Budget 2023-24: What are The Logistics Sector’s Expectations From Finance Minister
January 10, 2023 | By Manufacturing Today
During the pandemic, logistics firms played an integral part of the value chain, both within and across international borders—whether delivering essential goods or supporting SME or MSMEs as they adapt their business operations. The sector has helped ensure the global flow of goods.
Logistics and manufacturing are interrelated and have a significant impact on one another. Strategically managing the procurement of raw materials, freight transport and storage of materials, production, and dispatch of finished products, maintaining production and information flows into and throughout the organization, planning and executing standard logistics procedures to meet the requirements of manufacturing operations as well as consumer demands.
However, with the growing complexities of logistics and industrial manufacturing, various challenge To stay competitive in the market, there is a need to capitalize on modern technological support and anticipatory intelligence constantly evolving and finding new ways to manage production and logistics. There is a need to capitalize on modern technological support and anticipatory intelligence to stay competitive in the market.
With the budget season closing in, we bring to you the expectations of the sector from the Union Finance Minister.
Kami Viswanathan, Senior Vice President, FedEx Express, Middle East Indian Subcontinent and Africa (MEISA) Operations “While the National Logistics Policy will be pivotal to developing the logistics and supply chain ecosystem, FedEx recommends a special focus on air cargo. The development and expansion of airports to meet the rapidly growing demand for air cargo capacity and digitized systems to streamline surging cross border shipments, will be essential to ensure seamless freight movement in and from India. A more efficient air express infrastructure will improve global competitiveness, ensure just-in-time deliveries and fuel India’s ambition of becoming a $5 trillion economy by 2025.
Indian small and medium-sized businesses are prioritizing cross border trade to thrive in the post-pandemic world. MSMEs are the growth engines of the Indian economy. FedEx recommends allowing all categories of export and import shipments through express mode. We also recommend eliminating value and weight restrictions for clearance under courier regulations. This will further boost exports from India, especially for MSMEs engaged in cross border e-commerce, and increase India’s competitive advantage as a manufacturing hub.
Furthermore, we recommend implementing zero rating of Goods and Services Tax for all international transportation services. Most of the international GST/VAT legislations ‘zero-rate’ international freight transportation services. This would facilitate trade and align India with international tax practices as well as reduce logistics costs.
Lastly, the budget should not only create a roadmap for sustainable growth in the logistics sector but also incentivize logistics players to adopt sustainable practices.”
Varun Gada, Director, LP Logiscience – A Liladhar Pasoo Company In the post COVID era, the Indian logistics and supply chain sector has emerged as a significant backbone for the Indian economy and continues to be the important step to strengthening India’s position as a global economic power. While disruption through geopolitical stressors further threatened international trade, India has emerged as a stable trade and business economy, thanks to positive government policies. As the Indian government enhances its focus on infrastructure development and bolstering Indian exports through various schemes, I would like to draw attention to the warehousing and contract logistic sector that has become vital in terms of building global supply chains. Currently, the warehousing sector is looking to accelerate digital adoption, embrace greener practices that match international standards, and drive value added collaborations with the manufacturing sector. In the upcoming budget, a focus on the following aspects will be beneficial for the sector:
1. Reduction in Steel duty/ prices for industrial warehouse construction would be beneficial as up to 50% of the cost of construction of a warehouse is attributed to steel as a major component. 2. Enhanced focus on improving the road transport infrastructure can help decongest the existing warehousing hubs, reduce rentals and unlock better value for land available for warehousing. 3. The government can additionally consider capital subsidies for the construction of grade-A warehouses in smaller towns. 4. Better Public-Private Partnerships to setup of multi-modal logistics parks with better connectivity to new expressways. 5. Reduction in solar panel import duties to help reduce capex investments and a re-look at the tax structure and subsidies for environmentally responsible practices. 6. Easier and attractive loans/ access to funds for tech adoption and setting up smart warehouses, especially for the Cold storage and speciality warehousing segment. 7. A focus on easier access to investment for industrial warehousing, including simpler processes for FDI, would be appealing in the 2023 budget.
