The Union Budget for 2013-14 has brought a mixed bag for the industry. But for the logistics sector, it has been more disappointing on several fronts with no major incentive to overcome the challenges posed by a sluggish economy.
The failure to introduce Goods and Service Tax (GST) to ensure seamless flow and tax rationalisation has dampened the spirit even though the pre-budget approval of FDI in retail business is expected to create additional opportunities for the logistics sector.
“We are happy with capacity augmentation in port sector by announcing major ports at Sagar islands, 100 km south of Kolkata in West Bengal and Ramayapatnam in Andhra Pradesh and Outer Harbour expansion at Tuticorin to add a total cargo handling capacity of 142 million tonne,” Visakha Container Terminal COO Capt. Sriram Ravi Chander told THE HINDU.
To offset the loss caused due to freight and fuel cost increase, the industry was expecting some good news in road and rail connectivity between Chennai and Kolkata and other sectors. Though Rs.3,000 crore is earmarked for road development, nothing has been allocated to AP.
“We welcome Rs.5,000 crore allotment through NABARD for developing warehouses and hope that we expect a lion’s share of the allotment in creating new warehouses through AP State Warehousing Corporation,” Mr. Ravi Chander said.
The failure to double railway line between Titlagarh and Raipur is a big disappointment. This will force travelling 350 km additionally to reach Visakhapatnam via Hyderabad.
There should have been route rationalisation by the policy-makers. The announcement of Debt Service Fund for dedicated freight corridor, however, is a welcome development.
By, and large, players involved in the logistic sector feel that there should have been bigger push to improve rail network. There is some good news on developing sixth national waterways in Lakhipur-Bhanga stretch in the river Barak. Water transport will be possible from Haldia to Farakka with NTPC signing MoU with Inland Water Authority of India and Jindal ITF to move coal for Farakka Power Station.
SAIL, RINL and other major steel producers, while seeking a re-look at increase in rail freight charges, felt that allocation of Rs.60,000 crore for infrastructure will raise the demand for steel consumption.
“We had pinned high hopes but the proposals have dampened our spirit, albeit there is scope for mid-course corrections. For improvement of logistic supply chain and improvement in connectivity, the booster dose is missing,” General Manager of Orissa Stevedores Limited J.K. Nayak said.