Tamil Nadu Government unveils logistics policy, aims to cut costs; suggests incentives

Desired outcomes include a reduction in logistics costs and the use of private equity, supported by initiatives such as tax incentives for truck companies, container freight stations, warehouse operators, shippers, start-ups and technology service providers and other related businesses.

The government “intends to offer various tax incentives to market participants, operators and developers to improve the efficiency and visibility of trade and encourage business opportunities through private participation in the logistics sector,” the policy said.

The vision of the policy, released by Prime Minister MK Stalin in the Secretariat, is to promote an integrated, reliable, cost-effective and sustainable logistic system in Tamil Nadu for improved competitiveness and accelerated economic development.

The Government of Tamil Nadu, in coordination with the Ministry of Railways and through private participation on a pilot basis, would promote the uptake of container rail services and Kisan rail services on strategic routes under the market development approach.

“Strategic Coastal Shipping Routes” would be evaluated and identified to encourage and promote intermodal transport that would result in cost-effective services.

Coordination with relevant authorities to improve the quality of air cargo-related services, cooperate with the Central Bureau of Indirect Taxes and Customs and other authorities and operators to take measures to reduce the dwell time in air cargo complexes and seaports.

The government would extend the existing one-window clearance to logistics activities under the aegis of Guidance Tamil Nadu and FaMe TN Department to facilitate business transactions.

Identifying skills gaps related to logistics job profiles and creating a “Logistics Sector Skills Plan” is one of the initiatives to upskill the workforce. The provision of health and medical insurance for state-registered heavy-duty drivers at a nominal cost would also be explored.

All of these proposed initiatives are part of strategic interventions for cost-effective logistic services by supporting market development. Strategic goals include enabling an integrated and robust development of logistics infrastructure, as well as promoting the availability of cost-effective and high-quality services.

Adopting new-age technologies, enabling skill development and building resilience and sustainability in the logistics ecosystem are among the key objectives.

The desired results are the reduction of logistics costs for export-import and domestic freight, the use of private participation for the development of logistics infrastructure and the formulation of an effective coordination mechanism between state and central agencies to facilitate and implement initiatives in the logistics sector.

Other outcomes outlined in the policy include Tamil Nadu’s consistently high ranking in the Union Government’s LEADS (Logistics Ease Across Different States) Index, as well as improved economic growth and job creation.

Measures to achieve the goals include the use of the GIS (Geographical Information System) layers of the state master plan, which is being prepared within the framework of PM Gati Shakti’s national master plan, to enable integrated planning and connectivity improvement. Identifying and solving existing connectivity bottlenecks and developing new infrastructure is another area of ​​intervention.

One of the proposed interventions is the earmarking of land in emerging industrial parks, clusters for truck terminal/yard development and for carrying out joint logistic activities. “The development of such facilities is preferably carried out through private participation. The Government of Tamil Nadu will identify unused factory buildings within the existing industrial parks/areas/clusters in the state and make them available for logistic activities wherever possible.”

The government would identify and designate land parcels of at least 50 acres in strategic locations for the development of multi-modal logistic parks, logistic parks, warehousing clusters and private freight terminals (PFT).

The tax incentives would apply for 5 years from the date of “policy promulgation” and a further extension could be considered depending on effectiveness and evolving requirements.

Proposed incentives include a one-time reimbursement of 100 percent of the patent registration fee in India for technology vendors, start-ups and other business entities developing technology-enabled solutions to improve logistics efficiency, subject to a cap of Rs. 25,000 per patent.

One-time 100 percent vehicle registration fee and road tax refund for 1 year for refrigerated trucks including retrofit capacity over 15 tons by logistic trucking companies in Tamil Nadu. The tax incentive is granted for registering the first 500 reefer trucks in the state during the insurance period.