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Budget 2019: Govt allocates ₹100 lakh cr in logistics industry over next five years

Finance Minister Nirmala Sitharaman, during her two-hour presentation of the Union Budget 2019 in the Parliament, Friday, said that the government has allocated INR 100 Lakh crore over the next five years to build and develop critical logistics and transport infrastructure.

The minister further said that the government is proposing an expert committee to study the current situation relating to long-term finance and its past experience with development finance institutions.

Based on the committee, the government will create a structure and the required funds would flow through development finance institutions, she added.

“The initiative to invest INR 100 lakh crore in infrastructure will definitely have a positive impact on the nation’s logistics and transportation industry both from a business and connectivity perspective,” Kushal Nahata, CEO and cofounder, FarEye, said.

The government would build on the Pradhan Mantri Gram Sadak Yojana, with multiple industrial corridors, dedicated freight corridors, Bharatmala and Sagar Mala projects, Jal Marg Vikas and UDAAN Schemes.

Sitharaman further said that while the planned industrial corridors would improve infrastructure availability for greater industrial investment in the catchment regions, the dedicated freight corridors would mitigate the congestion of our railway network benefitting the common man.

“The ambitious programme of Bharatmala would help develop national road corridors and highways, while Sagar Mala would enhance port connectivity, modernisation and port-linked industrialization. These initiatives will improve logistics tremendously, reducing the cost of transportation and increasing the competitiveness of domestically produced goods,” she added.

The minister also stated that it is estimated that Railway Infrastructure would need an investment of INR 50 Lakh Cr between 2018-2030. She also went on to propose a public-private partnership to unleash faster development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services.

While, Manish Rathi, CEO and co-founder of RailYatri said,”The proposed budget focuses on some very important factors when it comes to transportation. The government’s investment in road infrastructure will prove to be advantageous in the long run, especially for the transportation industry. The enhanced private participation in Indian Railways and metro connectivity will give further impetus towards creating integrated intercity connectivity in India.”

Sitharaman also shared that in the last five years, financial instruments such as Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs) as well as models like Toll-OperateTransfer (ToT) garnered over INR 24,000 Cr as revenue for the government.

According State of The Indian Startup Ecosystem 2018 Report, India had over 900 logistics startups as of November 2018. Between 2014 and 2018, these startups have raised over $1.4 billion funding across 115 deals. The industry had been looking forward to infrastructural reforms from the Union Budget 2019 under the second term of the Prime Minister Narendra Modi-led government.

Also, the government will carry out a comprehensive restructuring of the National Highway Programme to ensure that the National Highway Grid of desirable length and capacity is created using financeable models.

At present, draft national logistics policy is under works and is expected to bring down India’s expenditure on logistics to 9% of GDP from the existing 14%. With huge investments in infrastructural support, the benefits will surely extend beyond the logistics sector and are likely to affect startups in various other allied sectors such as e-commerce, transport tech and electric vehicles.

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