Logistics industry poised for turbo-charging transformation with Budget 2024: Allcargo Chairman and Founder

Shashi Kiran Shetty

Shashi Kiran Shetty, is Chairman and Founder, Allcargo Group

India is on the verge of entering a multi-decadal growth trajectory. Over the past decade, India's growth discourse has been marked by resilience. The structural reforms implemented by the government over the years have firmly positioned the economy on a growth trajectory, and India is poised to soon become the world's third-largest economy.

Against this backdrop, the budget has offered a comprehensive roadmap for Viksit Bharat, rightly prioritizing productivity and resilience in agriculture, inclusive development, employment and skilling, manufacturing and services, urban development, energy security, infrastructure development, innovation and R&D, and next-generation reforms.

The goal is clear: fueling all the growth engines of the economy to ensure decades of accelerated growth. In addition, focusing on employment, skilling, MSMEs, and the middle class, boosting the rural economy, and further strengthening women’s participation in the economy, the budget has laid the foundation for inclusive growth, empowering every section of society.

For the logistics industry, the first budget of the NDA government’s third term in office has been critical, as the industry is steadily transitioning to a sustainability-driven, efficiency-led, and capacity enhancement-focused ecosystem.

This transition aims to catalyze economic growth, paving the way for India to become a $6-trillion economy by 2030 and a $10-trillion economy by 2035. The budget proposals to facilitate education, employment and skilling, infrastructure development, ease of doing business, digitalization, and data governance will have a far-reaching impact on the logistics industry, both from the demand and supply sides.

A budget allocation of Rs 1.48 lakh crore for education and employment and skill development, along with the announcement of a centrally-sponsored scheme for skilling 20 lakh youth over the next five years and the proposal to revise the model skilling loan to provide loans up to Rs 7.5 lakh, will significantly benefit the logistics industry. These announcements will help develop skilled human capital, bridge the skill gap, attract talent, and generate employment, creating opportunities for the logistics industry to meet the growing service delivery demand.

The capital expenditure to boost infrastructure will not only have a growth-multiplying impact on the economy but will also strengthen operational efficiency and transportation bandwidth. Maintaining the capital expenditure target at Rs 11.11 lakh crore – 3.4 percent of the GDP – is a positive policy continuity signal for the industry. The Rs 1.5 lakh crore allocation for long-term interest-free loans in FY25 for states for infrastructure development will encourage a collaborative development narrative.

Another noteworthy announcement is the launch of Phase 4 of the PM Gram Sadak Yojana. As per the scheme, all-weather roads will be constructed to connect 25,000 rural habitats. This will not only boost the distribution capability of the industry but also create new demand and consumption centers.

The Pradhan Mantri Gati Shakti National Master Plan and the National Logistics Policy have begun dismantling the siloed approach by bringing 16 ministries and departments onto a Geographic Information System-based platform. This has kicked off the process of building an efficient multimodal infrastructure. Continuation of that framework will further expedite the pace of infrastructure development and ensure superior resource utilization. The proposal to develop industrial parks with complete infrastructure in or near 100 cities and 12 industrial parks under the National Industrial Corridor Development programme will add momentum to industrial growth.

The special focus on MSME and manufacturing, especially labor-intensive manufacturing, will strengthen employment generation and boost consumption. The proposal to develop e-commerce export hubs is another welcome announcement, which will further strengthen global value chain linkages. The logistics and supply chain industry is set to play a pivotal role in facilitating global access.

The Jan Vishwas Bill 2.0, in line with the Ease of Doing Business theme, encouraging states to implement Business Reforms Action Plans and digitalization efforts, will also have a far-reaching impact on the economy. Energy transition and continued focus on boosting electric mobility will help the logistics industry meet carbon-neutral goals.

An efficient logistics industry is critical for India to become a global business and manufacturing destination. Along with charting robust economic growth for the country, the budget proposes measures to drive transformation-led growth for the logistics industry.