Madhya Pradesh: Means Business

Logistics Industry

1
 Overview
Overview Madhya Pradesh (MP) – State that means business

 MP is the second largest State in the Country stretching over 308,000 sq kms.
 The State is blessed with large mineral resources of coal, diamond, limestone, methane etc.
 MP is among the top 4 states of the Country for industrial investments.

Economic Snapshot Madhya Pradesh is emerging as a key growth center for the Country

 Per capita GSDP USD 369**

 Gross state domestic product (GSDP) USD 23,983.63 Mn**
 Manufacturing sector USD 8.5 bn**
 Average growth rate 5.5% per annum
(Registered & Unregistered)

Advantage MP Madhya Pradesh has one of the upcoming industrial base in India

 Total electricity generation capacity 6,449.25 MW*

 The State is centrally located
 India’s first greenfield SEZ Indore SEZ
 Investor friendly Government policies
 Industrial Centers 8

Power Electricity generation capacity at present is 6,449.25 MW and estimated to rise to a surplus in 2008-09
 MP is rich in low grade coal suitable for power generation.
 Potential of hydro-energy generation.
 Installed power capacity (MP’s share)
 Hydel Power Generation: 852.7 MW*
 Thermal Power Generation: 2,147.5 MW*

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*Ministry of Power (powermin.nic.in) **Source: Indiastat.com (as on 23 Feb 2006)
 Enabling Infrastructure
• The State is well connected with the rest

RAILWAY NETWORK
of India with almost 425 trains passing
MP IS CENTRALLY LOCATED AND WELL
through the State on a daily basis. Of
CONNECTED WITH ALL MAJOR CITIES IN INDIA
these 175 trains pass through the State

capital Bhopal alone.

• 25 airstrips.**
• Convenient air links from key Indian
GWALIOR cities like Delhi & Mumbai to Bhopal,
Jabalpur, Gwalior, Indore and

AIRPORTS
Khajuraho.
KHAJURAHO • 5 operational airports.
• Indore airport has the capability of
INDORE BHOPAL
handling international cargo.
JABALPUR
• An international airport proposed in
Bhopal.

• The total length of roads spanning MP is

67,600 kms.**
• National highways of 5,200 kms run
ROAD NETWORK

through the State.*

• 18 National highways including trunk
routes of Delhi-Mumbai, Delhi-Chennai,
Delhi-Bangalore, Delhi- Hyderabad.
• The total length of State highways in the
State is 9,885 kms.**
• Convenient linkages to western ports i.e.
Kandla Port, Jawahar Nehru Port Trust.

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*Source: Department of Road Transport & Shipping (morth.nic.in) **Source: www.destinationmadhyapradesh.com
 Madhya Pradesh: A Preferred Investment
Destination
31% of the State under forest Over 2,000 kms of roads India’s 1st operational Offers diverse tourists destinations
cover with a largely unexploited being developed with Greenfield SEZ at Indore catering to various segments of
species of rare, valuable Private Partnership (BOT) tourism such as religious (Bhojpur),
medicinal- herbal plants eco/ adventure (Panchmari), heritage
(Sanchi, Khajuraho) tourism etc.

Over 100 agricultural farms with Third largest producer of

an area of over 20,000 acres is cement in India*
available on lease to investor

Favourable climatic Various blocks available

conditions for cotton for power, cement, iron
and over 40,000 power- and steel units
looms are driving the
textile industry

Largest producer of pulses Over 18,000 technical

and oilseeds in the Country graduates and 230,000
(~75% of soyabean graduates add to workforce
production) each year

Availability of coal and natural gas Over 144 BCM of coal bed 12 blocks with reserves
(G.A.I.L pipeline) along with support methane reserves available totalling 2,585 million tons
from Government to make investment of coal has been identified
in Thermal Power Plants lucrative

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*Source: www.mpsidc.org & Brochure: MP Means Business
 MP: The Right Place with the Right Environment
Savings in Office Space Rates
(A comparison of rates in Central Business Districts)
Fastest mover* in overall
DESTINATION MADHYA PRADESH Mum bai
150

performance among the Ahem adabad Delhi

100
big States in the Country.
50
Bhopal Bangalore

Fastest mover in agriculture Indore Chennai

Hyderabad Pune
Delhi
(740 Kms)
(MPV - 789.5)

Fastest mover in
Ahmedabad Bhopal and Indore have substantial cost
infrastructure development. (570 Kms)
(MPV - 220.63) advantages, even when compared to other Tier
III and IV cities.

