The Union Finance Ministry has granted Infrastructure Status to Logistics sector. Logistics Infrastructure was included by insertion of new item in renamed category of ‘Transport and Logistics’.
The inclusion of “Logistics Sector” in the Harmonized Master List of Infrastructure Sub-sectors was considered in the 14th Institutional Mechanism (IM) Meeting chaired by Finance Minister. The proposal was mooted by the Commerce Ministry and was approved by finance ministry.
Logistics Infrastructure means and includes
- Multi-modal Logistics Park comprising Inland Container Depot (ICD): Minimum investment of Rs. 50 crore and minimum area of 10 acre.
- Cold Chain Facility: Minimum investment of Rs.15 crore and minimum area of 20,000 sq. ft.
- Warehousing Facility: Minimum investment of Rs. 25 crore and minimum area of 1 lakh sq ft.
Coming under infrastructure category will help logistics sector to get credit at competitive rates and on long-term basis with enhanced limits. It will also give access to larger amounts of funds as external commercial borrowings (ECB), longer tenor funds from insurance companies and pension funds.
Besides, logistics sector will be also eligible to borrow from India Infrastructure Financing Company (IIFC). It can also put logistics sector on steady growth path and its benefits could spill over to other sectors such as food processing that use logistics services in a big way.
The need for integrated Logistics sector development was felt in view of fact that 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.
In 2017, India’s logistics performance had improved from 54th rank to 35th under World Bank’s Logistics Performance Index (LPI). The government also expects Indian logistics sector to grow to $360 billion by 2032 from current $115 billion. The development of logistics will give boost to both domestic and external demand, thereby encouraging manufacturing and ‘job creation’. This will in turn be instrumental in improving country’s GDP.