‘Infrastructure’ status for logistics sector to boost investment

The Dollar Business Bureau

The Government has granted infrastructure status to the logistics sector, which covers warehousing and cold chain facilities, a step that would to attract more investment at remunerative rates for these segments. 

“The Logistics Sector has been granted Infrastructure status. It 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 (ECB), access to longer tenor funds from insurance companies and pension funds and be eligible to borrow from India Infrastructure Financing Company Limited (IIFCL),” Finance Ministry said in a statement on Monday.  

Due to the higher cost of logistics in India as compared to developed nations, the need has been felt for the development of integrated logistics sector.

The higher cost of logistics reduces the Indian goods’ competitiveness in the domestic as well as international market.

“Development of logistics sector would give a boost to both domestic and external demand thereby encouraging manufacturing and 'job creation'. This will in turn be instrumental in improving country's GDP,” the statement said.

The Logistics Infrastructure is included in the Harmonized Master List by inserting a new item in the renamed category of ‘Transport and Logistics’.

Logistics Infrastructure includes multi-modal logistics park consisting of inland container depots (ICD) having Rs.50 crore as minimum investment and an area of atleast 10 acre, cold chain facilities with Rs.15 crore minimum investment and an area of 20,000 sq ft and/or warehousing facility with minimum investment of Rs.25 crore and an area of minimum 1 lakh sq ft.

The logistics sector’s inclusion in the Harmonized Master List was taken into consideration at the 14th Institutional Mechanism (IM) meeting, which was held on November 10, 2017.

The Institutional Mechanism has recommended the inclusion and Finance Minister Arun Jaitley has approved it.