Uttar Pradesh is on its way to establish itself as a favourable destination for investments. The decision to accord industry status to the warehousing and logistics sector in Uttar Pradesh is a case in point. This decision follows the changes initiated in labour laws so as to allow existing and new industrial units in the state to help alleviate post COVID-19 distress. According to the state’s Industrial Development Minister, Satish Mahana, the warehousing and logistics sector has immense potential to create job opportunities that are required to address the unemployment crisis faced by migrant labourers returning from other states due to COVID-19 lockdown. He further added that operations of warehousing & logistics sector will now be considered as industrial activities by all state development authorities in the context of land-use.
A report by JLL, “COVID-19: Industrial & Logistics Sector in India. Impact and Opportunities,” states that once lockdown is lifted, in the medium-term there will be an uptake in demand of urban logistics and in-city warehousing. The report highlights that sectors such as FMCG, e-commerce, pharmaceuticals, and cold storage will see an increased growth and demand for the additional warehousing spaces. The report adds a caveat that government policy and infrastructural support will accelerate activity.
The decision taken by the Uttar Pradesh government must be seen in this light. It will make financial borrowing and setting up of new warehouses easier in the state and will attract a large number of participants in the sector. The decision is likely to attract investments supporting the various projects of the state such as Jewar airport, inland waterway, multi-modal transport and logistics hub, etc. Strengthening of warehousing and logistics sector in the state will also complement state's unique location advantage with proximity to National Capital Region (NCR).
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The state government’s decision will help reduce the cost of setting up of parks and units by a fair margin. Accordingly, warehousing and logistics units will pay 1.5 times of the industrial rate to industrial development authorities for allotment and land use of areas reserved for industrial activity, which will enable substantial cost saving compared to existing costs of establishing units in the sector as land costs will be reduced to almost one-third. The activities of warehousing and logistics parks and units will be allowed for land-use of 'industrial land' of all industrial development authorities in accordance with the provision of 'UP Warehousing & Logistics Policy 2018'.