Govt plans logistics parks at 15 locations

New Delhi: The road ministry has shortlisted 15 locations with the highest freight movement for the development of multimodal logistics parks worth Rs.32,853 crore.

The locations are in the states of Maharashtra, Punjab, Gujarat, Rajasthan, Tamil Nadu, Karnataka and Telangana.

The parks would be spread over a total area of around 4,800 acres and will be built under the first phase of the ministry’s Logistics Efficiency Enhancement Programme (LEEP).

Through the programme, the government is trying to improve efficiency and reduce logistics costs by as much as 10%. The parks are expected to serve four key functions: freight aggregation and distribution, multimodal freight movement, storage and warehousing, and value-added services such as custom clearances.

The concept note for LEEP says the transport ministry will form a multi-modal company (MMC), which will manage the development of logistic parks and will have representation from the National Highways Authority of India (NHAI), Indian Railways, Airports Authority of India (AAI), Inland Waterways Authority of India (IWAI) and Indian Ports Association (IPA). MMC will also be responsible for partnerships with other government entities such as Dedicated Freight Corridor Corp. of India, Delhi Mumbai Industrial Corridor Development Corp. and Container Corporation of India Ltd.

Transport minister Nitin Gadkari has been focusing on the need to reduce logistics costs and the concept note is just the first step, said a senior transport ministry official on condition of anonymity. After this, a detailed technical assessment will be done to finalize the investment and business of logistic parks, the official said.

According to estimates prepared by the transport ministry, out of the total cost of Rs.32,853 crore for the logistic parks,Rs.10,665 crore will be spent for acquiring land while Rs.10,359 crore and Rs.11,828 crore will be spent on development of storage areas and development of allied infrastructure, respectively.

The multimodal logistic parks are important because when you shift from one mode of transport to another, there is time loss and wastage in handling, said Kuljit Singh, a partner at consulting firm EY. With the multimodal hub, cost of handling is reduced and processes become more streamlined and efficient, he said, adding that even government clearances will become streamlined.

The locations shortlisted are—Delhi NCR (Delhi, Gurgaon, Ghaziabad, Faridabad, Noida); Mumbai (Mumbai, Mumbai suburbs, JNPT, Mumbai ports, Raigad district); north Gujarat (Ahmedabad and Vadodara); south Gujarat (Surat and Bharuch); Hyderabad; north Punjab (Amritsar, Jalandhar, Gurdaspur); south Punjab (Ludhiana, Sangrur, Patiala); Jaipur; Kandla; Bangalore; Pune; Vijayawada; Cochin; Chennai and Nagpur.

EY’s Singh said the investments these hubs draw would depend on the amount of traffic and availability of resources.

Logistics costs as a percentage of total value of goods stood at 13-14%, compared with 7-8% in developed nations, the Institute for Studies in Industrial Development said in its report on freight logistics and intermodal transportation. This proportion has increased over the past few years, indicating structural inefficiencies. Also, the average speed of freight vehicles is about 25-30 kmph, which is 50-60% slower than the US, adding to the freight cost.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.