Draft Policy Document

Development of Multimodal Logistics

Parks

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1. Introduction
Freight movement in India has doubled to ~2,300 Bn Ton Km in FY15, from ~ 1,200 Bn from
FY 08. Freight movement in the country is expected to continue its growth trajectory, with an
expected annual growth rate of 8-10% over the next ten years. With this expected growth in
freight movement in the country, there is a need to focus on improving the logistics efficiency
to reduce the overall cost and time of the freight movement in India.

Freight Logistics, comprising transportation, warehousing and value added services (VAS)
spanning road, rail, sea and air, acts as an enabler and as a catalyst, spurring economic growth.
India’s rankings on global indices related to logistics performance, like the World Bank driven
Logistics Performance Index (LPI) – where India has moved up in ranking from 54 to 35 – and
Ease of Doing Business (EoDB), reflect that the country is heading in the right direction. However,
there still is need for focused action – the marginal improvement in key sub-metrics, like Freight
movement time and Freight cost parameters of LPI, point towards the same.

India’s freight modal mix is heavily skewed towards roadways with roadways constituting 60%
of total freight carried in the country, as against railways which constitutes ~32% of freight
movement. Further, more than 50% of the long haul freight movement happens by road.
Freight movement by road is typically 25 – 30% more expensive than railways for long haul
routes, thereby increasing the overall freight transportation cost in India. Infrastructure to
enable seamless multimodal freight transfer is critical to ensure efficient freight movement in
the country, with first and last mile through road and line haul movement through more
efficient modes such as railways, waterways, etc.

In addition, the warehousing market in India is highly fragmented with a majority of

warehouses less than 10,000 sq.ft.. ~90% of the warehousing space in the country is
controlled by unorganized players with smaller sized warehouses with limited mechanization.
Fragmented warehousing footprint results in higher average inventory holding, in addition to
resulting in higher storage and handling losses, driven by lower level of mechanization.

The aforementioned issues have resulted in higher logistics cost in India compared to other
developed countries. For instance, the logistics cost in India is ~13% of its GDP as against
~8% in the USA. It has thus become essential to create not just the highest quality of road

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infrastructure but also adequate infrastructure for enabling seamless multimodal freight
transfer and world class storage and handling.

Acknowledging the importance for inter-modality in transportation, the Hon’ble Finance

Minister made the following remarks in his Budget 2017-18 speech:

“An effective multi-modal logistics and transport sector will make our economy more
competitive. A specific program for development of multi-modal logistics parks, together with
multi modal transport facilities, will be drawn up and implemented”

The Ministry of Road Transport & Highways (MoRTH) has decided to develop multimodal
logistics parks (MMLPs) to address the aforementioned issues and to improve the logistics
efficiency in the country.

1.1 Introduction to Multimodal Logistics Parks

A Multi-Modal Logistics Park (MLP) is basically as a multi-modal freight-handling facility with a
minimum area of 100 acres comprising mechanized warehouses, specialized storage
solutions such as cold storage, facilities for mechanized material handling and inter-modal
transfers container terminals, bulk / break-bulk cargo terminals. In addition, a Multi Modal
Logistics Park is expected to provide value added services such as customs clearance,
provisions for late stage processing activities such as sorting / grading and cold chain,
aggregation / disaggregation, etc. to handle freight.

Multimodal logistics parks are expected to provide four key services as explained below:

a. Freight aggregation and distribution: Logistics parks acting as freight aggregation

and distribution hubs will enable line haul freight movement (between hubs) on efficient
modes such as larger sized trucks, rail, waterways, thereby aiding in reduction of
overall freight transportation costs.

b. Multimodal freight transportation: Road, rail, air and waterway connectivity of the
Logistic parks would enable efficient multimodal freight transportation. This shall aid
freight transportation on line haul (between hubs) to shift from road to rail and
waterways (wherever possible), thereby reducing the freight cost. In addition,
completion of the proposed rail dedicated freight corridors (Delhi to Mumbai, Ludhiana

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 to Kolkata) and focus on developing Coastal and Inland Waterways shall accelerate
adoption of rail and waterways for freight movement respectively.

c. Storage and Warehousing: Modern mechanized warehousing space, catering to the

needs of different commodity groups would be another outcome.

d. Value added services: Logistics parks will provide value added services such as
customs clearance with bonded storage yards, quarantine zones, testing facilities,
warehousing management services, etc. In addition, provisions will be made for late
stage manufacturing activities such as kitting and final assembly, grading, sorting,
labelling and packaging activities, re-working, return management, etc. as needed.

e. Reduction in inventory holding costs: With higher proportion of mechanized

material handling, warehousing in logistics parks will enable reduction in storage and
handling losses. In addition, availability of a consolidated warehousing zone will enable
organizations to reduce their average inventory holding and the associated costs.

f. Reduction in freight transportation lead times: Customs clearance at logistics parks is

expected to enable reduction in waiting time at the ports and thereby reduce the freight
transportation cost and time for export cargo. In addition, provisions for packaging/
repacking and return management at the Logistics Parks will enable a reduction in
overall supply chain lead times.

