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1 February, was the official Interim Budget 2024 date, when the announcement was made by the Union Finance Minister, Nirmala Sitharaman. Several themes were clearly prioritised, including increase in capex and infrastructure development, tax reforms, focus on MSME technology adoption, training and access to finance, improvements in logistics sector, investments in technology and more. In this article, we’ll take a closer look at the Interim Budget 2024 highlights, the Interim Budget meaning, and what the Interim Budget 2024-2025 mean for steel, logistics, taxation, exports, technology, and MSMEs in general.
Interim Budget 2024 highlights – What’s in it for logistics, steel, exports, technology, taxation
We take a look at the primary points highlighted in the Interim Budget 2024-2025 with respect to:
Initiatives in infrastructure development (Capex):
- Increase in budget allocation to 11.1% or ₹11.11 lakh crores for infrastructure development projects
- Adding 2 crores houses in the next five years to cater to the rising number of families
- Development of tourist centres in states to promote tourism
Logistics sector initiatives:
- 3 new economic corridors for railways under the PM Gati Shakti Yojana programme
- Infrastructure development and expansion of new and existing airports under the UDAN scheme
- E-Vehicle manufacturing and infrastructure development and e-Buses for public
- Metro railways for urban transport development
Technology and digitisation:
- ₹1 lakh crore budget for innovation and R&D in technology
- Budget for deep-tech research in Defence
- PLI scheme funds
- Domestic manufacturing of electronics and semi-conductors (Read about the Manufacturing sector in India)
- Budget for cybersecurity projects
Initiatives on sustainability:
- Solar rooftop project for 1 crore households
- EV manufacturing and e-Buses for public transport
- Bio-manufacturing and bio-foundry schemes
- Renewable energy and ‘net zero’ by 2070 initiatives
- Blue economy 2.0 and climate change
Tax reforms and compliance initiatives:
- No changes in the direct and indirect tax structures
- Threshold for presumptive tax for retail business and professionals increase to ₹3 crores and ₹75 lakhs respectively
- Corporate tax rate reduced to 22%
Interim Budget highlights for infrastructure development & it’s impact on the steel sector
The budget for infrastructure development (capex) has been raised to ₹11.11 lakh crores in the Interim Budget 2024. This is an increase from last year’s budget (11.1% increase) and makes 3.4% of India’s GDP.
Infrastructure development would include physical, social and digital infrastructure development and will play a pivotal role in economic management and growth. These would include initiatives in building infrastructure for logistics, technology, housing and more.
For instance, under housing and other infrastructure plans, the government aims to:
- Initiative solar rooftop installation for 1 crore people to get 300 units of free electricity
- Schemes to enable deserving middle-class families staying in rented accommodations or chawls to buy or build their own houses
- Expansion of plans under the PM Awas Yojana (Grameen) and target 2 crore more houses in the next five years to cater to the rising population
As can be seen, these initiatives in strengthening the infrastructure acts as a cornerstone for the growth and prosperity of the MSME sector and the larger business community. By laying down physical foundations such as railways, transport networks, digital systems, port connectivity, etc. paves the way for competition, operational efficiencies, trade and commerce, and scale.
Read more about: Details of infrastructure development in Interim Budget for economic growth
Impact on the steel industry and MSME procurement
It goes without saying that the steel industry will be impacted by the initiatives undertaken for infrastructure development. Key mentions include:
- Rise in the demand for steel through developmental projects for housing, roads, bridges, railways, airports, urban development and more
- Focus on steel manufacturing and distribution by steel suppliers/sellers across various locations (including steel exports)
- Adoption of digital tools and innovation to forecast demand, monitor steel prices, optimise order and reorder quantities, and streamline steel procurement and demand aggregation
- Employment generation and cluster development in the steel industry and related industries
- Steps to check rising steel imports and raw material prices, provide skill enhancement and certification training, offer incentives for green steel manufacturing, and more
Read more about: How the Interim Budget impacts steel production, pricing and procurement
Highlights of Interim Budget 2024 on supply chain and logistics sector
The Interim Budget in India unfurled a spectrum of strategic provisions for infrastructure development and the logistics sector. Amidst the ₹11.11 lakh crore capex allotted, logistics infrastructure development, especially railways, aviation, e-Vehicles, and metro rails, marked the beginning of a new era for logistics businesses (e.g., logistics startups, freight forwarders and 3PLs) and MSMEs.
