Infra status for logistic sector 

Infra status for logistic sector 

Context:

• The Centre has granted infrastructure status to the logistics sector.
• It allows availing loans at competitive terms that come along with the status.

What is the reason for this grant?

• High logistics cost reduces the competitiveness of Indian goods both in domestic as well as export markets.
• Thus, development of logistics would give a boost to both domestic and external demand thereby encouraging manufacturing and job creation.
• It will also reduce the cost of capital in transportation and warehousing.
• It also seeks instrumental in improving country’s GDP

What are the benefits of infrastructure status?

• Infrastructure industries get longer maturity loans compared to typical manufacturing sector.
• They are also eligible for slightly higher equity ratios while applying for the loans.
• They can do refinancing with specialised lenders like IDFC, IIFCL, etc.

What are the benefits of the logistic sector after the infrastructure status?

• It will enable the logistics sector to avail infrastructure lending at easier terms with enhanced limits
• Give access to larger amounts of funds as external commercial borrowings (ECB)
• Give access to longer tenor funds from insurance companies and pension funds and
• It will be eligible to borrow from India Infrastructure Financing Company Limited (IIFCL)

What is logistics infrastructure?

• Logistics infrastructure means and 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, and/or warehousing facility with investment of minimum 25 crore and minimum area of 1 lakh square feet.