Tamil Nadu to push fund influx of more than 500 crore for logistics infra development

State governments have lately been paying a lot of attention to the logistics infrastructure in their respective states, which on a broader level has amplified India’s supply chain ecosystem. In recent news, the government of Tamil Nadu announced that they will be providing more than INR 500 crore investment towards logistics infra development projects.

To attract and enable financing for large scale logistics infrastructure development, the government will coordinate with financial institution such as National Investment & Infrastructure Fund (NIIF), Tamil Nadu Infrastructure Fund (TNIF) or any other suitable sources for leveraging funds.

The State Logistics Policy of Tamil Nadu prescribes phase wise preparation of logistics master plan for major cities and metropolitan regions to promote city logistics. Land parcels of minimum 50 acres across strategic locations in the state will be marked and designated for development of multi-modal logistics parks, warehousing clusters and private freight terminals (PFT).

The government has also planned to shift warehouses under the ‘industries’ segment to further improve ease of doing business in the state. This will help warehouse operators generate better cost efficiencies, provided that existing warehouse developers update their developments for streamlining registration process under industries category within the defined period of time.

The freight transportation services sector in Tamil Nadu is heavily dominated by road transport. For instance, export-import cargo movement via rail to/from ports in the state on a large number of corridors has a share of only 10%. Further, the rail traffic movements in the state are largely confined to within state or nearby states, with long lead inter-state rail movements dominated by road transport. Also, coastal shipping services and domestic container rail services are limited and confined to only a few routes.

The government plans to bring together public as well as private sector participation in order to start container rail services on strategic routes, along with promoting intermodal transportation by identifying how rail routes can be connected to shipping routes – a step that is bound to result in cost effective services. Further, towards improvement in the State’s cold chain infrastructure, fiscal support will be provided to logistics or trucking companies for the purchase/retrofit of reefer trucks.

The Tamil Nadu Logistics Policy and Integrated Logistics Plan 2023, was launched this month with focus on advancing the infrastructure and logistics sector in the state. The Plan includes fiscal incentives for logistics service providers, technology providers, and integrated logistics park developers. It also provides a one-time reimbursement of 100% of the patent registration fees and a one-time cash award of 50% of technology adoption cost. The Plan also offers a 25% subsidy on the capital cost for setting up green and sustainable initiatives for integrated logistics park developers.

The provision of fiscal incentives will be extended to the following logistics facilities and activities as defined below:

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