Govt unveils new rules for setting up ICDs, CFS’ and air freight stations

Our Bureau Mumbai | Updated on November 17, 2020 Published on November 17, 2020

The revised land licence fee calculation could make the Tughlakabad ICD unviable for Concor (file photo)

The government will discourage setting up of new inland container depots (ICDs) within 200 km of a connecting or the nearest serving seaport and has decided against permitting new ICDs to be built within 100 km of an existing facility, according to the revised policy for developing such dry ports.

Rail transport is price competitive with road transport when the lead distance is more than 200 km. Rail linked ICDs are favoured at inland locations, with a lead distance of up to 1,500 km in north India.

The new rule for setting up ICDs is expected to boost direct port delivery (DPD) and direct port entry (DPE) between the hinterland and ports, the Central Board of Indirect Taxes and Customs (CBIC) said.

The country will be grouped into three areas – green, blue and red zones – for the purpose of opening new ICDs, container freight stations and air freight stations.

States low on ICD/CFS infrastructure will be listed under the green zone and will be open for setting up new dry ports.

In states where proposals can be accepted only for specific trade generating locations, with no existing facilities or with over-utilised facilities, will be grouped under the blue zone.

States identified under the red zone having adequate ICD/CFS infrastructure may be closed indefinitely for building new CFS. However, in exceptional cases, new ICDs may be approved in trade generating locations with high export and import potential in need of new facilities in states and union territories not listed in the green and blue zones.

The inter-ministerial committee (IMC) that vets proposals for setting up new facilities can relax distance rules in green zones to support infrastructure development in states with a limited logistics network.

The IMC can approve creation of additional facilities near existing ICDs (in all three zones) if demand exceeds the existing capacity of ICDs/CFSs in trade generating locations.

Development of ICDs along waterways will be encouraged, with relaxations being given in geographical zone and distance rules.

Approval for new ICDs directly along or linked with dedicated freight corridors will be accorded with no more than one ICD directly connected with these corridors, within chargeable distance of 100 km in both directions.

New CFS' which are linked to an ICD will not be allowed. Only CFS' connected to ports in permissible zones will be allowed after considering the existing capacity and utilisation parameters.

While screening applications for setting up airfreight stations, the IMC will only consider the demand-supply gap before taking a call.

The minimum threshold performance will be 7,200 twenty-foot equivalent units (TEUs)/ consignments per year (two way) for an ICD and 1,200 TEUs/consignment per year (two way) for a CFS. There is no threshold performance for an air freight station.

An ICD should have a minimum area of seven hectares, of which at least four hectares should be a Customs Notified Area, while one hectare should be devoted for DPD and DPE requirements.

For states in the green zone, ICDs with three hectares for Customs Notified Area and one hectare for DPD and DPE could be considered.

The minimum area for a CFS will be two hectares, while 1,000 square metres of covered area each for exports and imports should be made available for air freight stations.

“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,” said K Ravichandran, Senior Vice-President and Group Head, Corporate Ratings, ICRA.

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Published on November 17, 2020
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