Budget 2026: Logistics sector seeks policy stability and infrastructure push

Finance Minister Nirmala Sitharaman is scheduled to deliver the budget on February 1. Significant attention is focused on the forthcoming announcements regarding sectoral allocations for the new fiscal year, adjustments to income tax policy, and initiatives aimed at diversifying foreign exports.

The presentation comes against a backdrop of renewed economic optimism, following a significant endorsement from the International Monetary Fund (IMF), which has upgraded India's growth forecast for the fiscal year 2025-26.

The government is also set to table the Economic Survey on January 31, offering a report card on the past year’s performance and setting the tone for the fiscal priorities ahead.

Adding momentum to the pre-budget sentiment, the IMF has revised India’s GDP growth forecast for FY 2025-26 upward to 7.3%, a jump from the previously estimated 6.6%.

The revision, driven by strong third-quarter results and domestic demand, positions India well ahead of major global economies, including China (4.5%) and the U.S. (2.4%). While the IMF notes that growth may stabilise to 6.4% in subsequent years, the current outlook highlights India's resilience against global shocks and uneven world output.

Industry focus: Supply chain & green logistics
As the countdown begins, industry leaders are urging the government to prioritise long-term structural reforms over short-term incentives. The focus this year is heavily tilted toward strengthening supply chain resilience, reducing strategic dependence on limited geographies, and integrating MSMEs (Micro, Small, and Medium Enterprises) into global value chains.

"We are already seeing strong momentum across industries to rethink how supply chains are designed and managed," said Smitha Shetty, Regional Director of APAC Achilles Information. She notes that budget measures supporting transparency and data-driven networks are vital. "Over time, this will help businesses manage risk more effectively while advancing sustainability and resilience across the wider economy."

Logistics stakeholders are calling for execution-led reforms that lower costs while delivering clear carbon-reduction outcomes. Key expectations include policy support for automated warehousing, faster multimodal integration, and a shift toward rail and coastal transport.

Nikhil Agarwal, President of CJ Darcl Logistics, highlighted the need to support the human element of the sector, specifically the driver ecosystem. "Investments in driver training, upskilling, safety, and high-quality rest infrastructure... will improve reliability and address the growing shortage of skilled drivers," Agarwal added.

He further advocated for outcome-based incentives to drive the green transition. "Encouraging adoption of alternate fuels and electric mobility... will enable fleet operators to transition sustainably without compromising economics."

Infra Push
Indian Railways manages the transportation of more than 1,600 million tonnes of freight each year; however, its present participation in the logistics market stands at only 28%. This percentage is below the national objective of 35-40%, which is necessary for achieving cost-efficient logistics.

Vivek Lohia, Managing Director of Jupiter Wagons, said, “Based on recent trends, the rail outlay is expected to see a calibrated increase of around five percent, taking the overall allocation to approximately ₹2.65 lakh crore, including extra-budgetary resources”.

Lohia noted that with the massive task of electrification nearing completion, the government’s capital deployment is likely to pivot. The focus is expected to shift toward easing congestion through the construction of new lines, gauge conversion, track doubling, and the expansion of dedicated freight corridors and economic corridors linking ports to mineral clusters.

Ketan Kulkarni, MD & CEO of Allcargo Logistics, views Budget 2026 as a crucial opportunity to reinforce the government’s commitment to multimodal connectivity.

“Accelerating investments across rail, road, coastal shipping, and inland waterways can reduce logistics costs and urban congestion while enabling MSMEs to access faster, more efficient, and cost-effective supply chains,” Kulkarni said.

He also highlighted the critical role of technology in this transformation, anticipating a continued emphasis on digital infrastructure. “The adoption of digital and AI-driven solutions can meaningfully improve operational efficiency, resource optimisation, and service predictability, critical enablers for MSMEs looking to scale sustainably,” he added.

Nilachal Mishra, Partner and Head of Government & Public Services at KPMG in India, described infrastructure as a stable domestic anchor in a volatile global market.

“It strengthens export competitiveness by lowering logistics and energy costs, supports long-term objectives such as manufacturing scale-up and the energy transition, and sends a clear signal of policy continuity to markets,” Mishra added. “For investors and businesses planning long-term capital commitments, that signal matters.”

The industry is seeking specific budgetary measures to reduce supply chain costs to offset these external pressures. Key demands include reduced port dwell times, rationalised transport charges, and strengthened export incentives such as the Remission of Duties and Taxes on Exported Products (RoDTEP).

Gayomard Driver, Group CFO of Jeena and Company, said, “Faster clearances, lower inland logistics costs, and predictable incentive frameworks allow logistics partners to offer competitive freight solutions, enabling exporters to absorb tariff pressures and remain viable in global markets”.

Anish Kumar Jha, Managing Director for India, Sri Lanka and the Maldives, said the sector is looking for consistency in policy and execution. He said stability in PLI (Production Linked Incentives) schemes, sustained infrastructure development and a streamlined regulatory environment would allow logistics players to invest with confidence in capacity, technology and network expansion, supporting India’s manufacturing and trade growth.

