A promising budget for transport and logistics industry

A promising budget for transport and logistics industry

In his maiden Budget 2019 interim Finance Minister Piyush Goyal has announced slew of new initiatives to support growth of the logistics and transport industry. The industry has welcomed the interim Budget and believes the initiatives announced are forward looking. 

The Budget has announced that customs authorities will introduce comprehensive digitalisation of export and import transactions, and leverage electronic tagging technology to improve export logistics.

The last couple of years of logistics have been dominated by GST, eWay Bill and its integration with RFID/FASTag. The combination of these has boosted the use of technology in logistics which in turn hastened the emergence of digital logistics in India.  Abhik Mitra, CEO & MD, Spoton Logistics says, “The 2019 budget seems promising as Indian customs is introducing full and comprehensive digitalization of export/import transactions and leveraging RFID (radio-frequency identification) technology to improve export logistics. Tax benefits that have been given to individual tax payers will stimulate consumption and positively impact consumption linked industries like logistics and so improvement in logistics will further help in seamless movement of goods and reduce transactions cost for traders, leading to enhanced competitiveness of domestic products in the global markets. With infrastructure development being given prominence, it will be a positive step in developing regional and state market hubs."

Kushal Nahata, CEO and co-founder, FarEye, says “We have to wait and watch how this budget will ultimately impact the country. It was a great move by the Customs authorities to introduce comprehensive digitalisation of export and import transactions. Using RFID to enhance export logistics was a much-needed initiative. This will ensure seamless movement of goods, drastically improve visibility and reduce transportation costs. Digitising core logistics processes is a key when it comes to building a sustainable supply chain.”

In order to lend a boost to the digital landscape, Finance Minister Piyush Goyal announced that the government will soon launch a National Artificial Intelligence Portal. The NITI Aayog has already identified five sectors - healthcare, agriculture, education, smart cities and infrastructure and transportation - to focus its efforts towards implementation of AI to serve societal needs. Anjani Mandal, CEO and Co-Founder of Fortigo Network Logistics Pvt Ltd (Logistics sector) says, "The combination of the accelerated build-up of physical infrastructure and the promised support for the buildup of digital infrastructure combined with the propagation of AI knowledge through the proposed National Artificial Intelligence portal is the perfect combination for the rapid spread of digital logistics in India."

In his budget speech, the minister announced the highest ever allocation for Indian Railways that is of Rs 1.58 lakh crore. Apart from this, various other announcements have been made by the Finance Minister today, giving a major boost to all sectors of infrastructure including railways, aviation, roadways and waterways.  He also said that the flagship programme 'Sagarmala' along the coastal areas of the country will develop ports for faster handling of import and export cargo.

The government, under the Sagarmala project, has already set ambitious targets of port modernisation, port connectivity enhancement, port-linked industrialisation and coastal community development for phase-wise implementation until 2035. The Budget also higlighted the government's feat for developing 27 km of highways every day. On this the industry opine that it will enable faster long-haul deliveries and reduce the burden on existing roadways. The aim to digitise one lakh villages and speed up road development in rural areas will go a long way when it comes to driving financial inclusion and expanding and monitoring logistics activities.

Companies believe that abolishment of duties on 36 capital goods and single point of approval under section 65 of the Customs Act will help manufacturers. However, it didn’t have much to offer for start-ups. Surajit Das, Co-founder and CEO, Routematic, "Not much was talked on startups in the budget this year. The 2 per cent interest subvention on MSME loans will help to get access to capital. Areas, where we wanted more allocation, were higher education to improve talent pool and some innovative thinking around reducing capital gains tax for VCs which could make India the preferred investment destination for VCs."

The minister has stressed on the importance of electric vehicles to the countries growth. In his speech Goyal said, "Making India a pollution free nation with green Mother Earth and blue skies is the Third Dimension of our Vision. This India will drive on Electric Vehicles with Renewables becoming a major source of energy supply. India will lead the world in the transport revolution through electric vehicles and energy storage devices, bringing down import dependence and ensuring energy security for our people."