Interim union budget unveils 3 new economic rail corridors

Finance and corporate affairs minister Nirmala Sitharaman presented the Interim Union Budget for 2024-2025 in parliament today.

The finance minister's major announcements include the capital expenditure outlay for the next year being increased by 11.1 percent to Rs 11,11,111 crore, which would be 3.4 per cent of the GDP and the three major economic railway corridor programmes identified under the PM Gati Shakti to be implemented to improve logistics efficiency and reduce cost.

The programmes are namely energy, mineral and cement corridors, port connectivity corridors and high traffic density corridors.

Commenting on the budget, Ashish Agarwal, MD & CEO, Seros, noted that increasing the capital expenditure by almost 11 percent is a very welcomed step and the implementation of three major railway economic corridors will significantly contribute to the success of the PM Gati Shakti mission.

“This move will enhance the multi-modal connectivity, boost logistics efficiency, and reduce costs, making every part of the country an active participant in economic growth, which is very encouraging for the industry,” he said.

Rampraveen Swaminathan, managing director and CEO of Mahindra Logistics, said, “The announcement of three major economic railway corridor programs, spanning energy, mineral, and cement corridors, port connectivity corridors, and high-traffic density corridors under the PM Gati Shakti initiative, is poised to be transformative. These corridors not only promise to decongest high-traffic areas but also elevate the safety and speed of passenger trains. The integration of dedicated freight corridors is poised to catalyse GDP growth and significantly reduce logistics costs.”

Kami Viswanathan, President – MEISA, FedEx Express opined that the 2024 interim budget's increased capital expenditure for infrastructure development is a strategic and commendable move.

“It promises to accelerate economic growth and positively impact the logistics sector. The government's commitment to the PM Gati Shakti National Master Plan, is encouraging. These initiatives aim to enhance logistics efficiency and reduce costs, aligning with our objectives of service excellence and innovation in logistics. Additionally, the 'Amrit Kaal' initiative, which focuses on empowering MSMEs and boosting their global competitiveness, is set to benefit the broader logistics sector,” she said.

On the aviation sector, the minister noted that the number of airports has doubled to 149 and today five hundred and seventeen new routes are carrying 1.3 crore passengers. Indian carriers have proactively placed orders for over 1000 new aircraft.

Mahesh Fogla, executive director, Patel Integrated Logistics, opined that the focus on new airport expansion aligns with Indian carriers anticipating 1,000 new aircraft.

On the impact of aviation developments on warehousing, Rajesh Jaggi, vice chairman - Real Estate, The Everstone Group, pointed out that the development in aviation, especially in emerging markets, can stimulate the demand for warehousing facilities near airports, supporting air cargo logistics.

"The Interim Budget’s focus on transportation infrastructure aligns with our expectations for enhanced logistics connectivity. Developing new rail corridors, port connectivity, and urban transport systems will improve access and efficiency. This makes building warehouses and industrial parks in diverse locations more feasible,” he said.

Talking about the number of steps taken in customs to facilitate international trade, Sitharaman said the import release time declined by 47 percent to 71 hours at Inland Container Depots, by 28 percent to 44 hours at air cargo complexes and by 27 percent to 85 hours at seaports, over the last four years since 2019.

Maulik Manakiwala, partner, indirect tax, BDO India, agrees to it and said, “Customs has seen a significant transformation with more efficient clearances and digitalisation. This facilitates international trade and is a step closer to ease of doing business (EODB).”

Finance minister announced a corpus of rupees one lakh crore that will be established with fifty-year interest free loan. She said, “The corpus will provide long-term financing or refinancing with long tenors and low or nil interest rates. This will also encourage the private sector to scale up research and innovation significantly in sunrise domains.”

Homi Katgara, partner, Jeena & Company pointed out that the corpus specifically targeted at young minds in technology is an important move.

“This fosters a culture of problem-solving and tech adoption, crucial for streamlining logistics operations and optimizing routes,” he said.

“Furthermore, the government's commitment to "First Develop India" through bilateral trade treaties opens doors to new opportunities and strengthens our global footprint. This strategic approach aligns perfectly with our aspirations for growth and expansion,”

The finance minister announced that the FDI inflow during 2014-23 was $596 billion. “For encouraging sustained foreign investment, we are negotiating bilateral investment treaties with our foreign partners, in the spirit of first develop India,” she added.

