Logistics sector expects Union Budget 2023 to announce policies for transport sector

India freight transportation sector is rapidly growing to ensure demand is met for the rising number of consumers. As per NITI Ayog, India is presently transporting ~4.6 billion tonnes of freight annually, generating transport demand of 2.2 trillion tonne-km at the cost of Rs 9.5 lakh crore.

As this demand continues to grow, associated road freight movement is expected to increase to 9.6 trillion tonne-km by 2050. It is clear that logistics is the backbone of India’s fast-growing economy and key measures are needed to make this sector efficient and sustainable.

Supply side concerns need to be addressed: Despite making the most significant contribution to the Indian economy, the rightful entitlements of truck drivers do not get adequate attention, as the truck business remains fragmented and unorganised.

More than half of the truck drivers are dissatisfied with their profession, and over 80% of the truck drivers would not recommend trucking to their family members or relatives due to the lack of social security and safety on the road. Over half of the drivers earn between Rs. 10,000 to Rs. 20,000 per month with no standardisation in wages, lack of social security and incentives to complete a trip on time. And there exists a severe shortage of trained and licensed truck drivers in India.

The budget needs to address these issues with systemic changes that ensure reliable employment, and fair compensation with minimum wages in the range of Rs 25,000 per month through the Motor Vehicle Act, and linking of licence renewal with social security schemes such as ESI/ PF, life and medical insurance, etc.

Infra needs to boost ease of living: While the government has taken positive steps to address this, with an allocation of Rs 170,000 crore to the transportation sector in Budget 2020-2021, and another 68% increase in the Union Budget 2023, no focused infrastructure creation efforts have been made to provide ease of living for commercial vehicle drivers.

Absence of ergonomically planned pit stops, rest areas with access to hygienic food and medicines, poor vehicle maintenance services along major transportation routes, unplanned driving schedules and difficulty in getting return loads, lower profit margins, apart from long working hours, months away from home and family, are all directly impacting their health and well-being. Many have not even undergone a medical check-up in the past year.

Under the National Logistics Policy’s CLAP, as the government aims to facilitate development of a network of Logistics Parks mapping it with the PM GatiShakti NMP, enhancing visibility, improving logistics efficiency, and ensuring optimum utilisation and connectivity, there exists a critical need to map these with the requirements of commercial vehicle drivers at the core.

Improving India’s ranking in the Logistics Performance Index: As we approach the monumental Union Budget in FY 2023-24, we are hopeful that it will be a pragmatic one. We are expecting the government to enable a smooth and prompt execution of the NLP. It is inspiring to see that 13 states have developed their own state-specific policies so far, and we anticipate that with the right support from the government, the rest of the states will follow suit.

Incentivising states for faster execution with budgetary allocations related to completion of road infra developments will be the key here. Today, nearly 56% of dedicated freight corridors have been completed. We are hoping that the Union Budget will incentivise development to bring 100% closure of these freight corridors.

Technology to bring the much-needed transformation: The Unified Logistics Interface Platform serves as a proof point for a digitally-driven industry, and will aid in enabling the integration of current ministry data sources with the data interchange of private participants. With this, industrial departments will benefit from the Ease of Logistics (E-LogS) dashboard for registering, organising, and keeping track of time-bound issue resolution. We advise giving these projects top priority to support a seamless and effective logistics model.

Inevitable transition to zero-emission commercial vehicles: The road freight sector is expected to grow fourfold by 2050. By continuing to run on fossil fuel, these burgeoning fleets will only add to air pollution, exacerbating public health hazards, increase energy costs, and drive-up emissions.

In India, using conventional trucks to meet growing demand would require spending over $1 trillion cumulatively on crude oil imports for diesel production by 2050. Zero emission transmission vehicles are the clear-cut solution to all of these problems and more. By reducing both air pollution and costs, these vehicles can directly enhance industrial competitiveness.

This will require synchronised efforts from private and public sector players to increase the manufacturing supply and deliver the much-needed charging infrastructure to support this emerging green vehicle ecosystem.

Policymakers should implement targeted incentives that can spur demand for commercial alternative fuel technologies and their adoption. By coordinating joint efforts, the government can help industry players transfer risk, reduce costs, and seed the nascent alternative fuel / zero emission vehicles market to harmonise demand and supply driving market scale.

Clear asks from demand and supply side: It is critical now for logistics demand-side policies to increase consumer demand, such as purchase subsidies, feebates, interest subvention, scrappage incentives, zero-emissions zones, and fleet purchase requirements. While supply-side policies need to encourage traditional OEMs to innovate and start-ups to enter zero emission transmission manufacturing, such as OEM credit schemes, sustainable production targets, air quality regulations, and fuel efficiency standards that promote alternative fuel technologies and improve air quality. Additional incentives such as favourable financing for trucker’s community to buy green commercial vehicles will also add to the attractiveness of the sector.

Incentivise research: Lastly, as the logistics sector develops, we hope the government will look into incentivisation of R&D for the latest alternative fuels – battery-electric, compressed natural gas (CNG), flex fuel, hydrogen fuel cell, fuel efficiency, among others, with relevant charging infra – and technologies like AI, ML, Big Data, GPS, safe driving – that can create employment opportunities, a better standard of living and ease of doing business for all stakeholders in the Indian logistics sector.

Author : Karan Shaha CEO and Co-founder, Vahak

Source: TOI