The logistics initiatives in the Interim Budget 2024 underscores an ambitious blueprint to invigorate the logistics landscape, anchoring its vision to boost connectivity and efficiency, while reducing costs and promoting digitisation and sustainability.
Key logistics highlights
The theme of logistics under the Interim Budget 2024-2025 clearly indicates the goals towards bringing supply chain efficiency in logistics management.
- Opening of three new commodity-specific, economic corridors for railways, under the PM Gati Shakti programme. Commodities would include energy, minerals, and cement. The corridors would aid to increase efficiency in high-traffic routes, ease congestion, reduce turnaround time, and bring cost reductions.
- Enhancing rail transport for passengers and goods. The plan is to upgrade 40,000 old bogies to the new Vande Bharat standards to provide convenience, speed and comfort to commuters.
- Promoting EV manufacturing and infrastructure development (i.e., charging stations) across the country to boost sustainability. Also, adoption of e-Buses with digital payments option to provide a green, secure, and eco-friendly form of public commuting.
- Developing infrastructure and expanding existing and new airports to facilitate air transport. The plan is to increase the number of routes from 517 to more, and roll-outs to Tier-II and Tier-III cities under the UDAN scheme.
- Streamlining port connectivity between land and ports for efficiency in cargo movement and optimal supply chain operations to boost exports.
- Facilitating urban transportation through metro railways. This is a part of the ‘transit oriented development’ plan in large cities aimed at providing quick, affordable, and convenient commute to the urban middle-class.
- Boosting exports and international trade through the India-Middle East-Europe economic corridor.
Read more about: The Interim Budget initiatives for digital solutions in Logistics & SCM
What’s in it for MSMEs and other businesses
As can be seen, the initiatives crafted has been designed to make the Indian logistics sector globally competitive by reducing operational bottlenecks, adopting digital solutions in logistics management, and encouraging exports. India’s logistics sector contributes almost 14.4% of the country’s GDP and generates over 22 million jobs. The plans shared in the Interim Budget is a beacon of growth and opportunities, pivotal for economic empowerment.
- Adoption of new technologies for real-time tracking of goods, warehouse automation, supply chain optimisation, and predictive logistics.
- Forming business alliances and partnerships with vendors, suppliers, distributors and 3PLs on efficient movement of goods, exports and imports (based on better port connectivity, rail transport, and multi-modal transport). It also unveils measures to amplify air cargo capacity for greater market access and global trade links.
- Building a sustainable logistics ecosystem by adopting green logistics methods, reducing costs in transportation, optimising routes, getting tax rebates, and more.
- Access to multi-modal connectivity, warehousing facilities, and industrial parks (e.g., logistics parks) to reduce transport costs, time, inefficiencies or damages.
Read more about: How the Budget initiatives promotes MSME market access
Highlights on technology adoption in Interim Budget
Technology grants of ₹1 lakh crore for technology research has been allotted in the Interim Budget of 2024. Funds are allotted for research in deep-tech in Defence, building a digital infrastructure, and growth. Key highlights of the technology Interim Budget are:
- ₹1 lakh crore budget for innovation and R&D in technology in sunrise domains by the private sector (with 50 year interest free loans), with options of financing and refinancing
- Deep-tech research budget for the Defence sector
- Funds for PLI schemes across sectors (Production Led Incentive schemes)
- Building a self-reliant nation and promoting domestic manufacturing of electronics, IT hardware and semi-conductors
- Funds for digital transformation, including allocation of budget for cybersecurity projects
Read more about: The list of technology grants for innovation and R&D in the Interim Budget 2024
Impact on MSMEs and large enterprises
The technology budget is an initiative by the government to propel domestic manufacturing and build a strong technologically savvy infrastructure. While on the one hand there are start-ups and MSMEs that are digitally adept and innovative, on the other, there are MSMEs whose processes are archaic and are struggling with digital adoption. (Also read: Challenges faced by MSMEs when going digital)
The technology budget, especially for research and innovation, will enable small companies and large enterprises to adopt technology and digital solutions effectively. By providing funds for digitisation, relevant trainings for skill enhancement, and incentives for tech entrepreneurship the goal is to build an ecosystem of tech entrepreneurs, skilled workforce, and domestic manufacturing. This will enable to solve the employment challenge, build a self-reliant economy, and even increase FDIs in relevant sectors.
