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BW Businessworld

Budget 2020-21: Big Infra, Logistics & Warehousing Push

More high-speed trains, expressways and electrification of lines on the anvil.

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The Budget for FY21 has highlighted a number of steps to boost the infrastructure and faster connectivity via roads and railways. The FM announced Rs 1.7 lakh crore as the allocation to be provided for developing transport infrastructure in the country involving 6,500 projects.

The FM also said that the government plans to set up 9,000km of economic corridor and 2,000km of coastal road in the coming fiscal. The finance minister said the government will also look at monetizing 12 lots of highway bundles of 6,000km by 2024.

In her budget speech finance minister Nirmala Sitharaman has announced launching of more high-speed trains. "More Tejas type trains will connect tourist destinations. High-speed rail between Mumbai and Ahmedabad will be pursued. A suburban rail project in Bengaluru is planned," she said adding Rs 11 lakh crore will be allocated to the infrastructure sector in the next 5 years.

The government will also create five new Smart Cities in FY21, the finance minister said in her speech.

Logistics and Warehousing

Shares of logistic companies surged after the Finance Minister Nirmala Sitharaman on Saturday proposed to build a seamless national cold storage chain.

She added that the National Bank for Agriculture and Rural Development (Nabard) will map and geotag the warehouses and cold storages.

Sitharaman also informed the parliament that financing on negotiable warehousing receipts has crossed Rs 6,000 crore.

Aegis Logistics (up 6.39 per cent), Lancer container (up 5.40 per cent), ABC India (up 4.60 per cent), Kesar Terminals & Infrastructure (up 4.33 per cent), Transport Corporation of India (up 3.73 per cent), Container Corporation of India (up 1.63 per cent), and Blue Dart Express (up 1.01 per cent) were among the top gainers.

Sankey Prasad, Managing Director and Chairman at Colliers International India said, “National Logistics Policy will boost investor confidence in the country’s most unorganized sector. Creating a single point of reference for all logistics and trade facilitation matters in the country, National logistics policy will also enhance India's position in attracting investments and business competitiveness to facilitate the expansion of manufacturing units to tier-II and tier-III cities in the country to unlock demand potential of these regions. It will drive economic growth by promoting integrated development of logistics sector and creation of jobs and business opportunities.”

Commenting on some of the announcement related to warehousing, Abhilash Pillai, Partner, Cyril Amarchand Mangaldas said: "More government warehouses on government land is a welcome step. It should be developed with state of the art facility under PPP model and should have unhindered access. This will help in increasing production and sales. FCI & WCI can also lease out excess space available to private operators."

Aashish Agarwal, Senior Director, Valuation & Advisory Services at Colliers International India said: “The Government's intent to provide viability gap funding for PPP-based warehousing at block and district level will provide further impetus to the sector and attract global investors and developers. Organised and mechanized warehousing will support agriculture and the local economy, reduce distribution costs, encourage 3PL logistics as well as job creation”.