With the Prime Minister holding as many as 12 brainstorming meetings with different stakeholders over issues affecting the economy and related policy interventions, it is the time to table the wish lists for industrial & logistics sector.
The following key measures, if rolled out, can augment growth of the sector and create an uptick in demand for industrial and warehousing development:
1. GST reduction in Automobile Sector: Auto sector usually mirrors customer sentiment which is at an all-time low. Currently, the automobile sector is witnessing an unprecedented slowdown with low vehicle offtake across segments. A balanced situation can arise wherein government can consider reducing GST on BS-VI vehicles to 18 % from the current 28 % from April onwards. This would help augment demand and expansion of facilities thereby positively impacting the sector.
2. Tax benefits for Electric Vehicles (EV): With various states such as Tamil Nadu & Telangana rolling out separate EV manufacturing policies, the budget should consider providing fiscal incentives for manufacturers and provide tax benefits for buyers to augment demand for this greener technology. This would be a game changer for a country like India where EV technology has been slow to catch up.
3. Addressing low consumer spending: E-commerce companies have been large space takers in the country and have been driving the demand for organised warehousing to an all-time high. One wave of post GST consolidation and rapid expansion was seen effected in proximity of large demand centres. Currently, the key concern that exists for e-commerce and which needs to be addressed in the budget is the low consumer spending. One of measures would be to increase disposable income of the customer by extending enhanced personal income tax (I-T) benefits. This would bring about a positive customer sentiment owing to increased liquidity in hands of consumer with access to e-commerce platforms. The resultant impact would be increased end customer demand, giving an impetus for growth to e-commerce sector which is one of the largest space takers in warehousing space.
The challenge before the government is now to tackle both the growth drivers - investment and consumption. Government also introduced the interim tax rate cut for corporates, however the positive effects of the same are yet to be noticed on ground. The real estate sector has been one of the worst affected segments witnessing slowdown of sales in residential segment. Only by rolling -out more drastic measures to restore consumer confidence by providing more liquidity, enabling access to cheaper credit, putting more money in hands of customer by IT slab tweaks or effecting GST cuts for items would fuel the growth in demand that would bring positive momentum to the Industrial and Logistics sector.