Meanwhile, Shashi Kiran Shetty, founder & chairman, Allcargo Group commented that it’s a growth-focussed budget which has ticked all the important boxes.

''Announcement of large credit availability to the private sector will have a multiplying impact on the infrastructure development and overall economic development. For the logistics industry, the budget proposal to develop an enabling EV ecosystem by strengthening manufacturing capabilities and charging infrastructure is extremely encouraging, we are aligning our operations with the country’s sustainability goals. The continued capex boost will further accelerate the progress towards a fully developed and efficient multimodal logistics system critical to make India a global manufacturing hub,” he said.

Simon Mason, COO & CRO, Writer Relocations, opined that the budget's focus on upgrading transportation infrastructure, primarily through enhanced rail and urban connectivity, is a pivotal move for industries reliant on efficient logistics.

“These improvements are expected to reduce transit times and costs, a key factor for companies managing domestic and international relocations. Furthermore, expanding the aviation sector in smaller cities opens new corridors, enhancing accessibility and potentially broadening the market for relocation services. These developments in infrastructure are likely to streamline relocation processes, enabling smoother and more cost-effective operations for companies in this sector. This improved connectivity and accessibility are crucial for enhancing service delivery, especially in a diverse and geographically vast country like India,” he said.

Lancy Barboza, MD, Flomic Global Logistics, applauded the budget, emphasising its transformative impact on logistics. “The government's eco-friendly bio-manufacturing initiative aligns with our dedication to sustainable practices in the supply chain,” he said.

Varun Gada, director of LP Logiscience- A Liladhar Pasoo Company, noted that the focus on upskilling and vocational training for youth is also a welcome step, which will translate into job-ready professionals across sectors, including for logistics and warehousing.

“The focus on further strengthening connectivity and building transport infrastructure in this interim union budget is a great boost to the existing efforts of reducing logistic costs,” he said.

On the same line, Rahul Garg, founder and CEO, Moglix said that it is heartening that policy priority will be given to provide training for MSMEs to build global competitiveness.

“Preparing the financial sector to meet MSME investment needs is key. The upcoming years will see unparalleled development as we strive for a developed India by 2047. There are abundant opportunities ahead and we are poised to fulfill the aspirations of our youth,” he said.

Ratheesh D, director - first mile, mid mile & last mile services, CABT Logistics, opined that logistics gets a shot in the arm with Budget 2024. “The focused strategy on freight movement aligns seamlessly with the National Rail Plan and promises to catapult India's manufacturing competitiveness by ensuring efficient and cost-effective delivery of goods," he said.

Vishal Jain, co founder, Roadcast, said, “Logistics sector is estimated to grow to 563 billion dollars in 2030, at a compound annual growth rate 9.4 percent. These new developments will help achieve this number and bring reduce the Indian logistics costs as well which are currently higher than other countries.”

Edwin, co-founder, Boxigo, said, "The government aims for economic policies fostering sustainable growth, inclusive development, improved productivity, and creating opportunities. The Middle East-Europe-India corridor reflects a commitment to technological growth, offering businesses opportunities for expansion.”

Anil G Verma, executive director and CEO, Godrej & Boyce thinks that the Interim Budget 2024 is extremely well thought of and clearly a step towards the vision of Developed India @ 2047.

“By limiting the deficit to 5.1% of the GDP which should be achievable given the rather conservative tax receipts, fiscal prudence has been given the due importance. Lower borrowings and thus lower borrowing costs will help prioritize domestic spends and guard against external shocks,” he said.

Harpreet Singh Malhotra, chairman & managing director, Tiger Logistics, noted that the interim budget presents a promising continuation for the goal of a Vikshit Bharat (Developed India).

“From a logistics standpoint, the government's emphasis on bolstering Digital Public Infrastructure, exemplified by initiatives like ULIP, sets a solid foundation for a transformation of this industry. Moreover, the rapid development of new airports is poised to substantially influence India's air cargo market, facilitating exponential growth," he said.