The government has accorded the logistics sector Infrastructure status with a view to accelerating development, thereby giving a boost to both domestic and external demand.
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 both in domestic as well as export market
The inclusion of the logistics sector in the Harmonised Master List of Infrastructure Sub-sectors was considered in the 14th Institutional Mechanism Meeting held on November 10, 2017. It was recommended by the Institutional Mechanism and subsequently approved by the Union Finance Minister, Arun Jaitley.
Logistics Infrastructure is included by insertion of a new item in the renamed category of ‘Transport and Logistics’, with a footnote stating that Logistics Infrastructure means and includes Multi-modal Logistics Park comprising Inland Container Depots (ICDs) with minimum investment of Rs 50 crore, 10 acres, cold chain Facility with minimum investment of Rs 15 crore and minimum area of 20,000 square feet, and/or warehousing facility with investment of minimum Rs 25 crore and minimum area of 100,000 square feet.
The new status is expected to enable the logistics sector to avail infrastructure lending at easier terms with enhanced limits, access to larger amounts of funds as External Commercial Borrowings (ECB), access to longer tenor funds from insurance companies and pension funds and be eligible to borrow from India Infrastructure Financing Company Limited (IIFCL).
Photographs courtesy TVS Logistics