Nisschal Jaain, Co-founder and CEO, Shypmax “With the upcoming budget, the Indian e-commerce logistics sector is expecting some clarity on the de-minimis (threshold) value. Currently the de minimis value for India for e-commerce import is zero which means that all orders into India, regardless of value, will often incur GST on their shipments. Items imported into the United States are subject to duty when the value is over USD 800. In Australia, duty and taxes kick-in after the first USD 1,000. In Canada, it’s USD 20; in some other countries, it’s USD 5. It is evident that individuals will buy more if duties are exempted or reduced. In the 2022-23 Budget, implementation of a simplified regulatory framework to facilitate export of jewellery through e-commerce was introduced however it was limited only through ECCS (Express Cargo Clearance System) at ICT Mumbai, ICT Delhi and ICT Jaipur, according to Central board of Indirect Taxes and Customs (CBIC) SoPs. Stakeholder are awaiting more details on the same from the upcoming budget. Additionally, the limit of Rs. 5 lacs worth of exports via courier under CSB-V, which affects the fine jewellery’s export, is counterproductive and confusing for the e-logistics players as well as the exporters.”
Zaiba Sarang, Co-founder, iThink Logistics Logistics is one of the most competitive industries in the world, to the point where it is regarded as the foundation upon which all other businesses are built. As a result, when discussing budget allocation, we must recognize how critical it is to not only invest in this sector but also to ensure that our investments are directed toward areas that truly matter. Logistics is one of the unorganized industries, so we should anticipate investments in activities that will make it more organized. PM Gati Shakti, for example, has focused on seamless multimodal connectivity to enable smooth operations. We can anticipate the implementation of the National Logistics Policy, which will reduce the cost of GDP from 14% to single digits. As we all know, logistics is one of the world’s largest carbon-emitting sectors; there has been discussion about investing in making this sector carbon-neutral by using less carbon-emitting fuels, electric scooters, and other similar technologies. On top of that, we can expect Rs 2 lakh crore in investments in port infrastructure to alleviate logistics inefficiencies. Overall, we can predict that 2023 will be the year when the logistics industry reaches its full potential.
Vineet Agarwal, MD, TCI We expect the forthcoming budget to provide a balance between the economic growth priorities and inflation concerns, in an all-encompassing manner. The momentum of growth at which India has come up post the pandemic cannot be weakened. We believe that the budget 2022 will be very carefully structured to sustain the growth momentum and continued infrastructure development, irrespective of the ups and downs.
As the government’s vision to ease supply chain bottlenecks is quite evident in the scale of decisions and initiatives which have been undertaken in the recent past. The continued focus on execution of specific strategies will improve global competitiveness. Reducing logistics cost and creating a technology-enabled structure will help to achieve the target of positioning India among the top 25 countries in the Logistics Performance Index. In addition, emphasis on upskilling programs like Gati Shakti Vishwavidalya will help the logistics sector contribute its best in India leading the Industrial Revolution 4.0 & 5G era.
Dhruv Agrawal, COO and Co-founder, Shipsy The logistics and supply chain industry has long been challenged by the sector’s highly fragmented nature, multiple regulatory bodies, manual approval processes, poor shipment visibility, lack of stakeholder collaboration, growing cost leakages, rising logistics costs, and evolving customer expectations. The national logistics policy has been a significant step forward in mobilizing the power of digital transformation, particularly platformization, to break down logistics silos. The upcoming budget would most likely move it forward by strengthening its foundation for its seamless implementation and reducing logistics costs. Besides, there is an urgent need to address climate change concerns through regulations. It would be excellent if the government allocates funds to develop policies that ensure sustainable logistics practices through digitization. The last-mile emissions per delivery in India are 285g CO2, higher than the global average of 204g CO2. Businesses can gradually reduce their carbon footprint by digitizing core logistics operations. This can be accomplished by shrinking the miles traveled per package and ensuring that the distance is covered using greener delivery modes. The thrust to expedite the development of multi-modal logistics parks will also be welcomed by the logistics industry, as it will facilitate lowering logistics costs and carbon emissions significantly. Emphasis on closing the digital skill gap in the logistics sector will also be beneficial.