Insider Exclusive: Logistics Industry Applauds Interim Budget 2024, Sees Opportunities in Infrastructure Boost

Finance Minister Nirmala Sitharaman presented the Interim Budget for 2024-25 on February 1, 2024, marking the conclusion of Prime Minister Narendra Modi’s second term. This provisional budget acts as a temporary financial plan, with the comprehensive budget for the fiscal year 2024-25 set to be introduced after the formation of the new government post-general elections.

The Interim Budget outlines expenses and revenues until the establishment of a new government, playing a vital role in facilitating effective financial management during this transitional phase. 

The FM presented the Interim Budget 24 with a focus on empowering the poor, farmers, youth, and women, and maintained the status quo in terms of existing tax slabs, making no changes.

During her speech, she gave importance to the government’s priority areas, such as women, poor, and youth; sustainability and infrastructure development including expansion of railway corridors and metro rail; construction of 2 crore houses for the poor; consideration of a housing scheme for the middle class; and extending interest-free loans to states for tourism. 

“Our vision for ‘Viksit Bharat’ is that of Prosperous Bharat in harmony with nature, with modern infrastructure, and providing opportunities for all citizens and all regions to reach their potential. With confidence arising from a strong and exemplary track record of performance and progress earning ‘Sabka Vishwas’, five years will be years of unprecedented development, and golden moments to realize the dream of developed India 2047. The trinity of demography, democracy, and diversity backed by ‘Sabka Prayas’ has the potential to fulfill aspirations of every Indian”

Nirmala Sitharaman, Union Finance Minister, Government of India. 

The logistics and supply chain fraternity has welcomed the interim budget with open arms and believes that the government’s vision for India resonates strongly with the industry’s aspiration, especially as the government also focuses on youth, Sustainability and infrastructure, innovation, and strategic partnerships. 

“The budget has laid the roadmap for a robust, inclusive, and widespread development to turn the goal of Viksit Bharat or developed India into a reality. The country is geared to enter the accelerated phase of growth keeping environment sustainability the key focus,” said Shashi Kiran Shetty, Founder & Chairman, of Allcargo Group. 

Infrastructure:

With emphasized focus on infrastructure development, the minister in her Interim Budget 2024 speech, announced a double-digit boost to infrastructure spending. 

The Minister said that building on the substantial growth in capital expenditure observed over the last four years, which contributed to a threefold increase in economic growth and employment, the budgetary allocation for the upcoming year is set to rise by 11.1% to ₹11,11,111 crore. This amounts to 3.4% of the GDP.

“The Union Budget 2024’s pivotal focus on infrastructure development, aligns seamlessly with our vision for enhanced logistics efficiency. With an increased outlay in FY25 and the expedited development of various infrastructure projects, the government’s proactive approach is set to spur economic growth. The India Middle East Europe Economic Corridor announcement is particularly game-changing, strategically positioning India on the global trade map. We at Mahindra Logistics eagerly anticipate actively participating in and benefiting from these initiatives, ushering in positive transformations in the logistics and transportation sector,” Mr. Rampraveen Swaminathan, Managing Director and CEO of Mahindra Logistics Ltd. said. 

Additionally, the government announced the establishment of three major economic railway corridors to reduce congestion and improve operations.

These three major economic railway corridor programs—energy, mineral, and cement corridors, port connectivity corridors, and high traffic density corridors—will be implemented under the PM Gati Shakti initiative to enable multi-modal connectivity. 

Mr Ishaan Gupta, Joint Managing Director, Gateway Distriparks said, “We welcome the transformative measures outlined in the Interim Budget 2024, particularly the emphasis on enhancing India’s railway infrastructure. The establishment of key economic corridors, such as the Energy, Mineral, and Cement Corridor, the Port Connectivity Corridor, and the High Traffic Density Corridor, looks promising for the overall growth of the logistics sector. We believe that these corridors, coupled with the dedicated freight corridors, will not only optimize logistics efficiency but also contribute substantially to reducing overall logistic costs. We look forward to leveraging these advancements to enhance our services and contribute to the overall growth of the logistics industry.”

“In line with these efforts, incorporating cutting-edge technologies such as AI, ML, and RFID-based digital track and trace solutions will boost operational efficiency in the warehousing, and transport and logistics sectors. Using the right technologies will help modernize and transform India’s transportation system into an advanced logistics network. This will in turn foster greater economic growth for India in the coming years,” said Subramaniam Thiruppathi, Director of Sales for India and Sub-Continent, Zebra Technologies while appreciating the government announcement of the strategic railway corridors. 

