While much of the attention was earlier focused on highways, a holistic approach for the infrastructure sector will not only facilitate efficient connectivity but also play a vital role in job creation and improving the standard of living. The Maritime Amrit Kaal vision underscores the government’s commitment to establishing green hydrogen hub facilities at all Indian ports.
By extending the sunset clause for production of sustainable fuels and manufacturing of hydrogen fuel cells, India can simultaneously attract investment in green shipping technologies and make strides towards its ambitious net-zero emissions target. This action would encourage innovation within the maritime industry and also support the international push towards a sustainable and resilient shipping industry.
Further, green shipping initiatives are gaining momentum as India seeks to align with global standards and contribute to the fight against climate change. The Indian government had launched the National Maritime Development Programme, which includes provisions for eco-friendly shipbuilding and recycling. Such vessels typically require higher capital capex compared to traditional ships. The upcoming Budget should consider incentivising ship buyers to invest in green vessels, which would facilitate the maritime industry’s shift towards more environmentally friendly operations.
The expanding inland cruise industry also offers a potential for expansion, as there is a demand for the development of ports that can handle large cruise ships and the construction of terminals equipped with modern amenities to enhance the experience of passengers. While the Cruise Shipping Policy of 2008 aims to make India an attractive cruise tourism destination, significant funds are needed to develop infrastructural facilities at various ports of the country. Further, permitting companies to carry out ‘domestic cruising’ from the GIFT City and extending the benefit of 10 years’ tax holiday may encourage cruising companies to register their units in the International Financial Services Centre (IFSC). This could invigorate the domestic cruise market, resulting in heightened tourism earnings and wider economic advantages.The National Rail Plan is a step towards building a state-of-the-art railway system and increasing the share of freight traffic to 45% by 2030. During the Interim Budget of 2024, the finance minister unveiled plans for economic corridors to enhance multi-modal transport links, streamline logistics, and spur economic growth. The forthcoming Budget is expected to build on this momentum, with stakeholders anticipating weighted tax deductions in connection with research & development activities. These tax deductions, if announced, would be in line with the Indian Railway Innovation Policy and are likely to stimulate investment in critical areas such as safety equipment, rail infrastructure enhancement, and the integration of cutting-edge technologies.Another key area is aviation, which is currently experiencing a significant upswing, as demonstrated by the remarkable order of over 1,100 aircraft slated for delivery within the next five years. This remarkable increase in aircraft orders highlights the swift progress of the aviation industry. To maintain and further boost this expansion, it’s crucial for the government to strengthen the supporting ecosystem and infrastructure. A key component to support this expansion is the development of comprehensive Maintenance, Repair, and Overhaul (MRO) facilities within the country. Enhanced MRO capabilities will ensure minimal aircraft downtime, thereby optimizing operational efficiency. Considering these developments, the government should consider introducing fiscal incentives to encourage the establishment of state-of-the-art MRO services capable of accommodating large aircraft fleets in India.While the upcoming Budget is an opportunity for the government to reaffirm its commitment towards infrastructure development, the anticipation surrounding the Budget is palpable among various stakeholders, who are keenly awaiting the budget’s reinforcement and broadening of facilitative policies.
With continued investment in infrastructure, policy reforms, digitalization, skill development, and green logistics, both government and businesses can further enhance the resilience and competitiveness of the sector. The above is a wish list of expectations which if accepted shall have the potential to significantly provide further impetus to the infrastructure sector. A well-balanced combination of financial allocations and policy reforms has the capacity to tap into the industry’s full potential, propelling the nation towards the vision of Viksit Bharat.
(Neetu Vinayek is a partner (Infrastructure) at EY India. Jasdeep Sahni, Director, EY India also contributed to the article. The views are personal.)