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Infrastructure Boost Key Driver For Logistics

Overall this is a very good budget for the Infrastructure and Logistics industry, and the initiatives introduced in the Budget will redefine the benchmarks of the industry

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This is a landmark Budget for the Logistics industry. Just last year, the Logistics sector was accorded Infrastructure industry status and in this Budget, Infrastructure has been earmarked as the Government's key growth engine. While significant budgetary allocations have been made for Infrastructure - and by extension for Logistics - the real game-changer is the Government's acknowledgement of the huge potential that Infrastructure has, to deliver diverse benefits - from job creation and economic activity to being an investment magnet and a big contributor to the nation's GDP. Infrastructure will be the country's growth machinery, and Logistics will be its core component, the DNA of growth.

Infra boom
The Finance Minister has introduced several important measures to develop Infrastructure in the country, and the allocation of Rs. 5.35 lakh crore to develop 35,000km under phase-I of the Bharatmala road project is one of the biggest provisions of the Budget. We also welcome other important initiatives like the decision to boost the MSME sector by allocating Rs 3,794 crore in the form of capital support. With the Government conveying its seriousness to develop Infrastructure, this will encourage significant private investments from overseas as well as domestic players, fulfilling the funding needs for the core projects.

One area where private investments can show huge results is the upgrading of dilapidated government and railway warehouses across the country. Modern warehouses will prevent wastage of produce, saving the country thousands of crores.

Digital push
The initiative to set-up National Logistics Portal as a single online window to link all stakeholders will give a big digital push and streamline the functioning of the Logistics sector. Another significant allocation is the Rs. 2.4 lakh crore towards development of smart cities, which will push the need for express companies like TCIEXPRESS. The introduction of digital payment models like pay-as-you-use system for toll payments will not only enable a cashless economy, but also bring in much-needed efficiency and transparency in the business.

Logistics parks 
The Budget's main thrust has been on boosting the rural economy, and this will also have an indirect positive impact on the Logistics sector. As rural markets will grow in significance and purchasing power, and marketplace demands go up, a more efficient and seamless logistics infrastructure that meets these demands will deliver strong advantages to the economy.

This is where logistics parks can play a game-changing role. By their nature, logistics parks can ease out the current fragmented nature of logistics, helping industry move away from point-to-point logistics towards the more efficient hub-and-spoke model. Aligned with the 'one nation, one tax' premise of GST, logistics parks will accelerate the benefits of GST to both producers and consumers. The hub-and-spoke approach will increase speed, cut costs and create a smarter logistics network in the country.

The way forward
Setting up a dedicated Logistics Division under the Ministry of Commerce & Industry and granting infrastructure status to the logistics industry is a move in the right direction. Subsequent initiatives in easing GST rules and implementing major infrastructure projects will further lift the logistics sector. But the biggest boost that the Government has given through the Budget is by cutting regulatory barriers and offering a seamless, transparent digital platform that will ensure easy movement of goods and vehicles across the country. Besides creating a level playing field, focused fiscal incentives to encourage investments in specific areas will allow the private sector to contribute, consolidate and expand.  

For a Government firm on reforms, the concerted approach towards the logistics sector demonstrated in this Budget will yield big demographic as well as economic dividends in the years to come, ensuring the growth of India's logistics sector, and in effect, the nation's GDP. Overall this is a very good budget for the Infrastructure and Logistics industry, and the initiatives introduced in the Budget will redefine the benchmarks of the industry.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
infrastructure Union Budget 2018

Chander Agarwal

The author is Managing Director at TCIEXPRESS.

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