Union Budget 2024: Logistics Sector Expects Continuous Capex Push, Focus On Technology

Union Finance Minister Nirmala Sitharaman is all set to present the Interim Union Budget for fiscal 2024-25 on February 1, 2024. India’s logistics sector is expecting the government to introduce some transformative measures from the budget to bring innovation and inclusivity to the sector. Industry experts are expecting government proposals towards a continued capex push for the development of road networks, delivery hubs, and advanced technology solutions for optimal route planning. 

Considering the targets outlined in the preceding year's budget, the upcoming interim budget for 2024-25 is likely to see a 10 per cent rise in capital expenditure to Rs 11 lakh crore. The industry is anticipating robust growth in the development of transportation infrastructure, particularly in relation to major freight routes, logistics parks, and road, railways, airports, and highway connectivity. 

On the back of increased government expenditure on ports, roads, and digitization, India’s logistics costs have decreased to less than 9 per cent of GDP, and the next target is to improve the global logistics ranking to rank amongst the top 25 countries.

Aneel Gambhir, Chief Financial Officer at DTDC Express urged the government to address the logistics sector’s unique needs by enhancing the strategic allocations toward infrastructure development, tax reforms, and other governance policies. “Besides this, the importance of digitally advanced processes through cutting-edge technologies including artificial intelligence, machine learning, IoT, and big data are also required,” he said.

“Additionally, the inclusion of diesel under the GST ambit is a critical move that we hope the government will consider in this budget. With India aiming to reduce its logistics costs and become more competitive in the international market, this will help the logistics players to regulate costs by cutting on the tax outflow,” Gambhir said.

According to Gambhir, facilitating a strong policy framework is essential to reduce expenditure, and improve transportation, and warehouse facilities to continue the growth achieved by the industry. Further strengthening the National Logistics Policy (NLP) can bring a massive change and streamline operations for the industry in the future.

The sector also anticipates more regulatory process simplifications for land acquisitions of warehouses and logistics parks, rebates in stamp duty, registration costs, and electricity charges. Streamlined regulatory processes will be essential to facilitate smoother cross-border transactions and ensure compliance with evolving global standards.

Abhijit Verma, Founder & MD at Avinya Industrial & Logistics Parks says that incentives and regulations promoting the use of technology such as automation, AI, and IoT—in warehousing and logistics might potentially receive a lot of attention in an effort to increase productivity, transparency, and tracking.

“The government can also look into introducing tax benefits or incentives for businesses who upgrade their warehouse facilities and implement environmentally friendly procedures,” he added.

Vivek Juneja, Founder & Managing Director at Varuna Group said, “At the core of our expectations lies the imperative for substantial investments in infrastructure. An enhanced logistics network, fortified with modernized roads and warehousing facilities, will optimize operational efficiency and position our industry as a key driver of economic development.”

According to Juneja, the integration of transformative technologies is paramount. Adapting cutting-edge solutions such as IoT and AI will empower logistics providers to unlock new transparency, traceability, and efficiency levels. This digital transformation is a modernization effort and a strategic move to future-proof the logistics industry against emerging challenges.

By addressing these expectations, there is an opportunity to share a resilient and tech-enabled future for the logistics sector. Nirmala Sitharaman will present her sixth consecutive budget since 2019. However, the upcoming will be an interim budget and is likely to have no major announcements. The full budget for the financial year 2024-25 will be presented after the formation of the new government following the general elections.