Industry cheers as Union Budget 2023-24 meets expectations

Finance Minister Nirmala Sitharaman presented the Union Budget 2023-24 today, focusing on the few of the most desired anticipations of the supply chain and logistics sector. To bring you up to it, when we last talked to the supply chain representatives about their expectations from this year’s budget, the following areas were prominent:

  • Capital investment for infrastructure development
  • Increased funding for start-ups
  • Tax rebates
  • Increased FDI
  • and Sustainability initiatives

“In the 75th year of our independence, the world has recognised Indian economy as a bright star. In these 9 years, the Indian economy has increased in size from being 10th 5th largest in the world. We have significantly improved our position with a conducive environment for business as indicated in several global indices. We have made a significant progress in many sustainable development goals.”

~ Nirmala Sitharaman, Hon’ble Finance Minister of India

The FM announced the priorities of the Budget as:

  • Inclusive development
  • Reaching the last mile
  • Infrastructure and investment
  • Unleashing the potential
  • Green growth
  • Youth Power
  • Financial Sector

Sitharaman announced the plan to setup massive decentralised storage capacities for agri-produce. This will help the farmers to store their produce and realise remunerative prices through sale at appropriate times.

She also said that under the budget, the States will get capital investment outlay of INR 1.3 lakh crores. Additionally, states will get additional private investment for infrastructure creation including rail and roads.

Railways has been given a capital outlay of INR 2.40 lakh crore, which is nine times the outlay provided in 2013-14 and the highest ever. Moreover, 100 critical transportation infrastructure projects have been identified for the last and first mile in sectors like ports, coals, steel, fertilizer and foodgrains. These projects take on a budget of INR 75,000 crore, including private investment of INR 15,000 crore. The budget will also resource the revival of 50 airports, heliports and water-aero domes to increase regional connectivity. Along with that, an Urban Infra Development Fund, with an outlay of INR 10,000 crore per annum, will be created for infrastructure development in Tier-2 and Tier-3 cities.

On the technology front, the FM announced that 3 Centers of Excellence for Artificial Intelligence (AI) will be set up in top educational institutes, to give a further boost to ‘Make AI work in India, Make AI work for India’. The FM also said that the center’s electric vehicle policy ‘Scheme for Faster Adoption and Manufacturing of Hybrid and Electric Vehicle in India’ will get a boost from INR 800 crore last year to INR 2,908.28 crore. The formulation of a battery-swapping policy and interoperability standards for the electric vehicles sector was also announced.

In terms of sustainable development of the economy, the recently established National Green Hydrogen Mission (with an outlay of INR 19,700 crore) will facilitate transition of the economy to low carbon intensity, and reduced dependence on fossil fuels in ports and make country assume technology and market leadership in the sector. In that direction, the production target for green hydrogen has been set to 5 MMT by 2030. The budget provides for INR 35,000 for priority capital investment towards energy transition, energy security and net zero objectives. Moreover, with regards to sustainable battery energy storage systems with a capacity of up to 4000 mWh, the Union Budget 2023 will support viability gap funding. A Green Credit program will be notified under the Environment Protection Act to encourage behavioural change.

On the Coastal Shipping front, the FM said that it will be promoted as an energy efficient and lower cost mode of transport (for both passengers and freight) through PP mode with viability gap funding.

The PM Kaushal Vikas Yojna 4.0 will be launched to increase skilled manpower of the country in the next 3 years. The scheme will introduce courses in AI, Robotics, IoT, Drones and other soft skills, which will be in alignment with the needs of the industry. 30 Skill India International Centers will also set up across states to skill the youth for international opportunities.

Sitharaman proposed to reduce the number of basic customs duty rates on goods other than textile and agriculture from 21% to 13% as a part of simplified tax structure. Customs Duty has also been reduced on import of certain parts and inputs to further deepen the domestic value addition in manufacturing of mobile phones, television and electronics.

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