India’s logistics sector has touched a new milestone by being allocated the infrastructure status. The masterstroke by the government has inspired new hopes across the logistics industry and the decision has been hailed as the harbinger of economic growth. The industry could now anticipate huge scale investment from foreign entities and the sectors dependent on logistics are likely to boom in funding. Companies would now be in a position to procure long-term credit in the form of External Commercial Borrowings (ECB), Pension Funds, and External Commercial Borrowings (ECB).
Turning Tables for Logistics in India
Rampant foreign investment in warehousing is a forerunner of progress for the Indian logistics industry. This has reflected in the decision of the Canada Pension Plan Investment Board (CPPIB) to acquire a substantial share in IndoSpace. Moreover, the central government is liaising with State governments and has allocated a budget of Rs.100,000 crores to accentuate targeted growth in logistics. The requirements for capital and land have also been stipulated for various avenues like multi-modal logistics park, warehousing facilities, and cold-storage facilities.
Growth Prospects for Various Industries
India has a pool of industries including pharmaceuticals, FMCG, and e-commerce, among others that largely depend on logistics and warehousing. The private sector also aligns well with the provision of warehousing facilities and better logistics. Hence, the landscape of trade is bound to get a boost with the growth of logistics. Furthermore, the private companies would now extend their reach to Tier II and Tier III cities, thus, enhancing employment opportunities. Another standpoint in this regard is the Goods and Service Tax (GST) which would add to the tally of advantages.
The logistics industry is expected to exhibit sparks of excellence with the granting of infrastructure status. However, pressing issues pertaining to the poor fettle of roads and low connectivity between urban and rural centers continues to haunt the industry.