Here's What the Logistics Sector Expects From the Union Budget

The logistics sector was praised for its undeterred spirit during the lockdown

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The year 2020 will be considered one of the worst years that mankind has faced on earth. Plagued by a once in a lifetime pandemic, the year saw empty streets, stressed healthcare sectors, increasing active and death cases. In terms of economy, with businesses remaining shut, countries recorded new lows in terms of GDP figures. 

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While the healthcare sector was working overtime to protect mankind from this contentious virus, another sector too rose to the opportunity to ensure essentials are getting delivered on time. Logistics, a sector which is considered a lifeline in various industries, faced their biggest challenge during three months of stringent lockdowns. From collecting passes to communicating with cops, and then delivering it, the sector met new challenges in every step. 

Come 2021, when the end of the pandemic is in sight with vaccination drives, India is also gearing up for the Union Budget 2021 that will be announced by finance minister Nirmala Sitharaman on February 1. All eyes will be glued to television on say of Budget as the finance minister described this year’s Budget will be “like never before” as India will try to climb in terms of GDP which plunged due to the pandemic.

The logistics sector which was praised for its undeterred spirit, will closely follow the Union Budget. 

Here’s what experts from the logistics sector expect from this year’s Budget:

Saahil Goel (CEO & CO-Founder of Shiprocket) 

"India’s offline retail market has been heavily impacted by the COVID-19 pandemic. However, the crisis has fuelled the growth of e-commerce and the Direct to Consumer (D2C) sectors. We expect that the Union Budget 2021-2022 will focus on improving digital infrastructure in tier-II and tier-III cities. Better internet connectivity in rural regions will further stimulate the e-commerce demand. The industry requires the introduction of the National Retail Policy that will boost the sector to a higher level altogether."

"Measures such as streamlining approvals and compliance for ease of doing business, enhancing access to capital, quicker adoption of technology and automation by traditional retailers, and setting up a well-connected logistics and supply chain network would be immensely favorable to the industry. Furthermore, measures to enhance warehousing would also greatly benefit the sector. These steps will allow the industry to grow rapidly and will also help in job creation during the year."  

Prem Kishan Dass Gupta, Chairman & Managing Director, Gateway Distriparks

The year 2020 has disrupted and challenged the logistics sector in different ways. However, the logistics sector still serves as one of the key economic drivers because of its thriving infrastructure and improved connectivity. From Union Budget 2021 we expect strong support and initiatives for the EXIM industry which will help in increasing volumes. 

We hope the budget will have enhanced allocation to the Indian Railways for completion of the Western Dedicated Freight Corridor (DFC) project at the earliest, so that the industry can benefit from the new rail infrastructure at this time when the focus is to increase manufacturing in India. This will immensely benefit ports, exporters, importers, shipping lines, container train operators and other consumers of Rail transport.

As a Logistics company, we are looking at the government's increased investment in infrastructure, which will provide further impetus to boost the overall economy.”

Aneel Gambhir, CFO, Blue Dart

“While the onset of the pandemic affected the logistics sector, the sector has stood the test of time by supporting the movement of essentials and non-essentials when the nation was under lockdown. We expect the government’s full support to revive the sector and in order to do so, the logistics cost should be reduced from the present 14 per cent of GDP to less than 10 per cent since high logistics cost is impacting the competitiveness of domestic goods in the international market. Investing in better road infrastructure will fasten the movement of goods, help in reducing the costs and improve turnaround time for vehicles. Improvement of air infrastructure and connectivity will help the logistics industry to boost this sector.

Electric vehicles have the potential to aid in last-mile delivery while also adding to environmental protection. The Government should incentivize the use of electrical vehicles and focus on strengthening the infrastructure for enabling easy manufacturing and usage of EVs and EV-related elements. Similarly, Government could consider rolling back additional taxes levied on Petrol and diesel prices. The additional taxes levied during the pandemic are hurting the cost of transportation. It is also leading to high inflation.”

Ankur Bansal, Co-founder and Director, BlackSoil 

Logistics industry is increasingly getting digitalized and such initiatives are also required from the Government. Taxation, payments, and documentation should be completely digitized, possibly through a single window. Investments are also required in automation tech such as warehouse sorting and package labelling to increase efficiency and meet the increased e-commerce demand. Need to encourage investment in tech that will improve operational and cost efficiency in the long-term and make Indian logistics industry more competitive globally.”

Mithun Srivatsa, CEO & Founder, Blowhorn

"In the post-Covid world, we are seeing a rapid acceleration in the transition of offline commerce to the online medium. We are also witnessing a cambrian explosion of D2C brands seeking to bring the very best of "Made in India" products directly to the customer's doorstep. We would like to see increased strategic spending on urban infrastructure, both in Tier-1 cities and beyond, as that is critical for reducing the last mile cost of product delivery, which currently constitutes nearly 50% of the total logistics cost of the product. Specifically in the last mile context, another important dimension for the government to target is to further incentivise the local manufacture and deployment of EV vehicles. EV vehicles have a potentially massive role to play in last mile logistics, which we hope will receive appropriate recognition in this Union budget." 

Abhik Mitra, MD & CEO, Spoton Logistics

"As India Inc. sets sights on the Budget 2021-2022, I would like to draw the attention of the honourable finance minister towards a few key pain points of the logistics industry that must be addressed in this year's budget. With logistics holding the economy together even during the COVID-19 pandemic and set to play an even more crucial role in current times, the government must look at providing the much-required financial and infrastructural support to the sector. With India's aim to reduce the logistics cost from the current 14 per cent of GDP to less than 10 per cent, it is imperative for the government to bring about a groundbreaking transformation in the logistics sector that encapsulates an increased use of digital technologies and automation. We urge the government to take dedicated measures to boost digitalisation so as to drive transparency and bring in the required predictability in logistics. Another key step that the government must take is to bring Fuel under the purview of GST as this could fundamentally transform the Indian logistics sector. While goods are moved from one place to another, it is generally required for the transporter to carry a hard copy of the invoice, the government must also do away with this by way of e-way bill digitalisation. On the demand side, the government can look at driving the overall consumption which could be achieved by reducing personal income tax and GST on various goods, etc."