Budget highlights on sustainability and climate change initiatives
Sustainability and green initiatives have been on top priority for world governments. Drafting policies for green initiatives, eco-friendly practices, sustainability and climate change, and building an ecosystem for cultivating those has been a regular concern for all. The Interim Budget’s key points on sustainability and climate change promote the same:
- Rooftop solarisation scheme for 1 crore households to provide 300 units of free solar electricity, leading to cost savings of ₹15,000-₹18,000 per year (each household)
- Bio-manufacturing and bio-foundry schemes for sustainable raw material usage and green growth
- Initiatives for ‘net zero’ by 2070 to promote renewable energy and sustainability to reduce greenhouse gas emissions (achieved through harnessing offshore wind energy, coal gasification and liquefaction, and more)
- Focusing on a blue economy (climate resilient activities for restoration of marine culture) and prioritising initiatives for climate change (including renewal of green energy)
- Building an e-Vehicle manufacturing and infrastructure development system
Read more about: How sustainability and climate change is prioritised in Interim Budget
Benefit to MSMEs
The sustainability scheme is designed to enable MSMEs explore new opportunities and promote entrepreneurship. For instance, the solar rooftop project encourages more MSMEs to take up installation roles, while technically skilled individuals can take up manufacturing and maintenance jobs.
Similarly, by building the blue economy ecosystem there’s the conscious choice to focus on climate change. The government’s initiative to increase aquaculture productivity from 3 to 5 tonnes per hectare, and double exports to ₹1 lakh crores is an opportunity for small businesses and MSMEs to grow through market expansion and international trade.
Similarly, opportunities in tourism, especially for building the infrastructure support also promises opportunities to MSMEs in technology, hospitality, travels and tourism, and other sectors.
Tax reforms and compliance measures highlighted in Interim Budget 2024
Tax and compliance are always the focus of any Budget decisions as it impacts all sectors of society. For instance, by implementing GST in logistics sector it simplified taxation (i.e., state tax at entry point) and even led to the growth of e-Commerce. Similarly, to encourage more small businesses to take up entrepreneurship and benefit from it, the GST registration limit in India was raised to ₹40 lakhs for goods and ₹20 lakhs for services.
When it comes to the tax reforms highlighted in the Interim Budget, here are the top things to keep in mind:
- No changes in the direct and indirect tax structures and customs rates (including import duties)
- Threshold for presumptive tax for retail business is raised to ₹3 crores
- Limit for professionals eligible for presumptive tax has been increased to ₹75 lakhs
- Corporate tax rate has been reduced to 22% from 30%
- Proposal to withdraw outstanding direct tax demands up to ₹25,000
- Extension up to 31 March 2025 have been provided, in addition to certain benefits to start-ups, and tax exemption on certain income of some IFSC units
Read more about: Details of tax reforms, GST and other compliance as per the Interim Budget
Interim Budget and what to look forward to?
We’ve had a look at the Interim Budget 2024 highlights. Now, let us understand Interim Budget meaning and what to look forward to.
What is an Interim Budget?
An interim budget is one that presents the expenditures and receipts of the government. It is presented in the parliament by a government that is in its last year of office before the general elections or is in a transition phase. It is designed to demonstrate continuity in essential services and expenditures till the time the new government is formed. Once the new government is formed it can present the full budget.
The Interim Budget therefore is a ‘vote on account’, that is, the government can withdraw funds from the treasury to maintain continuity in its services.
For MSMEs, the Interim Budget provides a blueprint on how the government aims to charter its expenditures and receipts. It showcases investments in areas that would ensure building a more conductive business milieu and encourage entrepreneurship across the country.
(For more information, visit the government website to learn about the Union Interim Budget 2024)
Sohini is a seasoned content writer with 12 years’ experience in developing marketing and business content across multiple formats. At Tata nexarc, she leverages her skills in crafting curated content on the Indian MSME sector, steel procurement, and logistics. In her personal time, she enjoys reading fiction and being up-to-date on trends in digital marketing and the Indian business ecosystem.
