creating a favourable environment for the growth of India’s shipping industry and positioning it as a strong alternative to China in the global supply chain.
The government’s continued support for innovation and collaboration in the logistics sector will play a critical role in enhancing the efficiency and competitiveness of the Indian economy.
Abhijit Verma, Founder & MD, Avinya Logistics & Industrial Parks
The 2023 budget of India is a beacon of hope for the working class. The focus on job creation, skill development and providing social security to the working class is commendable. The emphasis on strengthening the technology adoption through payments infrastructure and Digilocker will go a long way in making a big impact in the lives of millions of Indians. The allocation of funds for skilling programmes, startup ecosystem, and tax sops will benefit businesses and individuals alike. The budget strikes a perfect balance between economic growth and social welfare, making it a step towards a more equitable and prosperous India for all.”
Vineet Sharma, CEO & Co-Founder, FleetX
The Union Budget’s outline for the logistics industry seems positive for now. Initiatives such as a focus on last-mile connectivity, smoother process for establishing manufacturing and logistics hubs, and improving multimodal logistics, coupled with digitisation under the NLP can be game-changing and result in healthy growth of the logistics sector in the near future. The allocation of Rs.1,10,055 crore towards dedicated freight corridors will surely bring down the logistic costs.
Anshul Singhal, Managing Director, Welspun One Logistics Parks
Infrastructure development was a core in the 2023 Budget announcement, and the government’s announcement of all-time high capex outlay is a progressive step in making India a globally connected economy.
The infrastructure spend is up by 33% to 10L cr, which forms 3.3% of GDP in this year. There is a thrust and focus on urban planning and urban infra for sustainable living. An announcement of 50 additional airports, helipods, water aero drones, advanced landing grounds and over INR 2.4 lakh cr outlay for railways is also in the cards to improve connectivity across all urban and tier 2 and tier 3 cities.
The increase in Capex and resulting infrastructure development will also ease warehousing development and attract investment from the private sector, wishing to capitalise in this development.
Measures such as the government’s intention to launch Pradhan Mantri Kaushal Vikas Yojana 4.0 to skill the youth for international opportunities and the setting up of 30 Skill India International Centres across different States will also contribute to long-term talent creation for the infrastructure, logistics and warehousing development throughout the country in the next few years, thereby empowering this industry to contribute hugely to India’s ‘vikas’.”