On Aviation the minister while highlighting the progress said that over the past decade, the aviation sector has witnessed significant growth, with the number of airports doubling to 149. The widespread rollout of air connectivity to tier-two and tier-three cities under the UDAN scheme has seen 517 new routes serving 1.3 crore passengers. Indian carriers have proactively ordered over 1000 new aircraft. 

Commenting on the growth of the aviation sector Dr. Vandana Singh, Director of Global Corporate Key Account Management -Saudia Cargo called it a human-driven leap forward, promising growth and prosperity. She went on to commend the Union Budget’s spotlight on the aviation sector and said, “By prioritizing infrastructure enhancements and fostering innovation, it signals a promising future for both domestic and international connectivity. The allocation towards modernizing airports and simplifying regulatory frameworks reflects a proactive stance, poised to fuel competitiveness and expansion. Stakeholders eagerly await these initiatives, poised to unlock fresh opportunities and drive sustainable development.”

Signaling a positive trajectory for the aviation sector, the Finance Minister said that the expansion of existing airports and development of new ones will continue expeditiously.

“The emphasis on expanding air connectivity, along with the development of existing airports and the establishment of new ones, is a pivotal step that aligns with our advocacy for efficient multimodal logistics.FedEx welcomes the forward-looking approach of the 2024 interim budget, reflective of the ‘Viksit Bharat vision. We remain committed to actively contributing to India’s growth journey, aligning our efforts with the government’s vision for a smarter and more sustainable logistics infrastructure in India,” said Kami Viswanathan, President – MEISA, FedEx

Highlighting how the Interim Budget’s focus on transportation infrastructure has aligned with the industry’s expectations for enhanced logistics connectivity, Mr Rajesh Jaggi, Vice Chairman – Real Estate, Everstone Group, said, “Developing new rail corridors, port connectivity, and urban transport systems will improve access and efficiency. This makes building warehouses and industrial parks in diverse locations more feasible. Moreover, the development in aviation, especially in emerging markets, can stimulate the demand for warehousing facilities near airports, supporting air cargo logistics.”

Calling the budget a step in the right direction, Homi Katgara, Partner, Jeena & Company said, “The infrastructure push, particularly the doubling of airports (149 in 10 years) and the development of dedicated railway corridors, is a game-changer. These initiatives will significantly improve connectivity, decongest existing routes, and expedite freight movement.”

FDI: 

In her Interim Budget speech this year, Nirmala Sitharaman also underscored the pivotal role of Foreign Direct Investment (FDI), rebranding it with a fresh perspective as ‘First Develop India.’

Highlighting the prosperous era of the Modi government, Finance Minister Nirmala Sitharaman pointed out a remarkable influx of Foreign Direct Investment (FDI), reaching $596 billion between 2014 and 2023. This figure represents nearly double the FDI recorded in the preceding period from 2005 to 2014, which amounted to $298 billion.

She reiterated the government’s commitment to fostering FDI growth by actively engaging in negotiations for bilateral investment treaties with global partners. This commitment underscores the ongoing efforts to strengthen economic ties and attract foreign investments

 “This is truly a balanced budget working towards a true FDI – First Developed India. In the transformative landscape of the Interim Budget 2024, the logistics industry is excited for new opportunities. Development-centric policies and sector expansion directly impact warehousing and logistics, creating a positive ripple for market dynamics,” said Mr.Vivek Juneja, Founder and Managing Director, of Varuna Group.

Sustainability: 

In terms of Sustainability, a comprehensive set of measures has been unveiled to achieve ‘net-zero’ emissions by 2070. The Sitharaman highlighted that a Viability gap funding will be extended to harness the offshore wind energy potential, with an initial capacity target of one gigawatt. 

“In line with GOI’s push towards energy transition and in pursuit of the Net Zero commitment by 2070, FM announced Viability Gap Funding (VGF) model to harness offshore wind energy potential for an initial capacity of 1 GW. Interestingly, this VGF model has resulted in creating a major traction within the Road sector and has been effectively used to develop PPP projects under the Urban Infrastructure sectors,” said Mr. Sandeep Upadhyay, Managing Director – Infrastructure Advisory at Centrum Capital.

As disclosed in the interim budget, by 2030, plans are underway to establish a coal gasification and liquefaction capacity of 100 metric tons, providing a significant impetus to reduce imports of natural gas, methanol, and ammonia. Additionally, a phased mandatory blending of compressed biogas (CBG) into compressed natural gas (CNG) for transportation and piped natural gas (PNG) for domestic purposes will be enforced, marking a crucial step towards sustainable energy practices.

