Budget 2021 has a favourable outlook for the logistics industry: Shiprocket’s Saahil Goel

The budget promises increased spending on infrastructure, focusing on new and improved economic corridors, and road and railway infrastructure.

Last year, the COVID-19 pandemic brought the world to an abrupt standstill. Quite a few industries can still feel the aftermath of the ongoing health crisis as they try to reel away from it with the help of end-to-end digitisation.

As for the Indian logistics sector, it had been expected to grow at a CAGR of 10.5 percent between 2015 and 2019. However, as the nationwide lockdown(s) brought businesses to a begrudging halt, the industry witnessed a sharp decline in growth figures during those months.

It’s safe to say that the logistics and transport industry has been and will be the backbone of the economy. It fuels the growth of the manufacturing and ecommerce sector.

Simply put, any circumstances that impact the logistics sector will also be detrimental to other industries, especially the ones operating under the Make in India initiative.

Keeping this in mind, the government has stepped up to ensure smooth logistics and transportation services in 2021 and beyond. 

How can the logistics industry benefit from Budget 2021?

While the logistics industry is already on the road to recovery, the Union Budget 2021 bears further good news. The budget promises increased spending on infrastructure, focusing on new and improved economic corridors, and road and railway infrastructure.

“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.

The Finance Minister has announced that Rs 3.3 lakh crore out of the allocated Rs 5.35 lakh crore in the Bharatmala Pariyojana project will be used to construct more than 13,000 km of roads. They have already constructed 3,800 km.

She has also provided an outlay budget of ₹1,18,101 lakh crore for the Ministry of Road Transport and Highways for national highway projects, promising to construct another 8,500 km and an additional 11,000 km of national highway corridors.

To further boost the logistics and transportation industry, the government aims to commission eastern and western dedicated freight corridors (DFC) by June 2022, and build three new DFCs.

The logistics industry expect this to decongest the highly saturated road networks to boost connectivity between different points of the country, facilitate smoother and faster freight transportation, and lower the logistics cost as a percentage of the GDP.

The Union Budget 2021 has awarded a record sum of ₹1,10,055 crore to Indian Railways, promising to build a future-ready railway system by 2030. 

Besides allocating the funds to highway and railway infrastructure, several other highlights of the budget will also go in the favour of the logistics industry. The Finance Minister announced the allocation of Rs 2,000 crore on seven port projects under the PPP model, and a new subsidy scheme for Indian ship owners, allocating Rs 1,624 crore to be provided over five years.

She also announced a Rs 1,500 crore-scheme on digital payment – a push towards digitization – which is going to further enhance the efficiency of logistics companies. 

According to several industry players, these initiatives will support the logistics industry both directly and indirectly, ensuring better connectivity, increasing efficiency across the logistics ecosystem, and by creating more job opportunities at the grassroots level. This is only going to propel economic activities, paving the way for renewed resurgence post-COVID-19.

For YourStory's multimedia coverage of Budget 2021, visit YourStory's Budget 2021 page or budget.yourstory.com.

Edited by Kanishk Singh

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)