The concept of multi-modal logistics parks (MMLP) has evolved over time. There is no standard definition of an MMLP. Previously, any logistics park with intermodal connectivity and more than two modes of transport was considered an MMLP. Various ministries and departments have given different definitions. The Ministry of Road Transport and Highways (MoRTH) defines an MMLP as a freight-handling facility with a minimum area of 100 acres (40.5 hectares), various modes of transport access, and other facilities such as mechanised warehouses, specialised storage solutions such as cold storage, mechanised material handling, intermodal transfer container terminals, and bulk and break-bulk cargo terminals. The Ministry of Commerce, in the draft policy on logistics parks and terminals (LPTs), defines an MMLP as a large-scale LPT that is served by a minimum of two modes of transport and covers a minimum area of 50 acres. There are different agencies responsible for executing an MMLP project. They include MoRTH, the National Highway Logistics Management Limited (NHLML), the Indian Railways and the Dedicated Freight Corridor Corporation of India.
The need to set up an MMLP arose from a set of challenges, including issues regarding acquisition and consolidation of land above 50 acres, land use change, and obtaining approvals from state governments. These challenges alone result in a delay of around four to five
years before an MMLP.is even set up. Other challenges include issues with provision of railway sidings and their approval and construction, lack of proper and adequate road connectivity, acquiring approvals from the state governments for electricity and water connections, acquiring environmental clearances, and inter-ministerial committee approvals being handled by the department of customs.
Initiatives undertaken in setting up MMLPs
The government is taking steps to address the challenges and issues that arise in setting up MMLPs. As part of its efforts to reduce the cost of logistics, the Cabinet Committee of the Government of India has approved the creation of 35 MMLPs across the country through NHLML. NHLML is a new company formed and fully owned by MoRTH. It was created for the development, operation and maintenance of MMLPs, port connectivity projects, ropeways and other innovative and alternative mobility solutions.
NHLML is working on resolving the challenges being faced in setting up MMLPs. The 35 MMLPs that are going to be created in the country will be developed under the public-private partnership (PPP) model, and the National Highway Authority of India (NHAI) has been mandated with the development of these MMLPs.
In 2017, the government conducted a study to identify the locations of the 35 MMLPs to be set up. Each of these MMLPs is to have more than 100 acres of land. Of these 35 MMLPs, construction is under progress at Jogighopa, Assam, which has riverine connectivity. Two other MMLPs coming up at Nagpur and Chennai are at the request for proposal (RfP) stage. The Nagpur MMLP is a joint venture between NHLML and Jawaharlal Nehru Port Trust (JNPT). It is spread over around 230 acres of land, and has an additional 150 acres of land available for any industrial expansion and growth in the future.
The other MMLPs in the pipeline are at various stages of progress. Detailed project reports are being prepared for eight MMLPs including Indore and Bengaluru, while the remaining 23 are at the pre-feasibility study or some other stage. These MMLPs are expected to be handed over to their respective PPP partners for development by the end of 2024.
MMLP business model
These 35 MMLPs will use a “hub-and-spoke” model. This would draw the associated costs down and strategically integrate highway projects and other connectivity initiatives such as inland waterways, and railways with the freight ecosystem. As per the management model approved by MoRTH for implementation of the MMLPs, special purpose vehicles (SPVs) are to be created with the joint participation of central and/or state governments and other stakeholders such as Rail Vikas Nigam Limited (RVNL) for rail sidings, etc. The central government and its agencies will provide external trunk rails and road connectivity infrastructure.
These SPVs will take up the development of the MMLPs through the concessionaires on a PPP model. Model concession agreements and RfPs are being approved by MoRTH for the selection of these concessionaires. Additionally, any returns from the investments made by an SPV will be shared between the SPV constituents in proportion to their equity contribution.
Structure of an MMLP
The broad structure of an MMLP chiefly consists of MoRTH, NHAI and NHLML.
NHLML infuses a certain amount of equity through external connectivity and infrastructure, including rail siding and road connectivity. The Indian Railways also participates in the setting up of an MMLP through RVNL, while state governments offer a certain amount of equity in terms of the land that is provided. Together, these parties broadly constitute the SPV for an MMLP project. For example, for the Nagpur MMLP, JNPT and NHLML are the main parties in the SPV.
A concession of 30 years is granted to the developer on a design, build, finance, operate and transfer basis. Additionally, a facility for a 30-year extension is also provided to the existing developer on right of first refusal basis.
With respect to ports, concepts have been changing in the last several years. Earlier, ports were considered terminals by port operators and shipping lines. They were the endpoints or start points of a ship’s journey. However, over time, ports have become important transit points, and their connectivity to the hinterland determines the efficiency of the supply chains they serve. The presence and reach of a port in hinterland operations, with direct access to customers, improves the marketability of that port with the shipping lines.
Many major port operators such as Adani Group and PSA have been making acquisitions over the past few years in hinterland terminals. These groups have also shown interest in the RfPs for the Nagpur and Chennai MMLPs. The investments and synergies of such major port operators will make a big difference to these MMLPs.
Based on inputs from a presentation by Karunakaran Sathianathan, Independent Director, National Highway Logistics Management Limited, at the Ports in India conference