Mr. Vinod Aggarwal, MD & CEO of VECV said, “The interim budget injects renewed vigor into the automotive industry by emphasizing green energy and infrastructure development, with a notable 11.1% increase in capital expenditure. The budget resonates with VECV’s focus on sustainable mobility, addressing challenges in EV charging infrastructure and fostering entrepreneurial opportunities. With our development plans addressing Electric, H2ICE, Fuel Cell Electric, and LNG, in addition to CNG and clean Diesels, VECV stands ready to provide tested alternate fuel solutions to customers in line with the government’s Net-Zero vision.” 

The minister further said, the government is committed to expanding and fortifying the electric vehicle ecosystem by supporting manufacturing and charging infrastructure. Encouraging the greater adoption of e-buses for public transport networks through a secure payment mechanism is a key initiative.

“For the logistics industry, the budget proposal to develop an enabling EV ecosystem by strengthening manufacturing capabilities and charging infrastructure is extremely encouraging, we are aligning our operations with the country’s sustainability goals,” Shetty said. 

On the same lines, Mr. Anish Mathew, Chief Financial Officer (CFO), of Allcargo Gati Limited said, “The thrust on advancing EV infrastructure and driving the energy transition aligns seamlessly with the logistic industry’s goal to minimize operational impact on the environment. As we look ahead, the next five years hold immense potential for the growth and progress of the country, and the budget aptly outlines the framework. This period presents an exciting opportunity to explore the convergence of sustainable investment and financial prosperity.”

MSMEs: 

Guided by the principle ‘Reform, Perform, and Transform’, the Government also announced the Amrit Kaal initiative which focuses on empowering MSMEs and boosting their global competitiveness. The FM said that it is an important policy priority for our Government to ensure timely and adequate finances, relevant technologies, and appropriate training for the Micro, Small, and Medium Enterprises (MSME) to grow and also compete globally. Orienting the regulatory environment to facilitate their growth will be an important element of this policy mix.

“The interim budget looks promising and, in the direction to achieve the set goals. Various announcements made demonstrate the government’s commitment to bolstering the logistics sector, particularly for Micro, Small, and Medium Enterprises (MSMEs). The focus on providing timely finances, cutting-edge technologies, and relevant training reflects a strategic effort to enhance competitiveness on a global scale. The MSMEs are one of the keys to India’s growth, and such support offered to them will boost domestic manufacturing,” said JB Singh, Director, MOVIN Express 

Technology and Innovation:

Highlighting how, new technologies and data are reshaping lives and businesses, offering fresh economic prospects, and delivering high-quality, affordable services to all, including those at the ‘bottom of the pyramid, Sitharaman stated that India’s global opportunities are growing, and the nation is showcasing innovative solutions through the entrepreneurship of its people. She announced a substantial allocation of ₹1 trillion for technology research, underscoring the crucial role of innovation in development. Additionally, she commended the government’s digital public infrastructure, direct benefit transfers, and the Skill India Mission’s efforts to train millions of youth. The budget speech highlighted a strong commitment to leveraging technology and innovation for sustainable national progress.

Ashish Agarwal, MD & CEO Seros said, “This interim budget represents the government’s continued commitment to building a developed India. They have prioritized transparent, accountable, and prompt administration, making a noticeable impact across all sectors. The fiscal deficit target of 5.1 % is exceptional, and the country is experiencing macroeconomic stability, robust investments, and a thriving economy. The future aspirations are more significant than ever. It will be exciting to see a comprehensive budget in July’2024”

Overall, the Interim Budget for 2024-25 reflects a strategic vision focused on sustainability, infrastructure development, and innovation. Finance Minister Nirmala Sitharaman’s emphasis on FDI, infrastructure spending, and the commitment to sustainable energy practices along with a robust plan for technology and MSME underscores a proactive approach towards economic growth. The budget’s positive reception from the logistics and supply chain industry indicates alignment with national development goals and lays the groundwork for a promising and inclusive economic future, showcasing the government’s commitment to a developed and sustainable India.