Savings in Land Cost

Ranks 2nd in terms of Kolkata
(1350 Kms) (Estimated Values for Multi-
Mumbai Vishakapatnam
governance. (MPV - 613.19) 100% product SEZs)
(780 Kms)
(MPV - 1000) Pune 80%

(800 Kms) Indore

60%
Chennai
(MPV - 206.51) Hyderabad 40%
(840 Kms) Key Markets
20%
(MPV - 257.9) (Distance From
Ranks 3rd in terms of law & Bhopal) 0%

order Chennai MPV – Market

Bangalore (1430 Kms) Potential Value
Jaipur Greater Noida
(1400 Kms) (MPV - 362.84)
(MPV - 254.52)

Chandigarh
Cost of skilled labour is USD
2.4/day vis-a-vis USD 3.5 –
USD 4.0/day in metros
The cost of land is one of the lowest in the Country.
MP is centrally located. The State is at an easy distance from
Even central hubs such as Indore and Bhopal fare
* Fastest mover is the State where the rate of all the key consumer markets in the Country. well against other cities in terms of low land cost.
improvement between 2003 & 2006 was greater
than that between 1991 & 2003

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**Source: India Today (September ‘06 Issue) Source: (Reference: RK Swamy) - Distances rounded off
Industrial Policy: Catalyst for the
Investments
The Government of MP has devised an investor friendly industrial policy,
which is aimed at achieving global competitiveness. The policy emphasizes
on industrial growth in the state through adopting cluster approach,
establishing specialized infrastructure and offering favourable incentives.
The main thrust of this policy is:
• Establishment of a Madhya Pradesh Trade and Investment
Facilitation Corporation which would take decisions about
rationalization of taxes, facilities of mega projects and other related
SPECIAL INCENTIVES
• Special package for Mega Projects on project basis by apex level
investment promotion empowered committee headed by the Chief Minister.
• Industrial investment promotion assistance – 50% to 75% of commercial
tax for 3-10 years
• Concessional registration charges and stamp duty exemption for
Term Loans.
• Interest subsidy on term loan for 5 – years @ 3% to 5%.
• For thrust sector industries, 25% capital subsidy would be provided
limiting up to a maximum of USD 56,000

matters. • Land on 75% concessive rate for Mega Projects limited to USD 4.4
million.
• Enacting an Industrial Facilitation Act and to change the rules of • Entry tax exemption for 5 years.

business with a view to make single window system decisive and result
oriented.
• Developing infrastructure for supporting the identified industrial
• 5 years electricity duty exemption on captive power generation
• 15% capital subsidy to SSI up to USD 33,000 in backward areas
• Infrastructure grant up to USD 0.22 million crore for developing private
sector industrial parks

clusters • Partial reimbursement for Project report, ISO Certification, Patent and
Technology Purchase cost
• Reviving closed down/ sick industrial units by granting special packages.
• Attractive incentive schemes.
Crystal IT Park Indore
CLUSTER APPROACH

SPECIALIZED INFRASTRUCTURE
• Indore – Pharmaceutical, Textile, Food Food Parks Mandsaur, Khargone, Chhindwara,
Processing, IT, Auto Components Hoshagabad, Mandla and Bhind
• Bhopal – Engineering, Biotechnology, Herbal, Stone Park Katni
IT, Food Processing
Herbal Park Rewa
• Jabalpur – Garment, Mineral, Forest & Herbal,
Food Processing Granite Park Chhatarpur
• Gwalior – Electronics, IT, FMCG, Engineering,
Life Sciences Project Bhopal
Food Processing
• Rewa – Refractories, Lime Stone, Forest Based Apparel Park Indore (SEZ)
• Sagar – Mineral Processing Gems & Jewellery Park Indore

