India’s Budget 2021: What remains in store for Shipping and Logistics?

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Stakeholders in the shipping industry have lauded India’s Union Budget 2021-22 and said that it reflects the Government’s commitment towards reducing costs and improving logistics infrastructure in the true sense of the term.

“Bringing down the logistic costs for our industry is at the core of our strategy to enable Make in India,” said Finance Minister Nirmala Sitharaman while presenting the Union Budget on February 2. Below is a glimpse at India’s plan to develop three major modes which facilitate logistics.

Roads and Highways: More than 13,000 km length of roads, at a cost of INR 3.3 lakh crore, has already been awarded under the INR 5.35 lakh crore Bharatmala project of which 3,800 kms have been constructed. By March 2022, the government would be awarding another 8,500 kms and complete an additional 11,000 kms of national highway corridors.

Railway infrastructure: Indian Railways have prepared a National Rail Plan for India – 2030. The plan is to create a future-ready railway system by 2030. It is expected that Western Dedicated Freight Corridor (DFC) and Eastern DFC will be commissioned by June 2022.

Shipping and Ports: Major ports will be moving from managing their operational services on their own to a model where a private partner will manage it for them. For the purpose, the budget proposes to offer more than Rs 2,000 crore by major ports on public-private partnership mode in FY21-22.

Most notably, it is the first digital budget in the history of India. In all these aspects it is a ‘Budget like never before’. Sea News spoke with industry veterans and entrepreneurs in the sector about their take on the Union Budget 2021-22. Below are the excerpts…

Aditya Vazirani, CEO, Robinsons Global Logistics Solutions

“The 2021-22 union budget was a highly anticipated one, given the current economic situation and the global environment of volatility and uncertainty. And I would say it has delivered well, given the background. While this budget comes at the heels of the mini-budgets announced through-out the last year, in the wake of the COVID 19 pandemic, it has been progressive and offers an objective and detailed plan of action. The INR 1.15 thousand Crore allocation for railways, plan to privatise airports in tier 2 and tier 3 cities and completion of 8,500 Kms of strategic highways by March 2022, are all efforts in the right direction, to bring down the cost of logistics and transportation. Further, the development of Eastern, Western, East-coast, East-west and North-South dedicated freight corridors, is set to give a boost to logistics and supply chains across the country, improving connectivity and bringing down the costs. The voluntary scrapping policy for vehicles and the thrust on electronic/ greener transportation will, in turn, help reduce the carbon emission and control the air pollution index, which was vastly attributed to transportation. This has out and out been a well-planned and detailed budget that showcased the actionable points by the government and the desired impact, in line with the long term economic goals.”

Gaurav Bubna, Co-founder, NextBillion.ai

“We at NextBillion.ai are very excited with the current Union budget for 2021 announced by Finance Minister Nirmala Sitharaman. The budget fully recognises the impact of startups and how technology plays an important role in the future of digital India and Atmanirbhar Bharat. We think the one-year extension of tax holidays is a great move to support the entrepreneurs. The government is now focusing on many more types of companies especially through incentivising OPC, the government is going all out in supporting small business and entrepreneurship. The budget also touches upon the use of AI and we like how it is used to develop the national language translation project. We think this will be a great step forward in creating India to be a global centre for NLP and associated R&D. Overall really excited to see the effort the government is taking to move India forward-towards a digital society.”

Vishal Sharma CEO – Cluster India and Indian Sub-Continent, DB Schenker

“In the budget announced today, the fund allocation for the infrastructure development of transport sector, including roads and railways, is definitely a positive push for the logistics industry and will have a long-term impact on last-mile deliveries. With Covid-19 vaccine distribution, a robust national supply chain is of paramount importance in 2021. The proposed measures by the government will ensure ease of doing business for leading companies as well as Indian logistics startups and also, support in boosting the overall economy. Further, the step towards making India a strong textile hub through the development of integrated mega textile parks will improve manufacturing and aid export competitiveness.”

Rajesh Neelakanta, ED & CEO of BVC Logistics

“The logistics industry was looking forward to this year’s budget speech. We were expecting an update on the long-awaited National Logistics Policy. However there have been some hits and misses for us. Certain good points to look forward are reduction in timelines for reopening of assessments from 6 years to 3 years. Businesses can now breathe relatively easy because of this announcement. Boost to infrastructure development by allowing TDS exemption for investments into INVITs. Rationalizing custom duties on gold and silver is a welcome move. The focus on logistics through the development of road and highway projects will encourage economic transformation and seek to improve connectivity that is much needed for the growing economy.”

The Way Forward

COVID-19 pandemic has impacted the global shipping and logistics industry but businesses resumed after the initial few months. The Government intends to work strongly towards bringing more ships to India from Europe and Japan. Besides, India aims to achieve a total capacity of around 4.5 million Light Displacement Tonne (LDT) by 2024. “A scheme to promote flagging of merchant ships in India will be launched by providing subsidy support to Indian shipping companies in global tenders floated by Ministries and CPSEs. An amount of INR 1,624 crore will be provided over five years,” a port industry veteran said.

“India has its focus set on meeting future growth in traffic and to increase the freight movement across the country and through the country to other international destinations. By encouraging private participation in the sector, India aims to capitalize upon the advantage of its geographical location. It is certainly a progressive budget which gives good vibes,” he added.

Sea News Feature, February 4

Baibhav Mishra
Author: Baibhav Mishra

Associate Editor, Sea News