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The logistics sector has been granted infrastructure status.
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 the 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. This will, in turn, be instrumental in improving the country’s GDP.
The inclusion of logistics sector in the Harmonized Master List of Infrastructure Sub-sectors was considered during the 14th Institutional Mechanism (IM) meeting held on November 10, 2017. It was recommended by the Institutional Mechanism and subsequently approved by the Union Finance Minister, Mr 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 Multimodal Logistics Park comprising Inland Container Depot (ICD) with minimum investment of Rs 50 crore and minimum area of 10 acre, Cold Chain Facility with minimum investment of Rs 15 crore and minimum area of 20,000 sq. ft, and/or Warehousing Facility with investment of minimum Rs 25 crore and minimum area of 1 lakh sq ft.
It will enable the 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 eligibility to borrow from India Infrastructure Financing Company Ltd (IIFCL).
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