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 Doing Business Made Easy Through
MPAKVN
In a bid to build a competitive environment; industries and their ancillaries would be promoted in clusters based on the availability of raw materials,
skilled labour and market potential. Under this Industrial Policy through Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVNs)
scheme, the State Government, has identified industrial clusters. Many of the industrial giants have their establishments in these areas, however 44% of
developed area is still untapped and open for investment.

Area Developed: 1,330 Hectares Area Developed: 2,262 Hectares Area Developed: 790 Hectares Area Developed: 273 Hectares

Allotted: 618 Hectares Allotted: 800 Hectares

JABALPUR AKVN
Allotted: 125 Hectares Allotted: 115 Hectares
GWALIOR AKVN
BHOPAL AKVN

REWA AKVN
Units established: 286 Units established: 326
Units established: 52 Units established: 121
Major Groups:HEG, Crompton Major Groups: JK, Surya Roshini,
Major Groups: Raymond, Hindustan Major Groups: Birla, Jaypee
Greaves, P&G, Godrej, Lupin, IFB, Godrej, Grasim, Cadbury, Hotline,
Crompton Greaves Petroleum, PBM, Ayur
Oswal, Nahar Special Infrastructure: Integrated

Special Infrastructure: ICD, Food Special Infrastructure: ICD, Food Special Infrastructure: Stone Park, infrastructure development centres

Park Park Food Park (IIDC)

Area Developed: 2,492 Hectares

Malanpur, Malanpur
Phase II, Banmore,
Allotted: 1431 Hectares Chainpura,
Siddhgawan,
Units established: 575 Pratappura Total developed area 7,147
INDORE AKVN

Hectares
Rewa, Waidhan
Major Groups: Tata, Ranbaxy, Eicher,
Total allotted area 3,089
Bridgestone, Hindustan Motors, Kinetic, Hectares
SRF, S Kumars, Gajra, Nicholas Piramal, Mandideep,
Pillukhedi,
Mandideep Phase II Total units 1,360
Indorama, IPCA, Bhilwara established
Borgaon, Maneri,
Pithampur, Kheda, Purena
Special Infrastructure: SEZ, Crystal IT
Dewas, Maksi, Growth centres 19
Park, Food Park, Apparel Park Megh Nagar

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Source: MPSIDC
Logistics
Sector Profile : Logistics
Logistics : Evolving Landscape in India

MP’s Infrastructural Backbone of Logistics Industry

MP. Offers a Strong Value Proposition

MP: A Preferred Investment Destination

Way Forward

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 Logistics : Evolving Landscape in India
 Indian logistic market from the manufacturing sector alone is estimated to be around US$ 14.3
bn in 2004 and is expected to increase to US$ 19.54 bn by 2009 with a CAGR of nearly 6.4%. Indian Logistics Market Projections

