Impact of India's Interim Budget 2024 on Supply Chain

India's Interim Budget 2024 marks a strategic advancement in the nation's journey towards comprehensive development and modernization, with a particular emphasis on enhancing the supply chain and logistics sector. It outlines a transformative vision, bolstering infrastructure through the PM Gati Shakti initiative, which includes the implementation of three new railway corridors aimed at improving energy, mineral, and cement transport, port connectivity, and easing high-traffic density. This move not only promises to streamline transportation logistics but also aims to reduce operational costs significantly. Furthermore, the budget underscores a commitment to technological enhancement and environmental sustainability, notably through the promotion of electric vehicles and the development of green infrastructure.

In essence, the Interim Budget 2024 is a robust blueprint for fostering economic growth, improving supply chain efficiencies, and paving the way for India to emerge as a key player in the global logistics arena.

“Together with dedicated freight corridors, these three economic corridor programmes will accelerate our GDP growth and reduce logistic costs. These projects have been identified under the PM Gati Shakti for enabling multi-modal connectivity."

~ Nirmala Sitharaman

The Interim Budget 2024 of India has placed significant emphasis on enhancing the food supply chain and logistics from various perspectives:

PM Gati Shakti initiative: Three new crucial railway corridor programs were announced as part of this initiative. These corridors are focused on:

1. Energy, Mineral, and Cement Corridor: Geared towards facilitating the efficient transport of essential commodities like energy resources, minerals, and cement. It's aimed at enhancing the logistical capabilities and reducing operational costs in these key sectors.

1. Port Connectivity Corridor: Designed to improve the connectivity between major ports and the hinterland. It will likely boost the efficiency of cargo movement and streamline the supply chain processes, thereby enhancing India's trade capabilities.

1. High-Traffic Density Corridor: Intended to reduce overcrowding in high-traffic rail routes. By enhancing rail infrastructure and improving passenger and freight train operations, these corridors aim to provide a more efficient and cost-effective transportation system.

In addition:?

1. Accelerated Infrastructure Development: The budget aligns with the Gati Shakti masterplan, which emphasizes the development of multimodal hubs, dedicated freight corridors, and inland waterways. This infrastructure development is crucial for enhancing the efficiency of logistics operations across the country.

1. Technological Advancements: There is a strong emphasis on leveraging advanced technologies such as AI to streamline various aspects of the supply chain. This includes automation in warehousing, optimization of logistics operations, and improvements in customs procedures.

1. Workforce Skilling: Recognizing the importance of a skilled workforce, the budget proposes investments in training and skill development. This is particularly focused on areas such as AI, supply chain management, and last-mile logistics solutions, ensuring that the workforce is equipped to handle the evolving demands of the logistics sector.

1. Rationalization of GST Rates: The logistics sector is expecting a more simplified and transparent GST system. Currently, the multiple tax slabs under GST can be complex for businesses. Streamlining these rates would not only ease compliance but also stimulate economic growth.

1. Focus on Sustainability: The budget is expected to support initiatives that promote the adoption of electric vehicles (EVs) and alternative fuels. This aligns with India's commitment to achieving net-zero emissions by 2070 and positions the industry as a leader in eco-friendly logistics solutions.

1. Enhanced Multimodal Connectivity: The budget aims to strengthen multimodal connectivity, which is essential for rationalizing supply chains and fostering innovation. This includes investments in skilling labour and establishing more training centers for drivers.

1. Public-Private Collaboration: The budget encourages collaboration between various stakeholders in the logistics sector, including ports, railways, airlines, and e-commerce companies. This collaborative approach, possibly through public-private partnerships, is crucial for the holistic development of the logistics infrastructure.

In summary, while the Interim Budget 2024 has undoubtedly charted a progressive path, the journey towards realizing India's full potential in logistics and supply chain efficiency is ongoing. We stand at a pivotal moment, filled with anticipation and optimism, ready to embrace the comprehensive insights that the final budget will unveil.

Reference documents & articles:

Government domain:?

• Budget Doc. - https://www.indiabudget.gov.in/doc/Key_to_Budget_Document_2024.pdf?
• Budget Highlights - https://www.indiabudget.gov.in/doc/bh1.pdf?
• Ministry wise Budget Provisions - https://www.indiabudget.gov.in/doc/eb/sumsbe.pdf?

Public domain:?

• https://www.livemint.com/economy/budget-2024-25-key-highlights-live-updates-interim-budget-agriculture-infra-fiscal-deficit-nirmala-sitharaman-11706695416199.html?
• https://economictimes.indiatimes.com/small-biz/sme-sector/interim-budget-2024-logistics-sector-gets-a-rs-11-lakh-cr-boost-but-industry-players-await-clarity/articleshow/107324540.cms?from=mdr?
• https://business.outlookindia.com/budget/union-budget-2024-logistics-sector-expects-continuous-capex-push-focus-on-technology?
• https://www.financialexpress.com/budget/railway-budget-2024-sitharaman-announces-3-economic-railway-corridors-for-enhanced-logistics-and-reduced-costs-3381590/?
• https://www.financialexpress.com/budget/budget-2024-expectations-key-expectations-from-logistics-industry-3380450/?