Counting the Impact on Indian Economy Logistics 2017 Supported by Financial Planning

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The Logistics Headlines, New Delhi, 18th Feb 2017 :As per a recent study, India’s logistics market shall grow to USD 307 billion by 2020 year end with impetus from impending GST, e-commerce penetration, and government initiatives. The sector may accelerate at CAGR of 16%, with new investments to create opportunities for the logistics market. Recently, the United Nations also pegged India’s expansion rate in economy to 7.7% and 7.6% for 2017 and 2018, respectively on expectation of increased private consumption.
As per the first revised estimates of national income, consumption expenditure, savings and capital formation released by the Central Statistics Office (CSO) on January 31 2017 growth rate of Gross Domestic Product (GDP) at constant market prices is placed at 7.9 per cent.
Highlights of 2017: Indian Logistics Industry and Market
  • Recent report from December 2016 reveals that traffic handled in major ports grew by 7.5% to 481.2 million tonnes with estimation of 5% rise in 2017.
  • The nation can raise exports by $5.5 billion as the trade costs shall fall by 10% in the coming years.
  • India also made it to the second position on the Agility logistic index 2017, which has occurred for the second consecutive year.
  • The country is set to be one of the best in logistics market destination because of strong investment for the next five years. As for EU-India volume growth, the same is expected to be in double-digit with a forecast of 10.5% jump.
  • Also a new study, reduction in trade cost will be accompanied with inland infrastructure development, focus on digitization, and more that will support a boost in exports by 5 to 8% in 2017-19.
How Will the Union Budget 2017-18 Impact our Economy?
Some moves in the Union Budget 2017-18 that could hold a positive impact in the nation’s economy were the step to abolish the Foreign Investment Promotion Board (FIPB), revitalization of the Arbitration and Conciliation Act, 1996, and dispute resolution for PPP, the infrastructure linked contracts both for public utility and construction.
  • Global Trade: The prospects of India in global trade for 2017 shows slight weakness, with growth expected between 1% and 2% only. Increased competitiveness shall provide substantial inputs from companies to benefit the Indian economy and its logistics sector, as opined by Franck Dedenis, Managing Director – India, Bangladesh & Sri Lanka Cluster, Maersk Line.
  • GST: The Goods and Services Tax (GST) reform will be a game-changer for logistics sector and the Indian economy due to a spur in strengthened systems and shifts for Indian companies given minimization of taxes and better business opportunities.
Transportation: The heightened measures to boost highway sector with Rs. 64,000 crore, along improvement in coastal and rail connectivity will bring great results for exports and manufacturing sector, thus indirectly a boon to logistics industry.
Below are some of the bold steps taken in Union Budget 2017-18 that will usher opportunities for the Indian economy and logistics sector:
  1. Increase lending capacity of EXIM bank by Rs. 10,000 crore with debt as 10 times its net owned fund.
  2. 55 lakh tons capacity rural godowns and 880 other storage infrastructure projects will assure gap in storage capacity by 16%.
  3. 25000 MT of storage capacity shall be created under the scheme ‘Construction of Food Storage godowns by FCI (investment)’.
  4. Aircraft expected to receive (output deliverable against outlay 2017-18) – 6 in number with projects to increase capacity of airlines to carry more passengers.
  5. New helicopters to be acquired for serving better service to customers such as A&N, ONGC, and Lakshadweep Island.
  6. Execution of a 360 degree awareness campaign for investment targeting to attract investors to invest in selected 25 sectors under ‘Make in India’ directive.
  7. Construction of MRO facilities in Phase II with provision for major maintenance of fleet and supporting offices.
  8. For development in transport infrastructure for coal mine areas, there will be construction of 70Km rail, including rail siding and road.
  9. Provide interest equalization coverage of Rs. 96,000 crore worth of shipment trade.
  10. Transport cost subsidy will defray high costs in difficult terrain but shall depend on final verification by DIPP and demand preferred by the industries.
  11. For Northeast region, some developmental plans are- (for transport and communication) 3 sectors in Kolkata, Shillong, and Guwahati with Tezpur selected to provide VGF to airlines. 5 ongoing projects for Tezu Airport for security infrastructure, runway extension, more hangars etc. 5Km of road by BRO. Completion of 3 interstate truck terminals and 100Km of interstate roads.
  12. For disaster management steps taken are creation of 50 cyclone shelters, 15 bridges, 200Kms of roads, and 35Kms of saline embankments.

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