Sector gets ‘infrastructure’ status

The Confederation of Indian Industry (CII) has welcomed the setting up of Logistics division in the Commerce Ministry, pointing out that the sector needed recognition.

“We are extremely delighted and sincerely thank the Government of India for appointing a Logistics division under the Ministry of Commerce for integrating the various sectors of Logistics,” said R. Dinesh, Chairman, CII Institute of Logistics and Chairman for Sector Skill Council.

He pointed out that the logistics sector was still very fragmented and suffered from lack of investments and a proper recognition.

CII had been pursuing this with the Government at various levels and through various ministries for the last few years.

With this recognition as Infrastructure status to the logistics sector, it will not only help bring in more investments in to this sector but most importantly bring down the overall logistics cost by 1% to 2%.

CII expect the sector, which already provides over 17 million jobs, to grow at even faster rate going forward and provide even higher employment opportunities than before.

What ‘Infrastructure’ status means for Logistics sector:

Modern Logistics assets needed for the economy in the post-Goods and Services Tax (GST) era, will involve heavy capital investments with long gestation periods (~10-20 years) at current level of returns;

Thus, there is an urgent need to facilitate the credit flow into the sector with longer tenures and reasonable interest rates;

Infrastructure status for Logistics sector can result in an integrated planning of logistics infrastructure and better utilization of existing assets and resources with a focus on timely maintenance and upgradation;

Physical infrastructure and transportation capacity related investments are crucial for enabling and promoting multimodal transport in the country;

Infrastructure status will help in providing an easier access to institutional credit thereby reduces cost of borrowing for Logistics infrastructure;

Infrastructure status will simplify the process of approval for construction of multimodal logistics (parks) facilities that includes both storage and transport infrastructure; and

It encourages market accountability through regulatory authority and can attract investments from debt and pension funds into recognized projects. fii-news.com