Kerala is readying policies and infrastructure to tap the inherent opportunities in the logistics sector, especially given that operations will soon commence at the strategically located Vizhinjam International Container Transhipment Terminal. Alongside the International Container Transhipment Terminal in Kochi, the Vizhinjam terminal holds potential to turn the state into India’s prime logistics hub, according to stakeholders in the sector.

Releasing the state’s draft logistics policy recently, Industries Minister P Rajeeve announced investment subsidies for logistics parks — ₹7 crore for a 10-acre logistics park and ₹3 crore for a five-acre mini-park. The draft policy also recommends declaring logistics parks as industrial zones and establishing a single-window system to approve them.

Besides allowing industrial land use for logistics services, it proposes formulating skill development projects in the areas of storage, transportation, and other related services. It recommends stamp duty exemption for logistics parks and mini-parks, and high-level panels for coordinating and approving proposals.

Consuming power

“Kerala consumes more than six per cent of the country’s fast-moving consumer goods. The government intends to tap this potential through a comprehensive policy,” says Suman Billa, Principal Secretary, Industries Department.

According to a report by the Kerala State Industrial Development Corporation (KSIDC), the state’s wealth of natural resources offers potential for developing niche logistics sectors. Verticals such as cold chain logistics, agro-processing, spices, handicrafts, coir, and rubber require specialised logistics and packaging services.

It points to the need to explore new sectors such as e-commerce, express delivery, and reverse logistics. The adoption of digital technologies and innovations such as AI and blockchain can enhance logistics efficiency and transparency, it adds. 

KSIDC Chairman Paul Antony says Kerala has limitless possibilities in the logistics sector and the industry players have a big role in tapping it.

Natural advantages

Kerala’s long coastline, a string of big and small ports, 44 rivers flowing from the Western Ghats into the Arabian Sea, and the vast network of backwaters make it ideal for developing waterways transport on a large scale. Its four international airports and extensive rail and road networks promise multimodal connectivity.

The KSIDC report also mentions potential areas for investment, including a coastal economic zone in the Malabar region with a focus on logistics, among other sectors; developing inland water transport and coastal shipping for cheaper and faster movement of cargo and passengers; and building fishing harbours and fish processing centres to boost the export potential of marine products.

“The government intends to submit the policy for approval by June, after considering the suggestions from stakeholders,” says S Harikishore, Director, Industries Department, and Managing Director, KSIDC.

Cold chain capacity

Other areas mooted for investment include the construction of modern, organised, automated and specialised warehousing facilities, especially for perishable goods; multimodal logistics parks for seamless movement of goods; development of green packaging solutions using biodegradable or reusable materials such as bamboo, cardboard, paper or corn-starch; and digitisation of logistics operations, including use of blockchain technology, to enhance supply chain visibility, real-time tracking, and transparent transactions.

The state government has invested in building a cold chain infrastructure for the storage and transport of perishable goods such as fruits, vegetables, dairy products, and seafood. This investment is crucial in promoting the local economy, as Kerala is among the country’s leading producers of agricultural and marine products.