Financial assistance scheme to set up logistics parks

 

In 2022, the government of India introduced the National Logistics Policy, which aims at reducing the logistics cost from the current 14-18% to the global benchmark of 8%. Additionally, it also targets to improve last mile delivery and resolve logistics related challenges.

In this regard, various state governments are contributing by encouraging logistics industry in different ways. The state government of Gujarat for instance, has drawn up a scheme for encouraging developers to set up logistics parks in the state. The scheme provides financial assistance to developers. This article explains the Gujrat government’s scheme for financial assistance to set up logistics park, its benefits and eligibility criteria.

Let’s begin with what a logistics park is.

What is a logistics park?

In simple terms, a logistics park is an industrial area that is established to fulfill logistics needs such as warehousing, storage, transportation, etc.

Logistics parks enable easy accessibility to market areas and other infrastructural facilities such as internal roads, power lines, communication facilities, etc. As a result, logistics companies can better utilise these facilities to smoothen operations. Therefore, they play an important role in the growth of logistics services and become an essential part of the supply chain. Since logistics parks have easy accessibility to highways/ports/airports, companies can store their finished goods to serve the local, regional or global markets as per the need.

Scheme for assistance to logistic parks

Establishing a logistics park is not an easy task. Arrays of infrastructure solutions need to be accommodated to serve the diverse needs of logistics companies. Hence, the quantum of investment required is huge. As a result, state governments have introduced schemes to developers to set up these parks. For example, the government of Gujarat is assisting companies to launch a logistics park in the state through its Scheme for Assistance to Logistics Parks.

Nature of assistance

As per the scheme, Gujrat government offers assistance in following ways:

• Incentive of @25% of the eligible fixed capital investment in building and infrastructure facilities (except land cost and transport vehicles, etc.). Maximum assistance provided is for ₹15 crore.
• 100% reimbursement of stamp duty paid on land purchase if the project is ate Level Empowered Committee (SLEC).

However, there are various conditions that developers of the logistics park need to fulfill before availing assistance from the state government. They include:

Timeline for project completion

The project has to be completed within 3 years from the date of approval from SLEC.

Facilities to be included in the project:

The proposed logistics parks must include the following facilities:

• Cement concrete roads
• Strom water drainage system
• Domestic sewerage collection and disposal system
• Streetlights
• Open and green spaces
• Water and power supply and distribution network
• Entrance gate and security and communication network
• Parking
• Effluent treatment, collection and disposal
• Fire station/Firefighting facilities with equipment

Other important things to note for the logistic park scheme

• The logistics park must be developed in an area of at least 20 hectors to be eligible for this scheme.
• Developers availing this scheme will not be eligible to avail any other incentive scheme from the state government, unless it is specified likewise.
• The developer of the logistics park needs to follow third party quality assurance system (TPQS) for the entire infrastructure development.

What are the documents required?

For in-principal approval of the logistics park, following documents are needed:

• Application in prescribed format. Online application form is available on the website of Industries Commissioner ate state of Gujarat
• Constitution of applicant company
• Project report
• Annual report of the promoter company
• Copy of Acknowledgement under Industrial Park Scheme
• Layout plan of the logistic park
• Village map of the proposed land showing survey numbers
• Copy of Registration under Industry association/industrial house or Institution registered under Private sector undertaking/Cooperative undertaking/Societies Act/Partnership Act/Companies Act/Trust Act

For final approval, following documents are needed:

• Detailed expenditure statements with C.A. certificate
• Approved civil certificate
• GPCB/MoEF clearance, if required
• Third party quality assurance (TPQA) certificate
• Project completion certificate
• DIC Team report as per appointed by the Industries Commissionerate (IC) of Gujarat

What is the procedure for in-principal approval to logistics parks:

• Scrutiny of the application will take place.
• Developer will be called for a presentation.
• If the project is eligible, the agenda will be put up for approval of the State Level Empowered Committee after presentation if it is found eligible.
• In-principle approval letter to be issued within 15 days from the date of approval.
• After completion of the industrial park, benefits of stamp duty and other reimbursement will be provided.

What is the procedure for the reimbursement?

• The financial assistance under the scheme is proportionally reimbursed. The 25% and 50% are reimbursed based on expenditure incurred at least by 50% and 75% respectively, and final payment is made after completion of the Logistic Park.
• For receiving the reimbursement, the developer needs to submit an application along with information on completion of work.
• Stamp duty is reimbursed after approval of SLEC. The developer needs to submit necessary documents for the reimbursement.

Is Gujarat the only state to have scheme for logistics park?

In the attempt to attract logistics industry to the state, various state governments have launched incentive schemes for setting up multimodal logistics parks. One can check the respective state government’s websites for more details on the respective schemes.

For example, the state of government of Maharashtra has Maharashtra Logistics Parks policy.

Additionally, the central government of India had announced to set up 35 multimodal logistics parks at strategic locations across the country. These would be established  on design, build, finance, operate and transfer (DBFOT) model.

Conclusion

One of the important challenges that MSMEs are facing is high cost of logistics. Multi modal logistics parks can help logistics companies improve last mile deliveries, resolve logistical challenges, and reduce cost. As a result, it will help MSMEs to bring the cost of operations down while achieving faster deliveries. This in turn leads to higher profit margins and better customer satisfaction.