Budget 2015: Big but not bang
With the Government presenting the annual Budget, a roadmap has been set for the year. Industry insiders have called Budget 2015-16 reformist and well-intentioned. On a cautionary note, they have also said that the real takeaways will only become apparent
The Union Budget 2015-16 presented by Finance Minister Arun Jaitely has identified five objectives in the logistics sector to be addressed effectively in the fiscal year: improving Public Private Partnerships (PPP), tax structure, infrastructure, making India a manufacturing hub and corporatisation of ports. The budget also had welcome reforms, successful implementation of which will bring about major growth.
The government has infused confidence with the allocation of ` 70,000 crore in infrastructure space and setting up a National Investment and Infrastructure Fund (NIIF) to raise capital to ensure annual flow of ` 20,000 crore will result in promoting investments in the logistics infrastructure.
The much awaited decision to levy Goods and Services Tax (GST) from April 2016 has also brought hope to the industry.
The industry is looking forward to a uniform taxation system becoming a reality in April 2016, with the hope that the effective tax rate would translate into a collaborative gain for both corporate and consumers and create an environment for Indian logistics industry to offer value proposition. Budget 2015-16 has shown strong focus on making India a manufacturing hub of the world.
The ‘Make in India’ initiative will give momentum to the manufacturing sector, thus leading to growth in exports making the industry competitive.
On the other hand, there is not much for air cargo sector which could dampen the morale of air fraternity. However, the point to be taken here is that logistics industry will benefit from the growth of related industries like manufacturing, transport, trade, energy and consumer goods.
Sunil Kohli, Managing Director, Rahat Cargo
The Budget is well-intended, reformative, pragmatic, inclusive, growth-oriented and focused on creating an atmosphere of pro-investment and cementing a strong economic foundation for the country’s development. Unfortunately, the finance minister has not touched upon the vital issues relating to the desired growth in the air cargo segment which could largely help the country in yielding considerable revenue from abroad. The air cargo fraternity would expect minimal redtapism in accomplishing their targeted export activities apart from an enhanced incentive for those involved in the sector. Several concessions could be considered to all the stakeholders engaged in the air cargo sector such as rawmaterial suppliers, the manpower, logistics tools, transporters etc.
Rajeev Singh, Director General Indian Chamber of Commerce
Even if there are no direct announcements related to logistics sector, we are hopeful for the forward and backward linkages and growth of this crucial sector. The proposed investment plan looks promising. Connectivity of airports with railways would give a boost to the perishable goods sector and this would encourage the use of multimodal transportation. Transportation of agricultural goods by the Railways will help to cut down the related costs. Increasing the speed in nine railway corridors will help reduce logistics lead time, which will ultimately benefit the industry.
RS Subramanian, SVP & MD – India, DHL Express
Speaking from an express perspective, the biggest challenge remains access to adequate and competitively priced space at key airports that enable effective operations. Additionally, there are many procedural irritants in regulations governing international express. Express operators are restricted from carrying commercial exports using courier clearances. Indian SMEs need express solutions to participate competitively in the global e-commerce export market, and such restrictions needlessly hold them back from competing effectively. On the imports side, express operators are restricted from carrying perishables and individual packages exceeding weight limit of 70 kgs. Removing these regulatory irritants based on global best practices would be critical to increase efficiency of express logistical operations. Given that express logistics solutions are an important part of facilitating global value-chains, these reforms are urgently needed to ensure the success of Prime Minister Modi’s vision of ‘Make in India’ and fulfilling India’s ambition of becoming the next global manufacturing hub.
Cyrus Katgara, Partner, Jeena & Co.
The budget is neither hype nor underrated. Only after the implementation of GST and single point tax collection, the thrust of logistics sector can be satisfied with the budget 2015-16. Speedy rollout of GST will decrease compliance burden for businesses and create seamless pan-India market while bringing down the total incidence of taxes by eliminating cascading effect of taxes on goods and services. Focus on infrastructure, simplification of custom process at ground level and going paperless for all transactions are few points where support from government is required. Also, the impact of the last year’s budget reforms is yet to be seen.