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The Central Board
of Indirect Tax and Customs (CBIC) has notified revised policy and guidelines
for setting up of Container Freight Stations (CFS), Inland Container Deport
(ICD) and Airfreight Stations (AFS).
The revised policy
aims to boost investment in CFS/ICD sector in underdeveloped regions in India,
while the approvals in regions where already high concentration is there will
be discouraged except in exceptional cases. The locations will be classified as
Green, Blue or Red. While, the green zone will be the locations where the
ICD/CFS concentration are low and will be open for new proposals, in case of
blue zones the proposals will be accepted only based on specific trade
generating locations and in red zone, the new proposals may not be accepted,
except in exceptional cases. Further, there are also distance norms between two
facilities and from ports. The approvals will be in consonance with the national
logistics policy/action plan.
K Ravichandran,
Senior Vice President and Group Head, Corporate Ratings, ICRA commented, “The
new policy considers the issues faced by the sector; including regional
disparities in the concentration of facilities, with a high concentration of CFS in
Western and Southern regions and the adverse impact of new initiatives like Direct
Port Delivery (DPD)/ Direct Port Delivery (DPE) on the CFS sector. While the
impact on volumes due to DPD implementation has stabilised to some extent, the
margins have witnessed pressure and with growing investments in warehousing
space, only CFS players with larger logistics offerings allowing them to re
position their services will be able to continue in the long term. Hence, the
zoning and distance rules in the revised policy will aid in more balanced
development in the sector and prevent the concentration of facilities which will
improve the viability of existing/upcoming facilities by reducing competitive
pressure.â€Â
ICRA notes that the
revised policy has factored the developments in the sector in the last two
decades, including the growth in volumes during this period; geographical
concentration of CFS/ICD; implementation of schemes like DPD/DPE and other
automation and efficiency improvement measures; and also, the infrastructure
developments like Direct Freight Corridor and inland waterways.
Sai Krishna,
Assistant Vice President and Associate Head, Corporate Ratings, ICRA informed,
“The policy also aims to encourage the development of facilities along
infrastructure corridors like railway freight corridors and inland waterways,
which will complement Gov’t aim on improving multi modal transportation and
logistics in India. These coupled with the zoning and distance guidelines
should aid in more rational and balanced capacity additions in these segments
going forward, which should also be favourable for the credit profile of the companies
in the sector in the medium to long term.â€Â
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INDUSTRIAL PRODUCTS FINDER (IPF) is India’s only industrial product portal. Referred to as the ‘Bible’ of the manufacturing sector in India,
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