By – Darshan Ghodawat, CEO and Managing Director, AVA Global Logistics LLP
Announcements in Interim Budget for 2024-25 presented on February 1, 2024, hold a lot of positives for the logistics industry as it comes on the back of a long industry wish list. Given the double-digit boost to infrastructure, the interim budget presents a comprehensive plan to fortify the sector’s backbone. For the logistics sector, the three Economic Railway Corridors announced the promise to bring more Gati or speed to the development of energy, mineral, and cement businesses. To be developed under the PM GatiShakti initiative, these new corridors will usher in multi-modal connectivity. Such a connectivity which we have always advocated will take the Indian economy to the next level as envisioned.
These corridors together with port connectivity corridors, and high-traffic density corridors will bring improvement to logistics operations. Focussing on creating these corridors will help reduce costs linked to the movement of goods by rail, and alleviate congestion on high-density rail routes hugely benefitting the logistics industry. While we endorse the government’s investment in infrastructure it is important to highlight the potential for job creation and the multiplier effect that a thrust on infrastructure development has. The announcements augur well for India’s logistics sector with a far-reaching impact on the overall business and economy.
One of the immediate impacts will be the ability to lower India’s logistics costs. The money spent on the movement of goods makes up around 12% of the country’s GDP. The budgetary announcements will lead to a substantial removal of obstacles that the costs hold resulting in our nation’s ability to compete with others, particularly in the manufacturing sector. By improving the flow of traffic on transport routes and increasing the effectiveness of freight transport, India can significantly enhance its ability to compete with the best in logistics. A strong logistics network can be the backbone of multimodal connectivity under the PM GatiShakti National Master Plan.
As we applaud the government’s investment in infrastructure, it’s essential to mention the potential for job creation and the multiplier effect that a focus on infrastructure development can have. The expansion of airports, both existing and new and the India-Middle East-Europe Economic Corridor are strategic aspects of the interim budget that offer recognition of the importance of creating modern, world-class infrastructure to add to India’s growth and integration into global supply chains.
The Finance Minister’s acknowledgment and encouragement of research in the use of new-age technologies will do well for the logistics sector. The use such as GIS-data-based planning platforms, incorporating artificial intelligence (AI) and advanced tools, are areas where the logistics sector is already making significant investments. Utilizing data mining and analytics, the trade can enhance logistics efficiency through cost-effective transportation choices, reduced empty backhauls, strategic route planning, and real-time tracking. Additionally, RFID technology, Big Data Analytics, and IoT-based Logistics Data Bank (LDB) will enable predictive planning and data-based decision-making, revolutionizing the logistics landscape.
The government’s push to the Unified Logistics Interface Platform (ULIP) under the National Logistics Policy (NLP) is a step towards ease of logistics. It has led to streamlining operations and cutting down on logistics expenses across sectors. By establishing a transparent, single-window platform, stakeholders will gain access to real-time information, fostering smoother processes and cost savings.
This continued capex push underscores a comprehensive approach that not only mitigates risks in infrastructure investments but also catalyzes foreign direct investment (FDI) through the facilitation of logistics efficiency. A GIS-data-based decision support system, not only aids in integrated planning within the logistics and infrastructure sector but will also contribute to the broader goals of enhancing Ease of Living and Ease of Doing Business. The confluence of strategic investments and technological advancements sets the stage for a dynamic future, where the logistics industry anticipates unprecedented growth and efficiency.
By implementing these revolutionary actions proposed in the interim budget, the logistics industry foresees a vibrant future, playing a significant role in India’s economic expansion, worldwide integration, and increased competitiveness. The combination of deliberate investments, progress in technology, and a proactive strategy places the industry in a favorable position for remarkable expansion and effectiveness in the changing economic environment.