Lowering logistics costs through integration and execution
Reducing logistics costs remains a central expectation from Budget 2026. R. S. Subramanian, Senior Vice President, South Asia at DHL Express, expects continued investment in multimodal infrastructure under the National Logistics Policy is critical not only for the domestic economy but also for India’s export ambitions.

Subramanian added that sustainability is becoming a core priority for global trade, with express logistics players increasingly focused on reducing emissions through the adoption of sustainable aviation fuel.

Seamless multimodal movement and export readiness
Logistics operators say the next phase of growth depends on smoother physical and digital integration across transport modes. Dipanjan Banerjee, Chief Commercial Officer at Blue Dart, said Budget 2026 should focus on reducing dwell times, simplifying customs procedures and enabling smoother intermodal transfers across air, road and rail networks.

He said these measures would materially reduce operating friction and help bring logistics costs closer to global benchmarks, which is essential for India’s export ambitions. Banerjee also highlighted the need for policy support to simplify cross-border e-commerce for MSMEs, especially from Tier 2 and Tier 3 markets, and continued backing for specialised logistics in high-growth sectors such as electronics, new energy and life sciences.

Digital-first logistics and smarter freight movement
Technology-led logistics players are urging the government to accelerate digital adoption across freight and container networks. Dhruv Taneja, Founder and Global CEO of MatchLog, said Budget 2026 should prioritise incentives for AI-driven logistics platforms, EV trucking corridors and stronger multimodal hubs under PM Gati Shakti.

He said investments in shared inland infrastructure near industrial clusters and AI-led visibility frameworks could reduce empty miles, ease port congestion and improve equipment productivity. A sustained policy push on EV adoption, green logistics and clear data governance would help make India’s logistics ecosystem faster, more efficient and environmentally responsible, he added.

Trade technology firms are also calling for structural reforms in customs and compliance. Haresh Calcuttawala, CEO and Co-founder of Trezix, said exporters continue to face tariff distortions, compliance overheads and delayed capital cycles that weaken global competitiveness.

He said Budget 2026 should focus on faster duty drawback mechanisms, PLI-linked export enablement and initiatives such as a Product Passport to automate customs clearance. Stronger incentives for MSME digitalisation, ULIP–ICEGATE interoperability and regulator-led innovation would help reduce disputes, working-capital lock-ups and documentation delays, he added.

Cold chain as essential infrastructure
Cold-chain operators are calling for stronger recognition of temperature-controlled logistics as critical national infrastructure. Sameer Varma, Executive Director at ColdStar Logistics, said Budget 2026 should treat cold chains as “infrastructure for essentials” to improve reliability, reduce wastage and strengthen healthcare preparedness.

He said expanding and simplifying funding windows under existing government schemes, supported by blended finance and credit enhancement, could attract private investment. Varma also highlighted the need for incentives for energy-efficient refrigeration and thermal storage upgrades, along with harmonised temperature and traceability standards for pharmaceutical distribution.

GST rationalisation remains a key concern for the segment. Varma said targeted relief on cold-chain assets such as refrigerated vehicles and freezing equipment would accelerate capacity creation. Recognising modern warehousing and cold chain as infrastructure rather than a real estate activity, along with logistics-specific skilling and eased compliance, would further support the sector.

Swarup Bose, Founder and CEO of Celcius Logistics, noted these views, saying Budget 2026 should accelerate investment in integrated logistics and cold-chain infrastructure to reduce wastage and improve turnaround times in agri and pharma supply chains. He said targeted fiscal incentives, easier access to capital and deeper public–private collaboration would enhance efficiency and strengthen India’s competitiveness as a supply-chain hub.

GST reform and working capital relief
Freight forwarders and shipping companies are seeking urgent relief from GST-related working capital challenges. Supal Shah, CEO of Sarjak Container Lines, said the inverted duty structure under GST continues to block cash flows for logistics service providers, effectively acting as an unintended tax on operations.

He called for a unified GST rate with full input tax credit eligibility and a refund mechanism for accumulated credits. Shah also highlighted the need to reduce logistics costs through fuel tax rationalisation, incentives for rail and coastal shipping, and targeted subsidies for green logistics, including electric and LNG-powered trucks.

Express logistics, air cargo and time-critical trade
Air and express logistics players are urging faster, more predictable cross-border movement. Kami Viswanthan, President for the Middle East, Indian Subcontinent and Africa at FedEx, said India’s competitiveness will increasingly depend on how seamlessly cargo moves across borders and modes, particularly for time-sensitive trade.

He said the Union Budget can support this by further developing dedicated air cargo infrastructure and accelerating digital, time-bound customs and clearance processes.

Domestic express operators also flagged rising costs and compliance complexity. Aneel Gambhir, Chief Financial Officer at DTDC Express, said fuel volatility, higher insurance and maintenance costs continue to impact margins, while layered documentation requirements slow down interstate and cross-border shipments.

He said Budget 2026 should focus on faster rollout of multimodal logistics parks, better port connectivity, cold-chain support, GST rationalisation and incentives for AI- and IoT-driven visibility, automation and green logistics.