ICRA expects higher budget support for logistics sector
Mumbai:
Ratings agency ICRA said in its note on budget expectations for the logistics sector, enhanced budget support from the government for flagship projects such as Sagarmala and inland waterways will help boost promote investment and speed up implementation.
ICRA added that the government is also expected to continue to focus on improving connectivity across India and rapidly roll out projects such as Bharatmala for road logistics, specialized transport corridors, etc. (DFC) for railways and Sagarmala for waterways.
There has been some traction in the policy initiatives for the port sector in the current fiscal with the implementation of the Key Ports Act of India, 2021 and the announcement of the market-based tariffs under the Act. legislation, the notification of the revised Model Concession Agreement for PPP projects, and the passage of the Inland Ships Act, 2021 in both houses of Congress, the agency noted in the document.
While these measures are beneficial to the industry and will aid in attracting private sector investment, increased budget support from the government for flagship projects such as Sagarmala, inland waterways, and other projects, will accelerate implementation progress and investments.
Over the past few years, allocations to Sagarmala and inland waterway projects in the form of budgetary support have remained low (around Rs 500-600) relative to the costs of the planned initiatives. in these programmes, showing a strong reliance on private sector participation. , ICRA observed.
“In this context, even if the government continues with its previous policy and does not introduce higher budget allocations to these plans, some incentives or other measures to promote the private investor’s mind, facilitating more active participation,” it noted.
Furthermore, any budgetary support for the modernization of shipyards (public as well as private) or other incentives would help meet the government’s goal of implementing multiple naval contracts. would boost production under the ‘Make-in-India programme’, the note said.
The rating agency also said it is necessary to finalize and implement the National Logistics Policy to continue driving reforms in this area to reduce inefficiencies and improve the global competitiveness of the logistics sector. .