The contribution of logistics industry to country’s GDP has increased from 7.4% in 1999-00 to
9.3% in 2004-05. 19.54
CAGR 6.38%
 India spends around 13% of its GDP on logistics, compared to a global average of 10-11 %.
Globally better supply chain management has reduced logistics costs by nearly 1% over last 10 14.31 US$ Bn
years. However Supply Chain Management still remains a very new concept for Indian industries
which are increasingly looking to gain competitive edge by adopting logistics and Supply Chain
Management concepts and practice.
 Key trend in the industry is towards outsourcing logistics requirements to Third Party Logistics
(3PL) players. The demand is specially driven by the entry of MNCs and increasing export focus 2004 2009
of Indian companies .The estimated market for 3PL players in 2003 was US$ 250 mn and is
likely to grow at a CAGR of more than 20% during next five years.
 Consistent good performance of the economy (over 8% growth rate), is the key force, driving the Key Contributing Sectors
growth in the logistics sector. Vibrant economic scenario of the country has ignited the activities Automotive Efficient supply chain ensures
continuous assembly lines
in manufacturing/infrastructure sector.
Manufacturing Just in time approach requires
efficient logistics and distribution
Estimated Cost Saving by Reducing Logistics Cost by 1%
Functions At 13% of GDP At 12% of GDP Amount Saved
(US$ bn (US$ bn FMCG Strong distribution is the key to
Indian companies can (US$ bn) success
save substantial cost Transportation 32.45 29.95 2.50
Retail High inventory turnover requires
efficient distribution and
by adopting modern Inventory 23.18 21.40 1.78 transportation
supply chain and Packaging 10.20 9.41 0.78
Healthcare Cold chains are imperative for
logistics solutions Handling and Warehousing 8.34 7.70 0.64 distribution of vaccines and
biological products
Others 18.54 17.12 1.43
Textiles Efficient distribution reduces
Total Logistics Costs 92.72 85.58 7.13 costs

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*(source: Credit Analysis & Research Limited)
Logistics : Evolving Landscape in India
India’s Infrastructure Snapshot
Overview of Logistics Industry
 2 largest in the world with a total of more than
nd

3.34 mn km road length.

Channels of Logistics Components of Freight Logistics  200 km of expressway, 66590 km of National

Roads
Highway
Surface Transport Freight Transportation  128,000 km of state highways and 470,000 km of
district roads.
Warehousing
Roads Packaging  Covers almost all parts of the country with routes

Rail
Railways Freight covering a total length of 63,940 km
Custom Clearing and Forwarding

Inventory Management  20 international airports

Air
 180 minor and intermediate airports
Labeling and Order Processing
6000 km of natural peninsular coastline

Sea

 12 major ports and 187 minor ports

Snapshot of Logistics Operations via Major Channels

Roads Railways Air Water

 Road transport accounts for
85% of passenger traffic and
70% of freight traffic
 Currently Indian roads
handles over 1,176 bn tonnes
Km of freight per annum
 Total number of goods
vehicle has increased from
82,000 in 1951 to 4.04m in
2005
 15% of passenger traffic and 30%
of freight transport
 Freight contributes over 65% of its
revenue
 In 2004-05 it handled 602 mn
tonnes of freight
 95% of revenue comes from the
bulk commodities such as Coal,
iron ore, cement, fertilizers and
food grain. Coal alone constitutes
nearly 50% of all bulk freight
 Cargo handled at airports has
gone up at a CAGR of 7.8%
from 0.65 mn tonnes in 1995-96
to 1.3 mn tonnes in 2004-05
 International cargo handled has
increased at 6.8%per annum,
while domestic has increased at
9.9 % per annum
 5 major airports have accounted
for 90% of total cargo handled
in the country
 Major ports handle 90% of
seaborne trade
 In 2005-06 major ports together
have handled 423.41 mn tonnes
of cargo traffic out of the total
604.58 mn tonnes of cargo from
all ports in the country
 Container traffic has gone up by
14.2% during 2000-2005

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*(source: Business Standard)
 MP’s Infrastructural Backbone of Logistics
Industry
 Madhya Pradesh has a well developed transport infrastructure of roads, rails and State Wise Length of National Highways

airports. 5200 km of National Highway runs across the state with total length of the 6000 Km
3rd largest network of
roads in the state estimated around 67,600 km. The state also has 5000 km of rail 5000
National Highways
among states

Madhya Pradesh
networks with 425 trains passing through the state daily.
4000

Maharashtra
 MP has 5 operational domestic airports. The Indore airport has the capability to

Bihar

Gujarat
Karnataka
Tamil Nadu

orissa
3000

Rajasthan
handle international flights. The mammoth transport infrastructure of the state

AP
UP
2000
provides connectivity with all the key cities and major ports.
1000
 Under the National Highway Development Programme of NHAI, 1254 km of the existing
0
roads are being converted into four lane highway.

