Decoding Union Budget 2022 for The Logistics Industry

The Union Budget for the upcoming fiscal year seems strongly aligned to step up investment in infrastructure and digitalization. The Budget looks promising to put the growth trajectory on a firmer footing as the economy recovers from the Covid-19 pandemic.?

Here's a quick look at some of the key announcements made during the Budget that concerns the country's logistics industry and what it means.?

Unified Logistics Interface Platform

The government's decision to build a unified platform for all logistics operations is an excellent step towards harnessing the power of technology in streamlining operations.?

A platform approach fosters data exchange and breaks logistics silos. It will enable seamless movement of goods, shrink logistics costs, reduce delivery TATs, and ensure 'Just-in-Time' inventory management. It will also be a potent tool to garner rich insights for better and faster decisions and eliminate tedious documentation.

Shipsy’s unified shipment management platform is enabling a Fortune 100 exporter and importer to reduce incidental costs by 80%

Blockchain-Powered Digital Rupee

India is making rapid progress in embracing advanced technology. The announcement to introduce Blockchain-powered Digital Rupee is a great example. Logistics, both cross-border and domestic, comprises multiple moving parts and stakeholders, making it difficult to gain complete visibility of financial transactions that occur in supply chains. Blockchain and automation tools will pave the way for high levels of visibility, security and accountability of the movement of financials across supply chains.

Shipsy’s end-to-end EXIM management system ensure complete visibility of freight procurement, rate negotiations, spot rates, detention, demurrage and more

Battery or Energy as a Service

This Union Budget revealed the government's plan towards improving our country's battery charging and swapping infrastructure to drive the private sector to leverage electric vehicles (EVs). It's a great move to make transportation sustainable. Gradually we will also see the government extending "battery or energy as a service" to logistics service providers. This will play a critical role in empowering logistics businesses to curb their carbon emissions.

Shipsy’s smart logistics management platform empowers businesses to reduce carbon footprint by curbing distance traveled by 5% and decreasing trip volumes by 6%

'Drone Shakti' Programme

This programme is a great push for startups building drones in India. It rightly compliments the liberalization of Drone Rules in India made in 2021. Our country is already leveraging drones to improve farming, enhance railway security, distribute vaccines and better monitor COVID hotspots. This development will also push manufacturers and technology providers to build smart drones capable of executing local deliveries. It's going to be another step towards making logistics sustainable.?

New Measures Under PM Gati Shakti

The new plan of expanding the National Highway Network by 25,000 Kms in 2022-23 is a massive move towards improving road connectivity and will definitely help businesses operating in the last mile.?

The announcement of contracts for implementing multi-modal logistics parks was a much-needed development, especially with regards to reducing logistics costs. India's logistics cost of 14% of the GDP is relatively high compared to 8-10% among developed nations. The Center has plans to reduce the logistics cost to around 10% of the GDP in the next three years. Also, it's a critical development for logistics service providers capable of transporting freight using different transport modes.

Digital Universities?

The government proposed building a digital university with programmes in different Indian languages. This will be made on a network hub and spoke model and will include collaborations with some of the country's best institutions. It will be an excellent opportunity for institutions to take our local education standards to a global standard. For advanced logistics technology providers like us, this will surely widen our window to accessing highly skilled talent.

Tax Benefits for Startups

The decision to extend tax benefits for Startups by a year and ensure greater spending on R&D to encourage startups to drive growth for the country is welcoming news, especially for those heavily impacted by the ongoing pandemic.

In a nutshell, on successful implementation of the proposed initiatives, our logistics industry will definitely see significant improvement in digitization standards, cost savings, better freight movement and greater levels of logistics sustainability.