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As we stand at the threshold of a new fiscal year, all eyes are on the Budget of India for 2024-25, with expectations in the E-commerce and Logistics sectors reaching a peak. The interplay of technology, policy, and infrastructure funding is pivotal for these industries, with stakeholders eagerly anticipating measures that will spur growth and address critical challenges. Among these, the focus on same day delivery, next day delivery, and express parcel delivery India reflects the evolving consumer demand and the need for agile solutions from Indian logistics companies.
A major issue in the gig-based last-mile delivery sector is the current GST structure. At present, restaurants and, hence, B2B logistics service players shoulder the tax burden for last-mile delivery, impacting the competitiveness of restaurants and networks such as the Open Network for Digital Commerce (ONDC) compared to food aggregators. Their inability to claim input tax credit on this expense puts them at a disadvantage, which has very recently been highlighted by the NRAI. The budget is expected to introduce a more equitable taxation framework that promotes fair competition and levels the playing field.
While traditional bulk movement benefits from a streamlined GST process, e-commerce logistics, with its diverse range of SKUs, requires extensive documentation. A truck may carry thousands of different SKUs for different customers shipped via different clients, and the sheer number of pages ends up crossing hundreds. The proposed solution is to adopt digital record-keeping to simplify the process and reduce paperwork. Transitioning to a digital approach will not only streamline operations but also align the sector with the government’s broader digitization objectives.
Another aspect creating major confusion in the logistics network is around “returned shipments” – items which the end customer does not want and hence have to be sent back. These items are essentially “unsold” inventory, and typical GST rules cannot apply to them. Clearer rules here will save a lot of time at GST checkpoints, helping improve reverse logistics and reducing costs. This would further support the efforts of logistics service providers and the top logistics companies in India.
For e-commerce logistics, speed and reliability are essential. Today, 96% of India’s commerce runs on trucking, which is tangibly slower. The remaining 4% is taken up by airways, which is very expensive. Railways were to be the ideal solution for speed at a much-improved cost, but India has been unable to unlock that potential as of yet. Using parcel van coaches in passenger trains is common, but challenges like load offloading, train cancellations, a high degree of theft, and limited express goods trains act as major impediments.
The budget could introduce measures such as guaranteed capacity for parcel van coaches, daily operation of express freight trains, and facilitating easier access for trucks on trains over longer distances. Digitizing online truck booking for railways, reducing costs through direct booking, and addressing loading/unloading errors are critical for making rail transport more viable and cost-effective.
In today's digital world, precise location mapping is crucial. However, India’s pincode boundaries often lack clarity for both end customers, affecting delivery efficiency. The budget could allocate resources to redefine pincode boundaries, making them clearer and more accessible, or incentivize methods to improve the usage of digital location for parcel movement. By creating smaller grids, the government can assist both customers and businesses in navigating rural and urban pin codes, enhancing the logistics ecosystem's efficiency.
Also read about: The Value of Logistics for Retail Stores
Electric vehicles in various form factors will be key enablers of growth, with an expected increase in the adoption of EVs for intra-city logistics. Reducing the carbon footprint will be a key focus area across the industry. Developing EV infrastructure, like charging stations, is crucial for accelerating electric vehicle adoption. Government policy on EV infrastructure will play a pivotal role. The lack of infrastructure, coupled with a high cost of EVs, has been a barrier in the gig economy space.
At this stage of India’s electric journey, it may not be a bad idea to revisit the current strategy and policy framework and convert it into a revised vision that leads to electric 2.0 and helps India achieve 100% electric vehicles by 2030. This would not only enhance sustainability but also cement India's position as a leader in green initiatives among the best logistics companies in India.
As the budget approaches, the logistics and e-commerce sectors are anticipating significant developments from the government that will shape their course in the coming years. The role of logistic services and initiatives like express parcel delivery India, same day delivery, and next day delivery are more critical than ever to meet consumer expectations. Policies and infrastructure promoting these services could unlock immense potential for Indian logistics companies alike.
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