Road Map of MP Equidistance Connectivity - Key Strength

Distances of key Cities from Bhopal

Delhi 744 km

Mumbai 779 km

Ahmedabad 568 km

Hyderabad 839 km

Bangalore 1401 km

Kolkata 911 km

Pune 802 km

Vadodara 509 km

Madhya Pradesh is striving to create state-of-the art infrastructure essential to sustain

modern supply chain and logistics industry with a vision to transform the state into a key
logistics hub of the country.

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 Warehousing – A Value Proposition
 The state requires an immediate addition in capacity at strategic locations
Fertilizers,
Pulses, 4.98%

Item-wise Break-up of Warehousing

to ensure quality services to the target market. 2.37%

 The partition of the state has affected its warehousing capacity. The Oil seeds,
17.90%
Government is taking several initiatives to promote investments in this

Capacity 2005-06
Food Grains,
area to rebuild its warehousing and logistics might. 44.17%
Other Food
 The state offers a lucrative utilisation rates of 80-85%, which can be as Items, 2.46%

high as 90-95% at strategic locations.

 The Governments also invites private developers through lucrative Other Reserved
Capacity,
Sugar, 0.41%
business value propositions. 17.85% Tendu Leaves,
9.86%
 The economic growth of the country is further facilitating the growth of the
industry in the State.

Changing Utilisation Trend of Storage Capacity

Capacity Usage & Utilization Rate

1,800,000 95%
1,600,000
Administrative Partition90%
of
Organisations, Others, 0.00%
MP Civil Supplies 1,400,000
Corporation, 4.75% State
Others, 16.59% Farmers, 10.25% Farmers, 11.45% 1,200,000
10.98%
85%
Administrative Co-orperative
Indian Food 1,000,000
Organisations, Societies, 8.09%
Corporation, 800,000
2.63% 5.09% 80%
600,000
MP Civil Supplies 400,000
Corporation, Small Scale Forest
75%
17.13% Producers, Co-orperative 200,000
23.76%
Businessmen, Societies, 38.78%
- 70%
Indian Food 24.91%

1996-97

1997-98

1998-99

2003-04

2004-05

2005-06
1993-94

1994-95

1995-96

1999-00

2000-01

2001-02

2002-03
Corporation,
Businessmen,
5.09%
16.46% Small Scale Forest
Producers, 4.04%
M P Wareho using & Lo gistics C o rpo ratio n Wareho using Utilisatio n C apacity Utilsation

2003-04 2005-06

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 Warehousing - Building Capacity
 Along with the logistical hub for the Country, MP also The Proposed Hubs For Logistics & Warehousing
has a substantial internal demand for warehousing.
 Post partition, around 32% of states capacity was
given to Chhattisgarh. This has created a significant
shortage in warehousing capacity.
 Government is taking several initiatives to upgrade
the existing capacities and building capacities in the
State.
 Madhya Pradesh Warehousing & Logistics
Corporation is the nodal agency of the GoMP with 1.2
million MT of capacity and presence in 232 locations.
 Government also invites private players to take part in
its drive to position MP as the logistical hub of the
Country.
 The Government has identified 11 locations as the
hubs requiring immediate attention and have the
capacity to become the major distribution centers for
logistical activities and management. Further, 23 other
locations require capacity building to meet
requirements.
Most Suitable Locations - Identified hubs for capacity building on
Based on estimated demand an additional capacity the basis of expected demand, urgency of demand, road-rail
of 2.16 Million MT was to be generated between connectivity and availability of land.
2002-06. However, only ~ 1 million MT was Other Potential Locations - Identified on the basis of expected
created during the same period. Hence, there is a demand, road-rail connectivity and availability of land.
shortfall of 1.6 million MTs in capacity.

