Industry reactions to Union Budget 2022 for Rail, Metro and Transportation sectors

Vinod Shah Posted on: 2022-02-01 16:00:00 Viewer: 7,923 Comments: 0 Country: India City: New Delhi

Industry reactions to Union Budget 2022 for Rail, Metro and Transportation sectors

New Delhi, India (Urban Transport News): Union Finance Minister Nirmala Sitharaman today presented the Union Budgetfor the financial year 2022-23, which, largely, elicited a positive response from the corporate sector. A total of Rs 140,367.13 crore allocated to Railway Infratsructure.

Key Highlights

  • Completing 2,500 km National Highways in 2022-23
  • Unified Logistics Interface Platform
  • Open Source Mobility Stack
  • Integration of Postal and Railways Network
  • One Station One Product to enhance the future opportunities for local businesses and supply chain ecosystems
  • Induction of 400 new Vande Bharat Trains in the next 3 years
  • Multi-mpdal connectivity between Urban Transport and Railway Stations
  • National Ropeways Development Plan
  • Capacity Building for Infrastructure Projects

Here's how the Industry players reacted to the announcements made by the finance minister in Indian parliament today:-

Vimal Kejriwal, MD & CEO, KEC International

I welcome the forward-looking, capex-led Budget 2022, with a sharp 35% increase in outlay. A strong focus on improving the safety of Indian Railways, faster implementation of metro rail systems, infrastructure status for data centres, along with emphasis on PM GatiShakti with significant allocation towards Jal Jeevan Mission, Affordable Housing, BharatNet and building 100 Cargo Terminals for multimodal logistics facilities augur well for KEC International Limited and our well-diversified businesses. 
Further, initiatives such as the use of Surety Bonds as a substitute for bank guarantee, a cap on Surcharge of AOPs/ consortiums at 15% as against 37% earlier and an end-to-end online e-Bill System to enhance transparency are steps in the right direction for EPC contractors such as KEC.

Alain SPOHR, Managing Director, Alstom India & South Asia

“We welcome the progressive and growth-oriented Union Budget presented by the Finance Minister for 2022-23. India is poised to regain its title of the fastest-growing large economy with a 9.2% GDP growth estimated for the coming year. With an enhanced capital expenditure outlay of 35% as compared to last year, core infrastructure segments including Railways and Urban Transport stand to benefit and will have a huge multiplier effect on the economy.

Highlight of the budget was the announcement to introduce 400 new Vande Bharat trains over the next three years, introduction of the state-of-the-art KAVACH TCAS signalling systems over 2000 kms of railway network, larger investments to provide for sustainable and integrated urban transport systems. The total budget estimates of Rs 23,875 crore for MRTS & Metro Projects will incentivise faster implementation of projects and the standardisation of metro design systems will provide the much-needed stability for manufacturers.

The development of 100 Cargo terminals over the next 3 years will also improve India’s competitiveness in faster and cleaner logistics and freight movement by rail. The announcement of a new legislation regarding Special Economic Zones is a welcome step as it will help India enhance the competitiveness of its exports and integrate successfully with global supply chains.

From a policy standpoint, launch of the next phase of Ease of Doing Business (EoDB 2.0), is a step in the right direction. Modernized rules for evaluation of complex tenders especially transparent quality criteria and provisions for payment of 75% of running bills mandatorily within 10 days will encourage faster dispute resolution.

Introducing PLI scheme for railway manufacturers and exporters promoting Make-in-India would have been ideal for fast-tracking the implementation of projects and supporting the manufacturing ecosystem. We were anticipating FM’s announcement regarding plans for the private train operations; however, this budget provides the overall push towards economic growth and addresses the key priorities of the Government.

Sunil Mathur, Managing Director & CEO, Siemens India

We welcome the growth-oriented budget with a focus on the four pillars – productivity, climate action, financing investments, and PM Gati Shakti plan. These are concrete steps in the right direction, and over time should positively impact the economy. The increased Capex outlay of Rs.7.50 lakh crore further demonstrates the intent of the government to create the necessary impetus for the economy. Stability in tax policy is also a welcome step.

Ashish Gupta, Managing Director, Texmaco Rail & Engineering Ltd

We welcome FM’s announcement of development of railway infrastructure in the budget. This will result in increase of railways share in overall freight and will have a cascading impact on the industries associated with railways. Overall a very positive budget for all the segments of railways like wagon manufacturing, EPC business etc.

Kamal Bali, President & MD, Volvo Group, India

A progressive, thoughtful, imaginative, and growth-oriented budget that touches all socio-economic segments, while embracing technology & modern tools of governance. The budget has rightly allocated the highest ever Capex of 100 billion dollars (Rs 7.5 lac crore), up 34% over the last year, aimed at creating & improving our logistics infrastructure through PM Gati Shakti NMP, as well as social sectors of health, education, women, housing and the needs of our 112 aspirational districts. This, while following the agreed pathway on the fiscal deficit (4.5% by FY 25-26).

Focus on logistics will help solve supply-side challenges and curb structural inflationary challenges. Public transport, urban infrastructure push, and inter-operable battery swapping policy are big positives. Extension of ECLGS credit guarantee to MSME and hospitality sectors is a welcome step. Great to hear the mention of sustainable solutions in public procurement policy with due credence to clean & green tech, quality, and cost (instead of simply L1 approach). The Capex of 7.5 lac crore (if implemented with speed) will have a huge multiplier effect on jobs and will further kick in a virtuous cycle of consumption growth.

