The 2017 financial and rail budgets being presented together was a historic shift for the Government. The push has been maintained towards modernizing the nation’s logistics infrastructure and encouraging movement of good via multi-modal channels.
A few highlights of the Union Budget and what implications they would have on the logistics and technology sectors:
- Transportation infrastructure has taken a lion’s share of the 2017 budget with an outlay of Rs 2.41 lakh crore (11% increase over the 2016–17 budget).
- 2,000 km of coastal roads (Bharat Mala) to be constructed which will increase connectivity to ports with a total outlay of Rs 64,000 Crores towards roads and highways (a marginal increase of 10%).
- Opening up of Indian Railways freight for companies to use it for end-to-end solutions will unlock a USD 300 Billion opportunities.
- ‘Bharat Net’ — laying of optic fiber along railway lines to provide visibility throughout railway route.
- Allocation of high-speed Internet to 1,50,000 gram panchayats will further the rise in connectivity in remote areas.
- The Government has clearly marked its intentions to build out road infrastructure which at present has proved to be the biggest inefficiency in the logistics sector. With a focus on increasing multi-modal transport, investments in ports, railways — steps are being taken to eliminate the infrastructure roadblocks that are present currently.
With the introduction of GST, operational inefficiencies are set to be reduced drastically.
Our view is that currently the infrastructure hurdles have hindered quick TATs and driven up logistics costs. With the increased focus on the fundamentals such as roads, railways, ports and GST, we feel that these conventional problems are set to reduce in the next decade.
With the rise of the manufacturing sector and e-commerce, customer needs are evolving rapidly and smart adoption of technology will be essential in further driving down costs and increasing service levels.