By Deepal Shah
The Indian logistics business today is at an inflection point. During the COVID-19 pandemic and the subsequent nationwide lockdown, the logistics sector played a frontline part in preserving the intactness and continued functioning of domestic provide chains. This ensured an uninterrupted flow of crucial goods and services across the geographical expanse of the nation devoid of disruptions. Budget 2021 presented by Nirmala Sitharaman has played an enabling part in bolstering the functional competencies of the sector by announcing essential business-friendly proposals. These contain asset monetizing the Dedicated Rail Freight Corridor (DRFC) by Indian Railways for operations and upkeep, boosting investments to increase rail and road infrastructure in the nation and creating new financial corridors.
The proposal to monetize the DRFCs in the nation touted as the country’s biggest infrastructure projects has been hailed as a game-altering initiative. With the commissioning of the Eastern and Western Dedicated Rail Freight Corridors in the nation by June 2022, it is estimated that about 70% of freight site visitors at the moment plying on passenger lines will be steadily shifted to the freight corridors becoming created by the Dedicated Freight Corridor Corporation of India Limited (DFCCIL). With an emphasis on the transition in modal mix from road to rail, the vastly overburdened national road networks will be decongested. Logistics players in the nation will be in an enhanced position to leverage the added benefits of quicker freight transit instances and lowered operational expenses. This will also support them to increase final-mile delivery timelines with an emphasis on multimodal connectivity and create in buffer time for addressing final minute contingencies.
The freight corridors will have a transformative influence on the freight logistics ecosystem in the nation. By developing an integrated transport method in the nation, it will develop a favorable roadmap for Indian Railways to increase their earnings from freight transportation on a sustainable basis. The privatization of assets has the possible to attract elevated private sector investment inflows, increase operational efficiencies and service qualities and pave the way for railways to play a pivotal part in facilitating finish-to-finish logistics options. By freeing up the network for new and quicker passenger trains, it will also let the railways to earn more passenger income.
With the announcement of a National Asset Monetization pipeline for funding projects, capital outlay of INR 1.18 lakh crore for road transport and highways and extending the INR 111 lakh crore National Infrastructure Pipeline (NIP) to cover 7,400 projects, accelerated infra spending has been the priority concentrate region of Budget 2021. Unlocking the worth of underutilized public infrastructure assets will spur the creation of productive assets, lead to allocation and utilization of unlocked sources for balanced financial improvement and lessen the burden on the national exchequer. A record budgetary allocation for creating a robust road and highways network in the nation has come as a booster shot for the economy. This will have a multiplier influence on essential trade and business sectors with the possible influence to place the economy on a quickly-development trajectory in the post-pandemic phase. Broadening the scope of the NIP and creating new financial corridors will market inclusive financial development in the nation, bolster investor self-assurance in the domestic infrastructure sector by making certain lowered NPAs and elevated profitability, and improve income for the government.
The government has usually demonstrated the proper intent to increase the development possible of Indian logistics by way of the implementation of essential policy reforms and interventions. The Budget has ticked all the proper boxes in terms of addressing the issues of the Indian logistics sector.
Going ahead, the business and government will will need to collaborate in bolstering the resilience of provide chains, leveraging emerging technologies to turn out to be aspect of globally integrated digital worth chains, and lay the foundation of a self-reliant India or ‘Atmanirbhar Bharat’ firmly positioned to turn out to be a USD 5 trillion economy.
(Deepal Shah is the CFO at Allcargo Logistics Ltd. The views expressed ar the author’s personal.)