Latest News | New Policy for Setting Up ICD, CFS to Help in Balanced Development of Ports Sector: Icra

Mumbai, Nov 17 (PTI) The zoning and distance rules in the revised guidelines for setting up of container freight stations, inland container depots and airfreight stations will aid in more balanced development in the ports sector, ratings agency Icra on Tuesday said.

Besides, it will also prevent concentration of facilities which will improve the viability of existing/upcoming facilities by reducing competitive pressure, according to Icra.

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The Central Board of Indirect Taxes and Customs (CBIC) had recently issued the revised policy and guidelines for setting up of inland container depots (ICD), container freight stations (CFS) and airfreight stations (AFS) to address the issues of geographical disparity and concentration and aims to align future developments with projects like rail freight corridor and inland waterways.

The revised policy aims to boost investment in the CFS/ICD sector in underdeveloped regions in the country, while the approvals in regions where already high concentration is there will be discouraged except in exceptional cases, Icra said.

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The agency noted 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 direct port delivery/direct port entry.

Besides, it has also taken into consideration other automation and efficiency improvement measures; and also, the infrastructure developments like Direct Freight Corridor and inland waterways, the ratings agency said.

"The new policy considers the issues faced by the sector; including regional disparities in concentration of facilities, with high concentration of CFS in western and southern regions and the adverse impact of new initiatives like (DPD/ DPE) on the CFS sector," said K Ravichandran, Senior Vice President at ICRA.

As per the revised policy, the locations will be classified as green, blue or red with green indicating the locations where the ICD/CFS concentration are low and will be open for new proposals.

In the case of blue zones, the proposals will be accepted only based on specific trade generating locations and in the red zone, the new proposals may not be accepted, except in exceptional cases, as per the revised policy and guidelines.

Further, there are also distance norms between two facilities and from ports. The approvals will be in consonance with national logistics policy/action plan, according to Icra.

While, the impact on volumes due to DPD implementation has stabilised to some extent, Ravichandrana said, 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 concentration of facilities which will improve the viability of existing/upcoming facilities by reducing competitive pressure," he added.

The policy also aims to encourage development of facilities along infrastructure corridors like railway freight corridors and inland waterways, which will complement the government's aim on improving multi-modal transportation and logistics in India, said Sai Krishna, Assistant Vice President at Icra.

"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 medium to long term," he said.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)