Infrastructure status granted to logistics sector; what does it mean?

 

After reading this article you will gain an insight about the following:

  • What is infrastructure status?
  • Why infra status for logistics sector?
  • What are the benefits of infrastructure status?
  • List of sectors under “infrastructure status”

What is infrastructure status?

Infrastructure is one of the key ingredients for growth of the country. Hence, governments are expected to make policies for growth and improvement of infrastructure in the country. The union government defines the key areas that fall under this heading, and updates the list from time to time.

Benefits of infrastructure status

The status enables a sector to avail infrastructure lending at:

  • Easier terms
  • Longer maturity periods
  • 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).

Why infra status for logistics sector?

  • According to a study conducted by the government on Assessment of Quantitative Harvest and Post-Harvest Losses of Major Crops and Commodities in India, the annual value of harvest and post-harvest losses of major agricultural produces at the national level was of the order of Rs92,651 crore calculated using production data of 2012-13 at 2014 wholesale prices.
  • Infrastructure status for cold chains and warehousing facilities will provide a big boost to attracting private investment in this sector.
  • In 2017, India’s logistics performance improved from 54 to 35 under World Bank Logistics Performance Index (LPI).
  • The cost of logistics is extremely high in India with some estimates putting it at about 13% of GDP, which is higher than the U.S. (9) and Germany (8).
  • High logistics cost reduces the competitiveness of Indian goods both in domestic as well as export markets.
  • 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 country’s GDP.
  • The logistics sector needs improvement in efficiency. The infrastructure status will reduce the cost of capital in transportation and warehousing, thereby reducing the cost of logistics.
  • The government expects the Indian logistics sector to grow to $360 billion by 2032 from the current $115 billion.
  • The road ministry plans to develop around 35 multimodal logistics parks in India that would cater to 50% of the freight movement, enable a 10% reduction in transportation costs and a 12% reduction in carbon dioxide emissions.

What does logistic infrastructure include?

According to the definition that has been included, ‘logistics infrastructure’ includes:

  • Multi-modal logistics park comprising inland container depot (ICD) with minimum investment of ₹50 crore and minimum area of 10 acre.
  • Cold chain facility with minimum investment of ₹15 crore and minimum area of 20,000 square feet.
  • Warehousing facility with investment of minimum ₹25 crore and minimum area of 1 lakh square feet.

Note: Recently affordable housing and sports infrastructure were also added to the list of industries having an infrastructure status.

 

List of Infrastructure sub sectors

MINISTRY OF FINANCE (Department of Economic Affairs) (INFRASTRUCTURE POLICY AND PROGRAMME SECTION) regularly updates the list.

 

Updated Harmonized Master List of Infrastructure Sub-sectors

Sl.No. Category Infrastructure sub-sectors
1. Transport and
Logistics
• Roads and bridges

• Ports 1

• Shipyards 2

• Inland Waterways

• Airport

• Railway Track, tunnels, viaducts, bridges, terminal infrastructure including stations and adjoining commercial infrastructure

• Urban Public Transport (except rolling stock in case of urban road transport)

• Logistics Infrastructure3

2. Energy • Electricity Generation

• Electricity Transmission

• Electricity Distribution

• Oil pipelines

• Oil/Gas/Liquefied Natural Gas (LNG) storage facility 4

• Gas pipelines 5

3. Water and Sanitation • Solid Waste Management

• Water supply pipelines

• Water treatment plants

• Sewage collection, treatment and disposal system

• Irrigation (dams, channels, embankments, etc.)

• Storm Water Drainage System

• Slurry Pipelines

4. Communication • Telecommunication (fixed network) 6

• Telecommunication towers

• Telecommunication & Telecom Services

5. Social and Commercial
Infrastructure
• Education Institutions (capital stock)

• Sports Infrastructure 7

• Hospitals (capital stock) 8

• Tourism infrastructure viz. (i) three-star or higher category classified hotels located outside cities with population of more than 1 million, (ii) ropeways and cable cars

• Common infrastructure for Industrial Parks and other parks with industrial activity such as food parks, textile parks, Special Economic Zones, tourism facilities and agriculture markets

• Post-harvest storage infrastructure for agriculture and horticultural produce including cold storage

• Terminal markets

• Soil-testing laboratories

• Cold Chain 9

• Affordable Housing 10

Why is this in news?

http://www.livemint.com/Industry/v1WBpSQe3Z7DNhL4ouCuyN/Logistics-sector-gets-infrastructure-status.html

One comment

Guide us on how/what to improve, below...