Logistics sector gets infrastructure status
NEW DELHI: In a big push to developing an integrated logistics framework in the country including industrial parks, cold chains and warehousing facilities—the government has granted infrastructure status to the logistics sector, enabling the industry to access cheaper finances.
To adopt a coherent approach for the development of logistics infrastructure, the government appointed former Director General of Directorate General of Supplies and Disposals (DGS&D) Binoy Kumar as special secretary in charge of logistics in the commerce and industry ministry earlier this month.
Considering a proposal by the commerce ministry, the finance ministry, in a meeting held on 10 November, decided to include logistics in the master list of infrastructure sub-sectors, a finance ministry statement said.
The government has defined “logistics infrastructure” to include a multimodal logistics Park comprising an Inland Container Depot (ICD) with a minimum investment of ₹50 crore and minimum area of 10 acre, a cold chain facility with a minimum investment of ₹15 crore and minimum area of 20,000 sq. ft, and a warehousing facility with a minimum investment of ₹25 crore and a minimum area of 100,000 sq ft. Development of logistics will give a boost to both domestic and export markets, the finance ministry said in a statement.
“The need for integrated logistics sector development has been felt for quite some time, in view of the fact that the logistics cost in India is very high compared to developed countries. High logistics cost reduces the competitiveness of Indian goods.”
The decision will enable the logistics sector to access infrastructure lending at easier terms with enhanced limits, larger amounts of funds as external commercial borrowings (ECB), longer tenor funds from insurance companies and pension funds, and also make it eligible to borrow from the India Infrastructure Financing Co. Ltd (IIFCL).
In 2017, India’s logistics performance improved from 54 to 35 under World Bank Logistics Performance Index (LPI).
The government expects the Indian logistics sector to grow to $360 billion by 2032 from the current $115 billion.