Budget 2021 Expectations: How Integration Of Multi-Modal Transportation Can Promote Logistics Industry?

From better approval processes for setting up warehouses to easy tax rules with respect to combined warehousing and eCommerce shipping are some of the pain points of the industry which need to be addressed in the Budget 2021.

New Delhi: Union finance minister Nirmala Sitaraman in the forthcoming Budget is going to have a dual challenge of fuelling demand through incentives as well as managing the fiscal deficit of the government. The pandemic and the subsequent lockdowns have dealt a severe blow to the economy. Although the subsequent opening up of economic activity has shown some promising signs, but for businesses in general, the mounting debt as well as challenges of adhering to protocols for dealing with the pandemic and general sluggishness in demand is still a worrisome aspect.

The effect of disrupted supply chains and complete halt of industrial activity has affected the logistics industry negatively and continues to do so. The rising prices of diesel, low availability of truckers, unreliable and higher priced railway transportation, multiplicity of documentation and huge compliance burdens on the industry are some of the things ailing the logistic sector in the country. The logistics costs in the country at around 14% of the GDP are still amongst the highest in the world and this is a key disadvantage for the Indian Industry to compete in the international markets.

Integration of multi modal transportation

The forthcoming budget should at the first instance create an enabling environment for the digitisation of documentation and seamless transfer of documents from one agency to another reducing the compliance burden on the logistic service provider. At present every corporate in India has to file more than 150 compliances to various government departments through the year, this needs to be rationalised and reduced. Integration of various databases of government and improving ease of doing business should be at the forefront of governments agenda. Lastly , India has very limited multi modal integration of transportation and no single platform where all the modes of transportation compete with each other. Developing a digital platform for such integration would go a long way in promoting logistics as an industry in the country .

Digitisation of tax regime

With the thin margins logistics industry runs on, digitizing tax regime could have a huge impact on both profitability as well as attracting new players to the industry. The tech layer over the logistics setup that has started developing in the last five years needs a positive push, there have been a lot of start-ups working with Machine learning and Blockchain to improve the conventional setup and decrease wastage wherever possible. Such start-ups, working solely for improving the logistics setup through technology need to be incentivised and helped in the initial stages of their journey. Easy registration process and access to setup funding can help create a nudge in the technology hubs to work towards solving the pertinent issues with conventional logistics setup.

Easy tax rules for setting up warehouses

eCommerce logistics has had a very good run as far as economics are concerned but has also shown signs of despair at times. Being the most tech enabled sector amongst the logistics segment, advancement are still required in the overall network optimisation to take up unplanned demands. Scattered warehousing needs to give way to consolidated warehousing, something that Pickrr is working on aggressively. Better approval processes to setup warehouses and easy tax rules with respect to combined warehousing and eCommerce shipping would help solve some of the prevailing pain points.

[Author Rhitiman Majumder is Co-founder at Pickrr.]

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