Union Budget 2020 speaks of National Logistics Policy with E-Logistics Market

In a first, Kisan Rail to be launched for backing agri based cold chain

Finance Minister Nirmala Sitharaman finally announced for the roll-out of much-awaited National Logistics Policy with single window e-logistics market in the country for faster movement of goods in her Budget speech.

Sitharaman assured that the National Logistics Policy has been drafted to pivot and clarify the role of the union government, state governments, government regulators and providing the best possible solution for the booming industry of logistics.

The Finance Minister said: “The policy will clarify the roles of the Union Government, State Governments and key regulators and create a single-window e-logistics market and focus on generation of employment, skills and making MSMEs competitive.”

In a first the minister announced dedicated “Krishi Rail” to build a seamless national cold supply chain for ‘perishables’, the minister also proposed that the Indian Railways will set up a “Krishi Rail”- through PPP arrangements. The rail system will include refrigerated coaches in express and freight trains as well.

The Finance Minister also announced that 100 more airports would be developed by 2024 to support Udaan scheme. She also remarked in her Budget presentation that India’s Air traffic has grown rapidly as compared to the global average and the Air fleet number was expected to go up from the present 600 to 1200 during this time.

Finance Minister also announced that the “Jal Vikas Marg” on National Waterway-1 will be completed and further the 890 Km Dhubri-Sadiya connectivity will be done by 2022”.

T.A. Krishnan, CEO & Co-founder, Ecom Express said: “The government’s focus on logistics is highly appreciated. The National Logistics Policy is a constructive move and will bring a positive shift in the logistics industry’s current position. Creation of single-window clearances and rolling out more favourable policies is another step as logistics is important and will act as a catalyst in driving economic growth.’’

Monetisation of Roads

Realising the roadways dependence of the logistics industry, the government has proposed to monetise at least 12 lots of highway bundles of over 6000 Km before 2024.  

Pressing the need for infrastructure for the logistics industry she reiterated that the government will invest Rs. 100 lakh Crore on infrastructure over the next 5 years.

Mr Rajesh Neelakanta, ED & CEO of BVC Logistics commented: “The focus on logistics through the development of 9000 km of economic corridors is a welcome move. It will encourage economic transformation and seek to improve connectivity that is much needed for the growing economy. We look forward to the National Logistics Policy which will clarify the roles of the Union Government, State Governments and key regulators. We are keen to know about the e-logistics market as mentioned by FM.”  

To thrust the development of roadways she said the development of 2500 km access control highways, 9000 km of economic corridors, 2000 km of coastal and land port roads and 2000 km of strategic highways. Work on Chennai-Bengaluru Expressway will also be started with Delhi-Mumbai Expressway and two other packages to be completed by 2023.

Mr Shashi Kiran Shetty – Chairman – Allcargo Logistics Ltd said: “The proposed roll-out of the National Logistics Policy was one of the hallmarks of the budget. A single window e-logistics market will lead to the integrated development of Indian logistics and help reduce logistics cost. The NLP will also boost value chain efficiencies and generate employment across the supply chain spectrum.”

Mr Shetty further added, “The Krishi Udan scheme is a key initiative by the government to help farmers boost their income by expanding markets for their products on national and international routes. The setting up of a Kisan Rail via the PPP mode will help build a robust cold supply chain infrastructure, increase the shelf-life of perishable goods and reduce food loss in the global cold chain. The government will need to continue with its policy of fiscal consolidation, spur job creation and revitalize the credit cycle to propel the economy on the recovery path”  

Railway means Money

To mint more revenue from the national transporter, the government has decided to set up large solar power capacity alongside the rail tracks, on the land owned by the railways.  Four station re-development projects and operation of 150 passenger trains would be done through PPP model. More Tejas type trains will connect iconic tourist destinations.

High-speed train between Mumbai to Ahmedabad would be actively pursued. 48 km long Bengaluru Suburban transport project at a cost of Rs 18600 crore, would have fare on the metro model.

Central Government would provide 20% of equity and facilitate external assistance up to 60% of the project cost.

Krishi Udaan to be launched by the Ministry of Civil Aviation

International and national routes both will be covered under Krishi Udaan scheme. Union government has called North-East and tribal districts to realize the improved value of agri-products. A strategy of One-Product One-District for better marketing and export in the Horticulture sector will be worked on.

Mr Steve Felder, Managing Director, Maersk South Asia commented: “This year’s budget has come with a number of positive updates for the logistics and transport sector. A fund allocation of INR 1.7 lakh crores for transport and infrastructure including railway infrastructure enhancement, and investments in warehousing and logistics, is a constructive step that will help boost growth across industry-verticals including manufacturing and help improve last-mile delivery especially in rural geographies.”

We are hopeful that the port infrastructure will also get the much-needed improvement to bring them to a level where they are competitive in the global scenario. The government aims to complete the National Waterway-1 in this year to effectively leverage inland waterways for freight transportation which is welcome news for domestic hinterland trade especially for refrigerated agro-commodities.

Mr. Rizwan Soomar, MD & CEO, DP World Subcontinent said, “I welcome the steps taken by the government in the Union Budget toward growing export and rejuvenating manufacturing. To realize India’s vision of a $5 trillion economy, growth in both exports and domestic trade is critical. The decision to set up an investment clearance cell, a scheme to encourage manufacturing of electronics and ‘networked products’, allocation of INR 27,300 crore for industry and commerce, all this will propel the economy in the right direction.

“The government’s efforts on encouraging more modes of transport such as rail and Inland Waterways will help bring down the cost of logistics, making Indian goods competitive globally. We welcome the FM’s decision to set up Kisan Rail for transportation of perishable goods in special reefer containers, through the PPP model. This will further increase the share of railways in the multi-modal transport mix, which is skewed towards the road, at present,” he added.

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