Parul
The logistics sector has been granted infrastructure status, which will help it access loans on easier terms, encourage manufacturing in the country and help improve economic growth, the government said on Monday.
The cost of logistics in India is very high compared to developed countries and the sector’s development will provide a boost to domestic as well as external demand, encouraging manufacturing and job creation, it said. The sector covers cold chain, warehousing facilities and multi-modal parks, comprising Inland Container Depot (ICD), subject to certain conditions.
The finance ministry said in a statement that the grant of infrastructure status will enable the logistics sector “to avail infrastructure lending at easier terms with enhanced limits, access to larger amounts of funds as External Commercial Borrowings, access to longer tenor funds from insurance companies and pension funds”. The sectoral players would also be eligible to borrow from India Infrastructure Financing Company Ltd.
Amending the existing framework, a notification issued by the Department of Economic Affairs (DEA) has widened the category of infrastructure sub-sectors to “transport and logistics” from the earlier sub-head of “transport”. “High logistics cost reduces the competitiveness of Indian goods both in domestic as well as export market.
“Development of logistics would give a boost to both domestic and external demand thereby encouraging manufacturing and job creation,” the ministry said. “This will in turn be instrumental in improving country’s GDP,” it added.
According to a notification in this regard, logistics infrastructure includes “Multimodal Logistics Park comprising Inland Container Depot (ICD) with minimum investment of Rs 50 crore and minimum area of 10 acre”.
Further, a cold chain facility having an investment of at least Rs 15 crore as well as warehousing facility with investment of minimum Rs 25 crore would come under logistics infrastructure. In both cases, the facilities should also have a minimum required area.
As part of the changes in the classification, the DEA — which comes under the finance ministry — has updated the ‘Harmonised Master List of Infrastructure Sub-sectors’.
The government said inclusion of logistics sector in the master list was considered in the 14th institutional mechanism meeting on November 10 and later the recommendation was approved by Finance Minister Arun Jaitley.
Besides transport and logistics, the list comprises energy, water and sanitation, communication, social and commercial infrastructure.
Roads and bridges, ports, shipyards, inland waterways, airports, railway tracks, tunnels, viaducts, terminal infrastructure including stations and adjoining commercial infrastructure are all part of the transport and logistics classification.
Urban public transport and logistics infrastructure are also part of it.
