Union Budget of India which is announced on 1st February of every year plays an significant role in boosting the economy and a guideline to growth. Government has been continuously focussed on improvement in the Logistics Sector with recent policies in the recent years like Gati Shakti, NLP 2021, NLP 2022, National Air Cargo Policy which has been a great welcome move by the Logistics and Supply Chain industry. The logistics industry has applauded the budget announcements as there seems to be a lot of focus on infrastructure development , transport projects, ease of doing business etc.

The highlights of the same which will boost the industry are praiseworthy. This clearly would work as a catalyst to reduce the logistics cost, speed up growth and take the country near to the vision of being the third logistics economy.

• 100 critical transport infrastructure projects, for the last and first mile connectivity for ports, coal, steel, fertilizer & food grains sector. This will have a positive impact on the nations last and first mile connectivity
• Capital Investments Outlay on transportation infrastructure is a whopping 2.40 K crores on Railways, .1.62 K crores on Roads & 10k Crores on urban India infra development.
• Focus of the Government will help solve the current connectivity issues and building more sustainable future for the logistics sector
• 58 additional airports, heliports, Water Aero drums and Advanced Landing Grounds to boost regional connectivity which will ultimately improve logistics to this Tier 3 & Tier 4 cities in India establishing comprehensive air connectivity.
• Announcement of setting up Urban Investment Development Fund (UIDF) for the Tier 2 and Tier 3 cities will provide greater boost for efficient logistics transportation and enhance greater connectivity
• Finance Minister announced the new 100 projects will be taken up on priority with an investment of Rs 75000 Crore , including Rs 15000 crore from private sources. This will help speed up India’s growth story
• Development of Private participation is a welcome move as this will bring traction of private investments necessary for India’s growth
• Announcements were in line with the NLP 2022 demonstrating the Governments commitment and focus to the logistics sector.
• Infrastructure and investment was one of the seven priorities listed by the budget and the capital investment outlay increased steeply for the third year in a row by 33% to Rs 10 lacs crores which would be 3.3 % of the GDP
• Focus on sustainability by focusing on Green Mobility investment of Rs 19700 Crore for the National Green Hydrogen Mission, Setting up battery energy storage of 4000 MWH with viability gap funding, reduction of custom duty on imports of capital goods for Urban battery, Coastal Shipping Promotion as Energy Efficient Mode.
• Setting up of Skill development centres across states which would directly help the logistics sector too
• Focus on Digital Infrastructure especially in the Agri sector thus enhancing the visibility which was lacking in a big way till now.
• Capital 2.40 Lack crore record outlay for the Indian Railways will provide the necessary impetus to programmes like Dedicated Freight Corridor projects critical to logistics improvement all across
• Ease of doing business as the budget has reduced 39000+ compliances and decriminalised 3400+ legal provisions.
• Revamped guarantee scheme for the MSME’s proposed in the previous budget will take effect from April1, 2023 through the infusion of Rs 9000 Crore in Corpus
• Reduction in basic customs duty for goods from 21 to 13 percent will bolster foreign trade while creating global acceptance for Indian brands

So, above initiatives, focus and the strong will of the government will not only help the overall logistics Industry in improvement, move towards reduction in logistics cost and would certainly take the country towards being the third largest economy in the world. Giving importance to the logistics industry has also helped in growing acceptance of logistics professionals as key to success of any organisation, more and more business institutes and skill development centres opening all across the country is a matter of pride for the SCM fraternity.

Railway freight in India has been one of the most important modes for the logistics. This has been the second largest share in the freight logistics sector behind road transport. As a country with many metropolitans and states located inland, freight transport is dependent on the land modes. Freight volume carried by the Indian Railways has reached 1.23 billion metric tons. The railway sector in India was the third largest in the world.

India’s logistics industry faces unique challenges as India has an expansive geographic presence and large population. When it comes to efficiency, it lags behind many other countries due to an inefficient modal mixture, especially being overly dependent on road transport. As railway provides the most economical freight solution in India, the government invested heavily in the modernization and expansion of the railway system to improve efficiency and reduce costs of logistics across the country.

The Indian railway network is the third largest in the world. With focused attention from the government and investments in improving infrastructure, the railway sector is recognized as one of the largest railway systems under single management. Apart from carrying over ten thousand passengers per day, more than seven thousand freight trains play their part in carrying over three million metric tons of freight per day. In financial year 2021, the average freight rate per metric ton across the country was 1.61 Indian rupees per kilometer.