2. Multimodal Logistics Parks- Location Norms and Design

Principles

There is a need to develop Multimodal Logistics Parks in all the major production and
consumption centres in the country. Locations for development of Logistics Parks shall be
prioritized based on the amount of freight flow, need for trunk infrastructure connectivity and
the extent of competing facilities available. With a view to the economic viability of the
Logistics Parks, Logistics as a sector will be considered for grant of ‘Infrastructure status’.
Since customs bonding facilities for export/import of cargo, and quarantine facilities for
clearance of food items would be mandatory, the requisite provisions will be made by involving
the concerned Ministries/ central agencies.

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2.1 Norms for Location Identification

35 locations which account for ~50% of the road freight movement have been identified for
developing multimodal logistics parks in phase 1. An indicative list of some locations and
their economic potential is at Annexure I. The prioritized list of 35 locations is provided in
Annexure 2.

The land parcel for development of Logistics Parks shall be finalized based on an assessment
of freight flows and the connectivity requirement, within each node.

a. Freight flow assessment: A detailed assessment of the freight flow patterns shall be
conducted for each node to understand the direction of the freight movement. Land
parcels along the Highway with maximum freight flows from and to the node shall be
prioritized for development of Logistics Parks. A network of Logistics Parks shall be
developed along the Highways carrying large freight flows to cater to the needs of the
node.

b. Proximity to production and consumption zones: While Logistics parks shall be

developed outside the limits of the city to enable congestion reduction in the city, land
parcels that are closer to the periphery of the city, preferably along the ring roads/ city
bypasses shall be prioritized.

c. Connectivity requirement: Land parcels near National Highways and Railway

network with good access to other modes such port and inland waterway terminals
shall be prioritized for development of Logistics Parks.

2.2 Design Principles

The size and facilities needed at Logistics Parks Facilities needed at each Logistics Park
depend on the key commodities produced and consumed by the individual location. In
addition, the extent of competing facilities catering to the needs of the city shall be assessed to
evaluate the size of the facility needed.

a. Area required for building a logistics park at any particular location will be determined
based on the projected commodity wise freight generating and terminating at that

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 node. The following factors would be considered in estimating the area required:

i. Type of storage needed by commodity – covered, open or special storage

ii. Attractiveness of value proposition of the logistics park for each commodity
group and hence propensity of using the services offered by logistics parks

iii. Average inventory days and seasonality factor of each commodity

iv. Material bulk density and storage norms for each commodity

v. Competing infrastructure catering to the requirements of the city

b. There will be five broad zones:

i. Commodity storage zone – dedicated zones for different types of commodity

and bonded storage yard along with vehicle loading ramps, cross docking
facilities.

ii. Intermodal zone – rail siding area for intermodal freight transfer; terminals for
inland waterways, wherever applicable.

iii. Value added services zone- Package, Re-packaging, Processing, Re-

processing.

iv. Ancillary services zone – dedicated area for other value added services such
as customs clearance, vehicle service area, office spaces, restaurant, Retail &
wholesale, Hotels and entertainment etc.

v. Vehicle parking zone – dedicated area for vehicle parking.

d. Multimodal Logistics Parks can be developed on the following suggested lines:

 50 - 55% of the area allocated for Core Logistics Activities, which includes-
- Warehousing Zone: Open Storage, Covered Storage, Regulated Storage,
Cross Docking Facilities
- Intermodal Areas: Rail Siding, Loading/ Unloading facilities, Inland Waterway
terminal (where applicable) and Air Cargo Terminal (where applicable)

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 - Value Added Services: Labelling, Packaging, Re-packaging, Processing/ Re-
Processing, Kitting, Assembly, Return Management, etc.
- EXIM Clearance: Custom clearance services, bonded storage, testing facilities,
quarantine zones

 10 – 12% of the area allocated for Ancillary Logistics Activities, which includes -
- Vehicle sales and service: Vehicle maintenance, fuel stations (along with air
filling station, puncture repair & pollution check), consumer vehicle sales
- People Service: Lodging, sanitation, dhabas, dormitories for truckers, loaders,
unloaders, etc.
- Office spaces: Office space for Logistics Service Providers, Transporters, etc.

 15 – 17% of the area allocated for truck parking and internal roads for trucks

 10 – 12% of the area allocated for administrative facilities and commercial zone such
as Banks, ATMs, Medical facilities, Retail and wholesale area, Entertainment,
convention centres, etc.

