Background

Four major engines viz. Agriculture, MSME, Investment and Exports, as indicated in the Budget 2025 are planned to further fuel India’s growth story, re-affirming India’s position as the fastest growing major economy in the world. Supply Chain & Logistics is fundamental to all aforesaid the four engines of development. However, the high cost of logistics, led by legacy of poor infrastructure and efficiency has been on the radar of the policy makers for the past few years. Higher cost in this sector is the biggest hurdle in India’s aspirations to be a hub for global manufacturing as indicated clearly in the Budget.

The Budget signifies decisive reforms, focusing on quantum correction in some long-standing issues, while revitalizing the core sectors like agriculture, manufacturing and logistics. Building upon transformational initiatives like the PM Gati Shakti, the National Logistics Policy (NLP), Logistics Efficiency Enhancement Programme (LEEP), development of Dedicated Freight Corridors (DFCs), Bharatmala Pariyojana, Sagarmala programme, formulation of the National Rail Plan (NRP), Multi-Modal Logistics Parks, National Infrastructure Pipeline and Jal Marg Vikas Project, the Government is introducing cohesive policies that are aimed at reducing logistics costs. This strategic focus demonstrates the government's stronger commitment to tackling long-standing challenges, such as fragmented networks, underdeveloped infrastructure, and the underuse of technology. Aligning logistics reforms with economic planning makes Budget 2025 a crucial turning point in India's effort to boost global competitiveness and drive sustainable growth.

Focus on Logistics & Supply Chain Sector Through Budgetary & Policy Level Reforms During 2022 - 2025

2022-23: Laying the Groundwork

National Logistics Policy (NLP): 

The National Logistics Policy (NLP) was launched on September 17, 2022, aiming to create a comprehensive framework for integrating transport networks, warehousing and regulatory reforms. The policy focuses on enhancing efficiency of the logistics sector by addressing key areas such as process re-engineering, digitization, and multimodal transport. 

Infrastructure Boost: 

The PM Gati Shakti Master Plan catalyzed significant investments in national highways, ports, and rail corridors during this  period. This initiative aims to streamline logistics operations across various modes of transport by enhancing multimodal connectivity. The government allocated substantial funds to improve existing infrastructure and develop new projects, ensuring that bottlenecks in transportation are minimized. By focusing on integrated infrastructure development, the PM Gati Shakti Plan seeks to enhance first and last-mile connectivity, ultimately leading to reduced transit times and lower logistics costs.

2023-24: Expanding Connectivity

Freight Corridors:

The Dedicated Freight Corridor (DFC) project has seen a substantial increase in allocations, with funding raised by 75% to enhance rail transport efficiency. This extensive network spans over 2,800 kilometers, designed to facilitate swift movement of goods across the country. As of early 2025, the Eastern Dedicated Freight Corridor (EDFC) is fully operational, while the Western Dedicated Freight Corridor (WDFC) is nearing completion at 93.2%. These high-speed corridors are expected to significantly reduce transit times, cutting down travel from coal fields in Eastern India to power stations in Northern India from 35 hours to just 20 hours. This transformation not only boosts rail freight capacity but also lowers logistics costs, aligning with the government's goal of reducing overall logistics expenses to below 10% of GDP by 2030.

Digital Public Infrastructure (DPI): 

The government has prioritized the development of Digital Public Infrastructure (DPI) to streamline logistics processes across various sectors, including e-commerce and governance. By digitizing logistics operations, the DPI aims to enhance efficiency and transparency within supply chains. This initiative facilitates better data sharing among stakeholders, reduces paperwork, and accelerates decision making processes.

Rural Connectivity: 

Under the PM Gram Sadak Yojana Phase IV, the government is focusing on improving last-mile connectivity to remote areas, which is crucial for enhancing rural logistics. This initiative aims to construct and upgrade rural roads, thereby facilitating better access for farmers and small businesses to markets and supply chains. Improved rural infrastructure not only supports agricultural supply chains but also enhances the distribution of goods in underserved regions. By bridging connectivity gaps, this program plays a vital role in ensuring that rural producers can efficiently transport their products to urban markets, ultimately contributing to economic growth and reducing regional disparities.

2024-25: Accelerating Progress

 Record Capital Expenditure:

The 2024-25 Budget has made a significant commitment for logistics infrastructure enhancing the country’s transportation network. This funding will be directed towards construction and upgrading of national highways, ports and multimodal logistics parks (MMLPs), which are crucial for improving connectivity and reducing transit times. By investing in these key areas, the Government aims to streamline logistics operations, lower costs and ultimately boost economic growth through more efficient supply chain management. 

Green Initiatives:

The Budget places a strong emphasis on sustainability within the logistics sector by promoting the adoption of electric vehicles (EVs) and green hydrogen technologies. These initiatives are aligned with India's commitment to achieving net-zero emissions and reflect a growing recognition of the need for environmentally friendly transportation solutions. By incentivizing the use of EVs and exploring green hydrogen as a viable fuel alternative, the government aims to reduce the carbon footprint of logistics operations while fostering innovation in clean technology.

Industrial Parks: 

The development of 'plug-and-play' industrial parks will attract private investment and stimulate economic activity in the logistics sector. These parks are designed to provide businesses with ready-to use infrastructure, including utilities and connectivity, thereby reducing setup time and costs for companies looking to establish operations. By creating an enabling environment for logistics firms and manufacturers, the Government seeks to enhance productivity, encourage foreign direct investment (FDI), and promote regional development across various states.

Ongoing Reforms that are Shaping the Logistics Sector

Multi-Modal Logistics Advancements

  • Railways: The completion of DFCs is projected to increase rail freight's share to 45% by 2030, doubling its current capacity.
  • Roadways: 30,600 km of highways expansion and e-tolling optimize road freight delay.
  • Waterways: National waterways freight has increased by 44% due to the Sagarmala Programme and Jal Marg Vikas Project.

Airways: Air cargo sees 15% traffic growth, supported by airport infrastructure upgrades

Technology Driving Logistics Efficiency

  • Implementation of E-Way Bill System to simplify GST compliance, ensuring swift transit times and increasing warehousing efficiency.
  • The introduction of the Unified Logistics Interface Platform (ULIP) has enabled the integration of data from 30 systems across multiple ministries, streamlining coordination and reducing paperwork. It enhances cargo tracking, optimizes routes, and improves supply chain transparency through over 100 APIs.
  • The adoption of advanced technologies, including IoT, Blockchain, and RFID technologies, for supply chain transparency and operational efficiencies.

Green Supply Chain Initiatives

  • The National Electric Mobility Mission Plan (NEMMP) and FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) schemes promote EV adoption through buyer subsidies, charging infrastructure investments, and policies to boost EV manufacturing and usage.
  • India launched its first indigenous hydrogen fuel cell ferry under the Harit Nauka initiative at Cochin Shipyard. This aligns with the Maritime Amit Kaal Vision 2047, which targets reducing greenhouse gas emissions by transitioning to green fuels in inland waterways.

 

 

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