Govt readies multi-modal transport play to reduce logistics costs

New Delhi: India has firmed up the contours of its ambitious multi-modal programme to reduce logistics costs and make the economy competitive.

The strategy involves a reset of India’s logistics sector from a “point-to-point” model to a “hub-and-spoke” model and involves railways, highways, inland waterways and airports to put in place an effective transportation grid.

This includes setting up 35 multi-modal logistics parks at an investment of Rs50,000 crore, development of 50 economic corridors and an investment template which involves roping in the states and the private sector for setting up special vehicles for implementation.

To implement this, the government plans to host a multi-modal summit—India Integrated Transport and Logistics Summit—in May, on the lines of the maritime summit to pitch project opportunities to the investors.

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“It is for the first time that we have taken an integrated approach for the country’s transportation. This will increase India’s exports, provide employment opportunities, will be cost effective, and will make goods cheaper in the country,” said Nitin Gadkari, minister for road transport and highways, shipping and ports in an interview.

Sites for the proposed 35 logistics parks have been identified and they will be set up on railways, highways, inland waterways and airports transportation grid. Fifteen such logistics parks will be constructed in the next five years, and 20 more over the next 10 years. They will act as hubs for freight movement enabling freight aggregation and distribution with modern mechanized warehousing space.

The government’s intent was articulated by Union finance minister Arun Jaitley in his budget speech this year.

It will work like this: a joint venture will be set up between National Highways Authority of India (49% share) and the partner (51%) for the project which may be a state government or a private entity. Of the land acquired for the project, 40% will be developed and returned to the land owner. While 20% of the land will be sold to finance the project, the profit from the rest 40% of the land will go to National Highway Authority of India. The road transport and highways ministry has also sought an infrastructure status for these logistics parks.

“This model will ensure that there will be no need for us to make investments,” said Gadkari.

“We will build pre-cooling plants, cold storages, storage facilities for agricultural produce, food grains, hardware, cement, steel, fertilizer and will create a transport nagar (city) and logistic park. It will have fuel pumps and also truck maintenance shops. All of this will be at one place outside the city. Its first impact will be that it will reduce pollution, traffic jam, create new employment opportunities and contribute towards increasing exports,” the minister added.

According to the ministry of road transport and highways, several state governments want to partner with the ministry for the multi-modal logistics parks.

A pre-feasibility study will be conducted in Chennai and Vijayawada shortly.

“I have personally written to the chief ministers of states to make sure that these projects progress and have also invited them to the summit,” Gadkari added.

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