In order to tap the steadily growing logistics sector, Telangana, one of the promising states for development in India, has chalked out new guidelines for the development of logistics sector in the state. The state’s new logistic policy is aimed at building reliable, robust and efficient logistics infrastructure to optimize overall cost and time.
The purpose of the new logistic policy is to attract more investment to the state and employment opportunities. The logistics sector in India has been growing at $215 billion per annum with an impetus from e-commerce penetration and government initiatives like make in India and 100 per cent FDA in warehouses, food storage facilities, etc.
The expected outcome of the policy is to generate an estimated Rs 10,000 crore investments to the state, and expected to generate about one lakh direct employment opportunities. The state is going to provide about 1,060 acres of land throughout the state.
The policy shall be effective for a period of five years from the date of notification by Government of Telangana in conjunction with ‘Telangana State Industrial Policy 2015’ (T-IDEA) and its further amendments.
Key objectives of the Telangana logistics policy
- Development of Robust Infrastructure – Development of robust logistics infrastructure by encouraging the investors for development of Multi Modal Logistic Parks (MMLPs), Integrated Logistic Parks, Large Scale Storage infrastructure facilities across the state.
- Improve Quality of Services – Measures to improve the quality of services provided by logistics companies requiring improvement to match international standards. This shall be achieved by attracting 3PL/ 4 PL/ KPL services providers in the state with logistic experience.
- Increase Technology penetration: Technology plays important role in improving efficiency of the logistics business. Currently, technology penetration in the sector is low. All the companies in the value chain of logistics are encouraged to embrace state-of-art technologies in their business activities and help the state in improving productivity as well as traceability across value chain.
- Improve skilled manpower availability: Logistics sector is one of the fastest growing sectors and will demand availability of skilled manpower. The policy shall aim to increase awareness on employment opportunities, skill development infrastructure and create pool of skilled manpower.
Encouraging private sector participation
Government of Telangana intends to encourage private sector participation to improve the logistics infrastructure in the state with the following policy incentives:
- Development of Multi Modal Logistics Parks / Dry Ports /Entegrated Logistics Parks, etc falling under Mega Project Category of ‘Telangana State Industrial Policy 2015’ or T- EDEA:
- Multi Modal Logistics Parks / Dry Ports / Integrated logistics Parks or Infrastructure projects developed shall be treated as ‘Mega Projects’ as mentioned in Telangana State Industrial Policy Framework 2015. Mega projects are projects which have investment of above Rs 200 crores or providing employment to more than 1,000 persons
- Government of Telangana shall develop these projects through Public Private Partnership (PPP) mode or by accepting project development proposals from private developers.
- In addition to standard large category industry incentives, these projects will receive tailor made incentives based on requirements of the project. The broad areas of incentives shall be Road, Rail, Land, Power, Water, tax rebates and interest subsides.
Incentives for private developers
Government of Telangana shall encourage private developers to construct rail connected ICDs/ Dry Ports/ any other logistics infrastructure across state. For these projects, Government of Telangana shall provide the following incentives:
Allotment of Land: Government of Telangana will identify land at strategic locations for development of ICD/ Dry port. These projects will be developed on PPP mode. Private developers willing to develop these projects in Telangana can submit proposal for the same and the land required for construction of these projects shall be allotted as per the procedure laid out in ‘Industrial Policy Framework for the State of Telangana 2015’.
Interest Subsidy: Government shall provide interest subsidy of 35 per cent of annual interest payable by the company on loan taken for construction of the Projects. The interest subsidy shall be provided for period of seven years from date of commencement of Commercial Operations. The interest subsidy is capped at Rs 50 Lakhs/ year/ unit. The interest subsidy is provided for PPP projects initiated by Government as well as the projects developed by private developers.
Complimentary infrastructure: Government will provide complimentary infrastructure such as rail connectivity (from nearest railway station), road connectivity (from nearest state highway/national highway), power, water, sewerage and internet services. The total cost of implementation of complimentary infrastructure shall not exceed 10 per cent of the fixed capital in building, plant and machinery (excluding land) or Rs 10 crores (for rail based infrastructure the upper cap will be 20 per cent or 25 crores) whichever is lower. The complimentary Infrastructure is provided for PPP projects as well as projects developed by private developers.
Interest subsidy for warehouse and cold storage: An interest subsidy of 35 per cent of annual interest payable by (the company on loan taken for construction of warehouses and cold storages. The interest subsidy capped at Rs 50 Lakhs/ year/unit. The interest subsidy is provided for three years after the date of commencement of Commercial Operation. For warehouses and cold storages constructed near to tribal zones, interest subsidy shall be provided for period of five years from date of commissioning and capped Rs 50 Lakhs/year/unit.
- Primary Agriculture Credit Society (PACS) / Mutually Aided Cooperative Society (NACS) of Government of Telangana can also avail the benefits of the scheme.
- As Telangana’s agriculture output is expected to grow at a considerable rate in coming years, each district will be developed to have a Special/food Processing Zone to facilitate domestic transport of processed products and export the same. For these projects, incentive from other schemes will be tapped.
Strengthening of high capacity commercial fleet in the state
Government of Telangana intends to improve efficiency of transport industry by increasing number of high-capacity commercial vehicles available for logistics. Trucking is a fragmented activity and Government intends to structure it by attracting sizeable trucking companies to set up their services in Telangana. The incentives are available to those entities that shall buy at least 20 commercial vehicles with in 1 year in Telangana and having registered office in Telangana, The incentives provided shall be in the form of reimbursement of vehicle registration cost and reimbursement of cost of national permits.
Providing skill development in logistics
Telanganagovernment has proposed to establish Centre of Excellence (CoE) along with Telangana Academy of Skill and Knowledge (TASK). The CoE shall be developed in association with leaders in industry segment. The aim of CoE shall be to provide end to end training needs of the logistics sector.
The functions of CoE include offering training, upgrading skill, and encouragement for involvement of women/physically handicapped in logistics sector.
Encouraging Start-ups
- Government of Telangana shall provide 20 reserved office spaces / seats for upcoming start-ups in logistics sector through T-Hub/ Start-up Ecosystem partner.
- The state shall propose a special innovation Fund of Rs 1 crore for supporting start-ups In Logistics (for first two years)
- Government or Telangana shall demarcate at least five acres of land in upcoming Industrial Estates/Industrial parks and SEZs for purpose of development of common logistics Infrastructure – such as warehouse/ cold storage /loading/ unloading facilities /Trucking, etc.
- Railway sidings are infrastructure that facilitate intermodal movement of Bulk goods as well as provide opportunity for Rail side warehousing activities. The Government of Telangana may receive proposals from private developer for development of standalone Railway sidings and the need for the infrastructure will be evaluated. Based on evaluation and the level of capital infused by Private developer, Road connectivity up to the siding will be provided. If necessary, the state government may acquire on behalf of the private developer as per the procedure laid out in “Industrial Policy Framework for the State of Telangana 2015.
- Single Window facilitation system: To fast-track approvals required for building of any new logistics infrastructure in the state, all the proposals can be applied through Single Window Clearance system of TS-iPASS. Apart from this, Government of Telangana shall establish a separated procedure to fast track the issuance of commercial driver’s license and national permit for cargo carrying trucks.
Other industrial incentives such as stamp duty reimbursement, land cost rebate, SGST and land conversion cost (including NALA Tax) shall be provided as per the procedure laid out in ‘Industrial Framework for the State of Telangana 2015’.