Finally, the digital rupee is in the right direction. Thankfully, no major negative surprises in this purposeful budget.

Arindam Guha, Partner & Leader, Government & Public Services Deloitte India

The Gati Shakti initiative features at the center stage of Budget 2022-23, highlighting the importance of quality multi-modal transport in achieving overall cost competitiveness. With global studies pegging India’s average logistics costs at around 14% of GDP as against 8-9% for advanced economies, this is clearly a factor which needs to be addressed for attracting quality anchor investors across sectors. In addition to significantly increasing the outlay for multi-modal infrastructure development, the Budget has also called out technology as a key enabler not only for timely completion of projects but also streamlining logistics related regulatory processes.

As indicated in the budget, technology is also envisaged to play a key role in expanding the reach of education sector initiatives through TV channels under the e-Vidya programme, virtual and skilling e-labs, digital e-content delivered on a hub & spoke model as well as a Digital University initiative for world class quality universal education with personalized learning experience.  In health too, an open platform for the National Digital Health eco-system has been proposed. All these initiatives would not only help in optimally utilizing the existing physical infrastructure in these sectors but also leverage the existing capacity and bandwidth available with the private eco-system.

Infrastructure financing has also been mainstreamed in the current budget, with particular focus on environment and sustainability, as evident from the announcement around green bonds, focus of NIIF and NSIC Fund of funds on the renewables sector etc. For the rural economy and social sector in particular, the Budget also refers to blended finance as an option.  This would again be linked to the Social Stock Exchange – an initiative which had been announced earlier by the Government. It remains to be seen how some of these measures are implemented.

Rajeev Singh Partner & Automotive Leader, Deloitte India

Massive focus this year on logistics infrastructure, additional multi modal parks, cargo terminals, vande bharat trains could help in reducing our logistics costs as well as overall inventory on wheels.

Vishnu Sudarsan, Partner, J. Sagar Associates (JSA)

Timely and integrated deployment of logistics and connectivity solutions is critical to improving and enhancing crucial supply chains and in the realisation of the aims of Aatmanirbhar Bharat and Make in India. Such an integrated development will also greatly aid in removing inefficiencies and redundancies, resulting in better resource utilisation and a reduction in India’s carbon footprint and integral to India’s climate action goals. This would, in turn, be an enabling factor in India’s efforts to achieve ambitious climate action goals. The railways sector, which boasts a wide-reaching network and is a lynchpin of keeping crucial supply chains operational, can play a clinching role in India’s logistics growth story and meeting the climate change and sustainability goals. The efforts of the India Railways to enhance infrastructure in response to ever-growing needs has been nothing short of spectacular, with recent initiatives such as the Vande Bharat Express underscoring India’s enviable indigenous manufacturing capabilities. However, in order to ensure a starring role for the railways in the logistics segment, it is imperative that the Railways commence involving the private sector in a meaningful and phased manner that offers a win-win to all stakeholders.

Vivek Lohia, Director, Jupiter Wagons and Chairman, National Council for Railways at industry body Assocham

The announcements will result in efficient movement of goods, cut down logistics costs, raise productivity and increase international manufacturing competitiveness. However, the industry body was hopeful that the ₹3.1 lakh crore identified for rolling stock procurement between 2021-2016 would be revived in this year due to the fact that since 2017-18, the wagon acquisition has been about 20-50% below target.

Vikramjiet Roy, Managing Director of Maccaferri Environmental Solutions

This budget reflects the government’s push towards sustainable development. Encouraging safe and modern public transport, road  connectivity and infrastructure facilities to remotest parts of the country especially in the North East with a focus on renewables showcases the government’s push on reducing the carbon footprint. 

The policy push towards battery swapping will also significantly increase the rate towards EV adoption that will help towards India achieving its net zero commitment.

Jatin Aneja, Partner & National Practice Head, Shardul Amarchand Mangaldas & Co.

It is encouraging and heartening to see the focus of the budget on all round infrastructure development as a catalyst to growth. Hope to see that the budget proposals in respect of infrastructure are implemented at the ground level in 2022-23.

Sanjay Bhatia, CEO and Co-founder of Freightwalla

Supply chain logistics being one of the focal points in the budget hints towards the government's plan to boost the shipping and logistics industry. As anticipated, it encompassed multiple anchor points to initiate the Gati Shakti master plan, which would bring about a shift in India's logistics landscape. The program is a step in the right direction to strengthen our country's supply-chain ecosystem by integrating multiple logistics nodes and ensuring seamless multimodal connectivity and efficiency. Additionally, 100 cargo terminals will ease the burden on the existing ones. Besides, the development of multimodal logistics parks will reduce logistics costs thus improving distribution, storage and freight aggregation. 

The government steps up digitization of the shipping and logistics sector processes and promotion of the use and exchange of data, which will give the industry an edge over traditional practices. The exchange of data will be enabled using a Unified Logistics Interface Platform (ULIP), designed for App Programming Interfaces (APIs). It will provide with an efficient and error-free flow of goods through various modes, reducing the cost and time of logistics, assisting inventory management, and eliminating long and tedious documentation. Moreover, this will provide real-time updates to all stakeholders, imperative in a high-risk sector such as shipping and logistics. Expanding the national highway network by 25000 km will engage more exporters and strengthen the connectivity for on-ground transportation of export and import shipments.

However, more details about the national logistics policy would have been a boost to the MSMEs and others players in the logistics space since the stakeholders pinned their hopes on it for job creation in the economy.

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