The Logistics Sector has been granted Infrastructure status by the
government in an effort to bring down the costs according to an official
release. High logistics costs ranging from 14 to fifteen per cent reduces the
competitiveness of the Indian goods both in domestic as well as export market
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.
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 inclusion of “Logistics Sector” in the Harmonized Master List of
Infrastructure Sub-sectors was considered in the 14th Institutional Mechanism
(IM) Meeting held on November tenth.
It was recommended by the Institutional Mechanism and subsequently approved
by the Union Finance Minister Arun Jaitley. “Logistics Infrastructure” is
included by insertion of a new item in the renamed category of ‘Transport and
The notification has a footnote stating that "Logistics
Infrastructure” means and includes Multi-modal Logistics Park comprising Inland
Container Depot (ICD) with minimum investment of Rs. 50 crore. The logistics
set up should have a minimum area of 10 acre, Cold Chain Facility with minimum
investment of Rs.15 crore and minimum covered 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 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).