New Delhi: The Jammu and Kashmir government on Thursday announced the setting up of logistic parks in the mountain state in order to bring down delivery costs of commodities from 30% to 10%.

Presenting the budget for 2018-19, state finance minister Haseeb Drabu said, “The big idea of this budget is to move the economy to a frontier of lower logistics costs. The only way to reduce transactional and inventory management costs which are hurting our businesses is to bring down the logistics costs to sub 10 per cent levels." Logistics account for 25-30% of delivered costs in the Jammu and Kashmir’s economy.

Announcing a dry port each in Jammu and Kashmir regions, Drabu said, “A well- developed logistic sector will not only increase our trade activity across all sectors but will also enhance the competitiveness of our business."

To implement the projects, the state government already has an in-principle understanding with the government of Dubai and its logistics arm DP World. The three parties will get into a joint venture partnership to build a logistics hub.

Notably, the centre under its ambitious Rs8 trillion Bharatmala programme has already sanctioned a logistics park in Jammu—one of the 24 identified on national corridors that will cater to key production and consumption centres accounting for 45% of India’s road freight.

Experts believe the move will help make the state more competitive from the logistics perspective.

Jaijit Bhattacharya, partner and head, economic, regulatory and policy advisory at KPMG said, “This is a much needed infrastructure which will make J&K more competitive from a logistical perspective. It would be even more productive if the logistic parks are multimodal in nature, supporting trucking and rail cargo intershipment."

Manish Sharma, partner and logistics leader at PwC India, says the proposal to develop a logistics park is a badly needed intervention given the high cost of logistics to businesses in the state. A logistics hub will also bring in reliability, thus improving the efficiency of supply chains for agriculture produce as well as industrial products manufactured in state. The right location along with proper connectivity is crucial for such logistics parks.