Union Budget 2024: Logistics and supply chain sector set to surge

The first Budget of the new government presented by Finance Minister Nirmala Sitharaman sets a clear direction for making India a Viksit Bharat by 2047 and, at the same time, reflects a prudent balance between growth imperatives and fiscal consolidation.  

The fiscal deficit target of 4.9 per cent of gross domestic product (GDP) for 2024-25 is a significant positive, which also provides headroom for any geo-political uncertainties and global economic challenges, in case they arise. This will further instil confidence in both domestic and international investors and is a solid foundation for our sustained economic expansion. The focus on the next-generation reforms, and the financial sector preparedness to enable meet the capital requirements for the growth of Indian economy will help not only set the agenda for the government but also guide the work of other stakeholders to bring the necessary focus.

The focus on manufacturing in this Budget is a significant highlight, especially, to provide the necessary strategic duty reduction to enable the manufacturing sector to access inputs to become part of global supply chains. By reducing Customs duties on key components and raw materials, the government has taken a decisive step towards enhancing the competitiveness of Indian manufacturing. Also, the emphasis on developing investment-ready “plug and play” industrial parks in partnership with states and the private sector is particularly noteworthy. This initiative, coupled with the sanctioning of twelve industrial parks under the National Industrial Corridor Development Programme, will significantly enhance India’s manufacturing infrastructure.  The focus on skilling will further support the manufacturing capabilities.

The Budget’s commitment to infrastructure development is evident in its substantial allocation of Rs 11.11 trillion for capital expenditure, amounting to 3.4 per cent of GDP. This investment in building and improving infrastructure will have a strong multiplier effect on the economy, as in the past, benefiting various sectors, including logistics and supply chain operations.

The various initiatives cutting across the entire nine tracks, especially the focus on sectors generating employment, is one of the key highlights of this Budget. Logistics as a sector generates significant employment and will be benefited by the employment incentive plans.  With logistics outsourcing gaining ground in India, this Budget has presented a golden opportunity for logistics service providers to expand their operations and offer innovative end-to-end cost effective solutions to meet the evolving needs of the market.

The writer is executive chairman, TVS Supply Chain Solutions Ltd