 10 – 12% of the area allocated for landscaping and development of open green zones

 Prevailing standards and norms for safety, operation and maintenance will be
applicable

e. Adherence to ‘Green Principles’ will be encouraged. These would include:

i. Extensive horticulture and plantation along with adequate sewage treatment

ii. Recycling of water for landscaping and horticulture

iii. Use of natural materials like dry stone cladding for exteriors

iv. Use of bio-methanation for treatment of bio waste and for generation of cooking
gas

v. Rainwater harvesting

vi. Provision of single/ double glazed windows with matched U-Factor for increased
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 energy efficiency

vii. Provision of adequate ventilation and natural day light

3. Management Model

Private investment in development of Logistics parks has been muted primarily due to
restricted land availability, lack of dedicated trunk infrastructure connectivity to enable efficient
freight evacuation. In addition, the potential returns for private players from their investments
in end to end development of Logistics Parks including land ownership is limited. Hence, the
role of the Government through a Public Private Partnership (PPP) model is essential in
enabling private investments in development of Logistics Parks. Participation from private
players with prior experience in developing and operating such facilities will ensure that the
learning from global best practices in design and operations are leveraged. Participation from
the Government will ensure land availability as per land use norms, and trunk infrastructure
development, together with fulfilment of regulatory requirements, all of which are critical for
the success of Logistics Parks.

The Project Proponents—Central/State Government/private developer-- can drive the development

of Logistics parks by setting up SPVs with the NHAI and/or other related agencies such as Port
Trusts, IWAI, CONCOR, AAICLAS, Port-Rail Corporation etc. The proponent can assemble the
land required for development of Logistics Parks and the requisite trunk infrastructure would
be provided by NHAI. Wherever relevant, the concerned central agency would be a part of the
SPV; Railways for providing rail connectivity, Port Trust/IWAI for Port/ Waterways connectivity
and AAI for Air Cargo Hubs. The equity participation would be decided by the SPV members,
who would also finalise the appropriate PPP model, Concession terms, period etc.

4. Implementation Guidelines

This section highlights key elements of the execution model, as well as roles and
responsibilities of the concessionaire and the government entities viz., NHAI/central agencies
and State Industrial Development Corporations.

a. Private developers shall be invited for bidding based on approved RFP and contract
document.

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 b. Bidding for each logistics parks may be done separately.

c. Development, operation and maintenance of Logistics Parks shall preferably be done

on a Build Operate Transfer (BOT) model. The Model concession agreement for
development of Logistic Parks may be finalised by the stakeholders/State
Government and specify the following:

i. Bidding parameters
ii. Concession fee
iii. Service parameters.
iv. Concession period
v. Specification and standards
vi. Monitoring mechanism
vii. Incentives and penalties
viii. Facilities
ix. Blue print

4.2 State Government as the key stakeholder

 State Government can provide the land required for the Logistics Park or it can be
assembled/mobilised from private developers, with the said land parcel necessarily
conforming to all prevailing state legislations. State Government shall also facilitate all
the regulatory approvals needed for land use conversion, before an encumbrance free
land parcel is provided to the Concessionaire for development of Logistics Parks.

 State Government Authorities shall facilitate utility connections (Power, Water,

Sewerage, etc.) for the Logistics Parks in a time bound manner and also ensure
seamless movement of trucks into the Logistics Parks with enabling traffic regulations.
In addition, the State Government shall make appropriate arrangement to maintain
Law and Order within and around the Logistics Parks.

 State Governments should plan and facilitate development of Industrial and

Manufacturing Parks adjacent to Multimodal Logistics Parks through appropriate
zoning and master planning norms to ensure that network benefits of co-located
Industrial and Logistics Parks are realized.

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4.2 Role of Concessionaire

The role of the concessionaire is to be defined in the MCA. Broadly, it may include the
following:

i. Funding for the project

ii. Detailed design and engineering responsibilities

iii. Operation and Maintenance of the multimodal Logistics Parks in line with the
service level agreements mentioned in the concession agreement finalized with the
Authority

b) While the overall responsibility of development, operation and maintenance of Logistics

Parks shall rest with the concessionaire, the concessionaire shall be permitted to engage
with third party contractors to outsource certain elements of the Logistics Parks, as needed.
The concessionaire shall be responsible for obtaining all requisite permission(s) from the
concerned authorities for design, construction, operation and maintenance of the site.

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ANNEXURE I

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 Annexure 2

Locations prioritized for development of Multimodal Logistics Parks in Phase 1

S.No. Logistics park location
1 Delhi – NCR (Delhi, Gurgaon, Ghaziabad, Faridabad, Noida)
2 Mumbai (Mumbai, Mumbai Suburbs, JNPT, Mumbai Port, Raigad District)
3 North Gujarat (Ahmedabad and Vadodara)
4 Hyderabad
5 South Gujarat (Surat and Bharuch)
6 South Punjab (Ludhiana, Sangrur, Patiala)
7 North Punjab (Amritsar, Jalandhar, Gurdaspur)
8 Jaipur
9 Kandla
10 Bangalore
11 Pune
12 Vijayawada
13 Cochin
14 Chennai
15 Nagpur
16 Indore
17 Patna
18 Kolkata
19 Ambala
20 Valsad
21 Coimbatore
22 Jagatsinghpur
23 Nasik
24 Guwahati
25 Kota
26 Panaji
27 Hisar
28 Visakhapatnam
29 Bhopal
30 Sundargarh
31 Bhatinda
32 Solan
33 Rajkot
34 Raipur
35 Jammu

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