India’s Approval Process for Logistics and Connectivity Projects: New Rules Announced
As per a revised format announced by the government, large scale project proposals in India must clearly state whether they contain components of logistics or infrastructure connectivity. Foreign stakeholders should note that if they propose to add value to India’s logistics and connectivity infra sectors as part of a project, and intend to spend INR 5 billion or more, the project proposal must be first examined by the network planning group (NPG), which is set up under the PM Gati Shakti Master Plan for Multi Modal Connectivity. The NPG includes representative from multiple ministries and bureaucratic bodies. The goal is to streamline project planning and ensure new projects are at tandem with existing and approved upcoming infrastructure plans. An online portal associated with PM Gati Shakti also provides pertinent information in an accessible manner, enabling cost efficient and detailed project reports.
The Indian government has now aligned its rules for approving logistics and connectivity projects with the PM Gati Shakti Master Plan for Multi Modal Connectivity. As per a memorandum issued by the federal Finance Ministry on April 28, 2022, the approval format for Public Investment Board (PIB)/Delegated Investment Board (DIB) project proposals has been amended for projects in the infrastructure and logistics sector, where the proposed investment is for an amount of INR 5 billion or above.
The revised format will be applicable for all PIB/DIB proposals for new projects in the connectivity sector submitted on or after April 28, 2022.
Foreign investors must note that these amendments are aimed at rationalizing the whole project approval process, with the intention of increasing data accessibility and transparency. Further, with the digitization of the process through the GatiShakti Master Plan, logistics costs involved in physical recce and planning processes are also expected to reduce considerably.
What is the new format for granting project approval?
As per the revised format, project proposals must clearly state whether they contain components of logistics or infrastructure connectivity. If they propose to add value to these sectors via the project and are worth an investment value of INR 5 billion or more, the project proposal must also mention whether it has been examined by the network planning group (NPG). The NPG has been set up under the PM Gati Shakti Master Plan. As per the government, this step will promote effective and efficient planning of infrastructure projects and thereby reduce costs.
To streamline implementation, the Department for Promotion of Industry and Internal Trade (DPIIT) has created a national master plan digital platform and has conducted several training sessions with various government departments. The portal will help in streamlining data and increase its availability to accomplish the following goals:
- Use latest satellite imagery for visual understanding
- Facilitate coordination among all stakeholders
- Synchronize implementation of projects
- Offer planning tools for route planning
- Implement dashboard-based periodic monitoring for progress
- Facilitate land acquisition, permissions, and congestion reduction
Through the portal, all the relevant information will now be available at a click. For instance, if the railway ministry is planning a project on a specified route, the portal will update whether the proposed track is crossing through public land, private property, forest land, canal, or highways. Thus, project proposals that are linked to such logistics planning can cross check the relevant information on the portal before finalizing the detailed project report. Foreign investors can capitalize on this development by gathering information and intelligence at reduced costs, without needing to invest heavily in physical verification processes or reaching out to multiple administrative channels.
What will be the role of the NPG in granting approval?
The NPG is an integrated infrastructure network planning group, which includes representation from various connectivity infrastructure ministries and departments, involving their heads of network planning division for unified planning and integration of the proposals.
All the departments will approach the NPG first for approval before making a detailed project report at the planning stage. Once the NPG’s clearance is granted, the project will follow the normal procedure of approval by the finance ministry and the Cabinet, depending upon their scope and scale.
What is the PM Gati Shakti Master Plan?
The PM Gati Shakti National Master Plan, which was approved in October 2021, is a digital platform to bring 16 Ministries including Railways and Roadways together for integrated planning and coordinated implementation of infrastructure connectivity projects. It envisions the development of multi-modal connectivity to economic zones and boost last mile connectivity, in convergence with the National Infrastructure Pipeline and National Monetization Pipeline, all of which cumulatively seek to transform Indian infrastructure and logistics connectivity.
The Union Budget 2022 has focused its attention on the PM Gati Shakti Plan, to achieve capital expenditure-led infrastructural development in the country. The national master plan has a three-tier system based institutional framework for roll-out, implementation, monitoring, and supporting the planned goals:
- Empowered Group of Secretaries (EGOs): EGOs will be headed by Cabinet Secretary and will consist of Secretaries of 18 ministries as members and the head of the logistics division as member convenor. The EGOS are given the mandate to review and monitor implementation of the PM GatiShakti national master plan to ensure logistics efficiency. It is empowered to prescribe the framework and norms for undertaking any subsequent amendments to the master plan. They will also look at the interventions required to meet the demand side, such as efficiently transporting bulk goods on the requirement of various ministries like steel, coal, fertilizer, etc.
- Network Planning Group (NPG): It will consist of the heads of the network planning wing of respective infrastructure ministries and it will assist the EGOS.
- Technical Support Unit (TSU): The TSU will ensure overall integration of networks, enhancing optimization to avoid duplication of works for holistic development of any region as well as reducing logistics costs through micro-plan detailing.
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