Union Budget 2021-22 talks for increasing warehousing and logistics

Union Budget

Union Finance Minister Nirmala Sitharaman in her speech mentioned about increasing the logistics and warehousing, addressing required facilities for vaccines Budget 2021 includes assets to increase the warehousing capacity of India.

Today, Union Finance Minister Nirmala Sitharaman presented union budget for financial year 2021-22. This year’s budget allocations had not much focus towards the F&B and cold chain sector. Government is more focused towards regenerating the ailing economy and other industries. Also, the finance ministry has allotted ₹ 35,000 Cr. for coronavirus vaccines in the country as part of the newly launched Aatmanirbhar Swasth Bharat Yojana. However, Sitharaman in her speech mentioned about increasing the logistics and warehousing, addressing required facilities for vaccines Budget 2021 includes assets under Central Warehousing Corporation to increase the warehousing capacity of India.  Surprisingly, a large number of commonly used items, including refrigerators, air conditioners, LED lights and mobile phones, are expected to become dearer owing to the increase in custom duty on imported parts.

During the previous union budget 2020-21, Sitharaman announced of setting up of storage facilities at villages as part of the Creation of Backward and Forward Linkages (CBFL) under the Pradhan Mantri Kisan Sampada Yojana (PMKSY). The proposed facilities will be run by women self-help groups (SHG) and are expected to reduce logistics cost of farmers. But there was nothing per say during this entire budget session. Industry somewhere is a little upset as the entire cold chain and logistics, which has become an essential aspect remained unaddressed.

Following are some of the key highlights of Union Budget 2021-22

  • Bringing down logistic cost on railways by 2030
  • Warehousing transactions saw almost a threefold increase between FY17 and FY20, despite the decline the sector witnessed due to COVID-19.
  • As of FY20, India had about 307 million sq ft of existing warehouse stock across eight cities in the country. There is further potential to develop another 193 million sq ft.
  • Budget 2021 includes assets under Central Warehousing Corporation. Other infrastructure assets that are identified under the monetisation programme include airports in tier 2 and tier 3 cities, three.
  • Imported products such as compressors for Refrigerators and Air-conditioners (ACs), Alcoholic Beverages are set to cost more, as Finance Minister Nirmala Sitharaman proposed an increase in the customs duty on a range of items in her Budget 2021 speech.
  • Extending coverage of SWAMITVA Scheme to all states/UTs  Expansion of Operation
  •  Green scheme to include 22 perishable products  1000 more mandis to be integrated with e-NAM

Shashi Kiran Shetty, Chairman, Allcargo Logistics, ECU Worldwide and Gati 

“At a time when the Indian economy has been scaling a fast recovery trajectory, FM Sitharaman has effectively navigated the challenge of balancing fiscal concerns and addressing economic growth. This is further strengthened by the 13 points that outline the vision for a Self-reliant’ or ‘Aatmanirbhar’ nation. In light of the 6 pillars of this vision namely – health and wellbeing, capital and infrastructure, inclusive development, reinvigorating human capital, innovation and R&D, and minimum government and maximum governance – the initiatives to drive ahead FDI and FII inflows, infrastructure spend and facilitate legal and tax settlements are also noteworthy. Proposals to boost operational contingencies of road infrastructure and build more economic corridors have the potential to increase efficiencies across the logistics ecosystem and simulate regional economies to encourage local entrepreneurial initiatives. The government’s intent to increase the share of green energy in the national energy grid and transition to a zero-carbon fuel regime is in line with its steadfast commitment to sustainability. The proposed one-year extension of tax holiday for affordable housing projects is likely to ensure inclusive housing for the underprivileged and foster community empowerment and resilience.”

Anshul Singhal, Managing Director, Welspun One Logistics Parks

“Government’s focus on capital expenditure and infrastructure development will be a shot in the arm for the warehousing and logistics sector in the country. The proposed Development Finance Institution will act as a provider, enabler, and catalyst for infrastructure financing. Also, the budget has earmarked a sharp increase in capital expenditure at ₹ 5.54 lakh crore in 2022, from ₹ 4.39 lakh crore in 2021. A planned boost to road infrastructure across the country and seven port projects will aid in job creation and income generation. Overall, the large-scale infrastructure augmentation coupled with asset monetisation program of core infrastructure assets will go a long way in realising the national infrastructure pipeline, thereby benefiting the logistics sector.”

Ravichandran Purushothaman, President, Danfoss India

The Union Budgets provision for doubling the MSME allocation and setting aside Rs 15,700 crore in FY22, is a testament to the nation’s resolve towards strengthening its local manufacturing base and realising its vision for a self-reliant India. Further, the ₹ 1.97 lakh crore allocated over  the next 5 years for Production Linked Incentive Schemes to create manufacturing global champions for an Aatmanirbhar Bharat Will nurture size and scale and create jobs for youth. The enhanced outlay of 1,18,101 crores announced for the development of the Roads and Highways infrastructure would benefit the corollary industries like cement, steel and transportation, showcasing potential for recovery from the slowdown presented by the lockdown. In light of the government’s move towards reducing air-pollution and the impetus provided to the renewable energy sector, sustainability-oriented products can be effective drivers of maximising energy efficiency and a big contributor to reduction in air pollution which were also the key highlights from the budget today. The budget has attempted to strike a balance between supporting growth and a modest deficit reduction. The budget addresses issues of supply scarring and the demand constraints across all industries, and a set of fiscal and tax relief measures that would go a long way in boosting aggregate demand.

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