National level investments have played an important part for the tremendous growth of the sector. In 2008, the country spent almost five U.S. dollars per thousand dollars of GDP on rail infrastructure. The capital expenditures on the sector have also gradually increased over the years. The capital expenditure value of the railway sector was 20 billion U.S. dollars in financial year 2018.

The dedicated freight corridor has helped the modal (freight movement) shift from roads to the rail in India as per a report by credit ratings agency care edge. The model shift is currently ongoing despite a host of factors including the absence of a sector regulator posing problems.

As per the report, container cargo transported through railways ( rail volumes) rose by a healthy 17.63% you to 74.38 million metric tonnes during the previous fiscal as compared to 12.51 % in overall container cargo volumes supported by partial connectivity of the dedicated freight corridor (DFC). Major factors facilitating the shift are the slated competition of the DFC project by June 2023, increased trips of cost-effective double stack container trains and incremental volumes of cement cargo through railways. Transit assurance under DFC aiming to squeeze the travel period by 40–50 percent for some of the major routes and over 3x growth in the movement of cost-effective double stacker container trains by FY 25 will accelerate this transition. Container rail volumes to grow at a healthy CAGR of 15.60% for FY2022 to FY2025.

According to estimates inventory carrying costs amounts to 43% of the overall spend of logistics. Therefore reduction in transit duration is expected to “ help achieve just in time based inventory management thereby boosting the cost competitiveness of domestic goods. Few of the challenges currently to this shift include higher haulage rates for freight traffic due to extensive cross subsidisation of passenger traffic and the absence of a regulatory body for the railways.

So, Overall, the railway logistics revenue in the sector has witnessed steady growth over the years. The revenue of freight rail transport across the nation was projected to be close to 2.5 billion U.S. dollars in financial year 2018. With increasing participation from public as well as private sector firms, both domestic and international, the freight traffic is likely to grow rapidly, possibly resulting in more employment opportunities and revenue generation from the industry.

Indian railways is soon introducing train based on Vande Bharat express platform with an aim to facilitate faster movement of freight across its network.

Indian railways have said that these trains will be super-fast parcel services which carry time-sensitive cargo too. Railways currently runs 4 passenger Vande Bharat train services which are self-0propellef train sets with 160 kmph speed potential. The new freight train based on the Vance Bharat platform is this expected to speed up freight movement. In addition to this, its also planning to introduce super-fast parcel services which will enable to carry high value time sensitive cargo.

Gati Shakti, the government policy covers the Vande Bharat based freight trains which is expected to be ready soon. This would also help new type of services like small size parcel shipments by running dedicated high speed freight trains.

Few facts of Vande Bharat Trains which are important.

• The 16-car formation will have a payload of 264 T. There will be a provision for temperature sensitive cargo shipments.
• The self-propelled 16 car train set will have an operational speed potential of 160 kmph
• Designed for palletised container transportation, the new Vance Bharat based freight EMU will have 1800 mm wide automatic sliding plus doors
• The train will have a pneumatically retractable roller system with locking arrangements for easy handling of pallets
• Like the passenger Vande Bharat trains, the new fright EMU will make use of the concept of distributed powering, with 50% powering.

So, Overall, with various government focus on as per NLP-2022, Gati Shakti, Vande Bharat trains etc, the railway logistics is bound to take a larger market share and see a spike in loads as its now getting ready to carry all size & types of cargo which traditionally is moving either by road or air. The railway logistics revenue in the sector has witnessed steady growth over the years. The revenue of freight rail transport across the nation was projected to be close to 2.5 billion U.S. dollars in financial year 2018. According to National Plan 2030, the projected potential growth of freight traffic on Indian. Railways indicates that the rail traffic has a potential for almost 2.5x growth over the next decade. This is subject to improved logistics performance on rail which soon the customer will witness. The National Rail plan predicts that if railways were to gradually increase the average speed of freight trains and reduce tariff, its modal share in freight transportation colourless rise to 44%. This is a +16% shift from road to rail. With increasing participation from public as well as private sector firms, both domestic and international, the freight traffic is likely to grow rapidly, possibly resulting in more employment opportunities and revenue generation from the industry.

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