This interim budget represents the government’s continued commitment to building a developed India. They have prioritised transparent, accountable, and prompt administration, making a noticeable impact across all sectors. Increasing the capital expenditure by almost 11% is a very welcomed step. The implementation of three major Railway economic corridors – Energy, Mineral & Cement; Port Connectivity & High Traffic Density corridors – will significantly contribute to the success of the PM Gati Shakti mission. This move will enhance the multi-modal connectivity, boost logistics efficiency, and reduce costs, making every part of the country an active participant in economic growth, which is very encouraging for the industry. It will be exciting to see a comprehensive budget in July’24. – Ashish Agarwal, MD & CEO Seros

The Interim Budget allocates robust funding for Infrastructure Development, emphasizing upgraded roads, doubled airports (149 total), and advanced railroads. A strategic focus on new airport expansion aligns with Indian carriers anticipating 1,000 new aircraft. This plan includes the introduction of 517 new routes under the UDAN scheme, fostering connectivity for tier II & tier III cities. The budget adheres to fiscal prudence, keeping the fiscal deficit in check to reduce borrowing costs. Furthermore, the combination of infrastructure development, potential business support measures, and a focus on supply chain efficiency reaffirms a steadfast commitment to nationwide progress and economic vitality. – Mahesh Fogla, Executive Director, Patel Integrated Logistics Limited

The Interim Budget 2024-25 is clearly prepared with a vision towards making our country Viksit Bharat by 2047. With a substantial increase in infrastructure outlay, the budget has rightly given a thrust to multi-modal connectivity by implementing three major economic railway corridors under the PM Gati Shakti program. These initiatives will go a long way in improving logistics efficiency and reducing costs. This will surely elevate India’s logistics and infrastructure landscape. – Mr. Rajiv Agarwal, MD & CEO, Essar Ports.

In the wake of Budget 2024, we commend the Finance Minister’s visionary strides towards bolstering India’s logistics sector. The announcement of the railway economic corridors, comprising – (i) energy, mineral, and cement corridors, (ii) port connectivity corridors, and (iii) high-traffic density corridors under the PM Gati Shakti initiative, is a significant leap towards enabling multi-modal connectivity, improving efficiency, and reducing logistics costs. This aligns seamlessly with our industry’s expectation for sustained support, together with dedicated freight corridors, these three economic corridor programs will accelerate India’s GDP growth. We look forward to collaborative efforts with the government for a resilient, transparent, and technologically advanced logistics ecosystem, positioning India as a global logistics juggernaut and further strengthening the sector in the upcoming budget in July 2024. – Mr. Nikhil Agarwal, President, CJ Darcl Logistics Ltd.

The Interim Budget for financial year 2024-25 has kept to the path of fiscal prudence and growth momentum. With a strong focus on infrastructure development, last-mile connectivity, and social and geographical inclusivity, it effectively complements the Hon’ble Prime Minister’s vision of a ‘Vikasit Bharat’ by 2047. The increase of 11.1% in the capital outlay for infrastructure will enhance connectivity and last-mile linkages. This aligns with the goals outlined under the Prime Minister Gati Shakti Yojana, thus opening new possibilities for businesses in India while improving logistics efficiencies and multi-modal connectivity. The Government’s unwavering focus on priority areas such as skilling; health; energy security; reducing the compliance burden for MSMEs; and achieving gender balance in the labour force is truly commendable. – Mr. Rizwan Soomar, CEO & Managing Director, North Africa and India Subcontinent, DP World

The interim budget presents a positive outlook, showcasing significant strides in managing the fiscal deficit. For the fiscal year 2024, the deficit stands commendably at 5.8%, comfortably aligning with the budget, with a targeted reduction to 4.5% by fiscal year 2026. In terms of the logistics sector, there are two notable highlights. Firstly, the emphasis on infrastructure development directly enhances logistical efficiency. The budget allocates a substantial increase of 11.1% in infrastructure spending compared to the previous year, totaling INR 11.11 Lakh Crore. Moreover, the government’s focus on reducing logistics costs is a game-changer. – Mr. Mahendra Shah, Chairman and Managing Director, V-Trans

The interim budget presents a promising continuation for the goal of a Vikshit Bharat (Developed India). From a logistics standpoint, the government’s emphasis on bolstering Digital Public Infrastructure, exemplified by initiatives like ULIP, sets a solid foundation for a transformation of this industry. The execution of three pivotal economic railway corridor programs, which also includes the Port Connectivity Corridors, promises to foster multi-modal connectivity, thereby catalyzing a pivotal transformation within the logistics sector, along with the progress on Dedicated Freight Corridors. Moreover, the rapid development of new airports is poised to substantially influence India’s Air Cargo Market, facilitating exponential growth. – Harpreet Singh Malhotra, Chairman and Managing Director, Tiger Logistics

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