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 MP Offers a Strong Value Proposition
 Central location of MP facilitates equidistance connectivity with
Key Ingredients of a Logistic Hub
major Indian cities. The strategic location is the key incentive for
Geographic  Being centrally located, MP provides inherent advantage as

MP has Advantage Across All

various industries to establish their logistics hub in the state. location a logistic and distribution hub for companies
 MP is the connecting link between the northern & southern states
and eastern & western states of the Country. All major highways Linkage with other  Well connected through roads, rail and by air with other
cities major cities
and rail routes passes through the state.  Convenient linkages to Kandla Port, Jawahar Nehru Port
etc.
 On completion, the North-South and East-West corridor passing
through the state will provide further impetus to the logistics sector Infrastructure  MP has well developed transport infrastructure.
 Indore airport has the potential to handle international
due to improved connectivity with key metro cities. flights, international airport is also proposed at Bhopal
 Companies can save a maximum of 25% of the transportation cost
by locating their warehouse in MP via locating it in North. Similarly Skilled labour  Cost of labour US$ 2.3 per day as compared to US$ 3.5- 4
per day at metros
saving of 17%, 23% and 16% can be made in MP via locating it in
Labour peace  Man days lost due to strikes & lockouts is less than 0.5% of
southern, eastern and western part of the country. the total available man days
 Since 90% of the operational cost of a logistics company lies in
transportation, substantial savings can be made by locating the
Matrix of Distance From Central vis-à-vis Others parts of country
company in the central region.
North South East West Central
 The peaceful labour environment in the state makes MP a
Distance Distance Distance Distance Distance
favorable business destination.
North 450 2100 1400 1250 750
 Well developed infrastructure of roads and airports facilitates
timely and expedite movement of goods across the country. South 2100 350 1500 1200 1300

East 1400 1500 400 2000 1250

West 1250 1200 2000 350 800

MP’s inherent strength coupled with advantage of
connectivity and cost makes it an ideal investment Central 750 1300 1250 800 300
destination

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MP : A Preferred Investment Destination
 MP provides an ideal combination of location, cost and infrastructure, factors critical for the Container Corporation of
India has 3 operational dry
For entire FMCG products
efficient operations of the logistics industry. The State offers opportunities for logistic P&G have located their
ports in Madhya Pradesh
central warehouse in
service providers specially the 3PL players as more and more companies are outsourcing Bhopal

their logistics requirements to specialized companies.

 The Container Corporation of India has three operational inland ports in the state, at
Mandideep Bhopal, Pithampur Indoor and Malanpur Gwalior. Malanpur,
Gwalior

 Companies in the FMCG, manufacturing and textiles, sectors are increasingly looking at
MP for establishing their storage and distribution networks.
Mandideep,
Bhopal
Proctor & Gamble, the international FMCG giant choose Bhopal to located their central
warehouse for all FMCG products. The cost saving due to critical location has helped the Pithampur,
company in slashing the price of their products, thus gaining a vital competitive edge in the Indore

price sensitive market.

Proposed MP’s Sectoral Hub MP 3C’s Cost Advantage Government Proactive Initiatives
Logistics Dependent Sectors

Major Auto Manufacturing Hub More than 1200 kms of National Highways being 4-

Infrastructure is the key

laned under the NHDP
Hub for Manufacturing Radial Tyres in India
Cost 13 strategic stretches of State Highways covering
Largest Soya Processing Hub 1871 kms being upgraded through BOT

FMCG Consumer Electronics Hub Connectivity MP Road Development Corporation constituted to

Pharmaceutical and Herbal Product Hub
Rapidly Growing Textiles and Apparel Hub
Gems and jewellery Center
spearhead road development in the state
5500 kms of fibre-optic network laid
Conveyance
Indore & Bhopal Airports are being upgraded as
International Airports

Creative Conducive and Competitive

business environment to support
your business

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Way Forward
 Madhya Pradesh offers multiple opportunities in the logistics sector specially for
Integrated Ware-housing Hub
companies engaged in manufacturing and distribution activities. Handling Facilities Octroi/Sales Tax

Parking Space
check points

Maintenance
Repair and
 A central warehousing facility would facilitate uninterrupted supply of raw materials and
Material Handling & Transport Services
speedy distribution of finished goods across the country. Decrease in lead time will Storage

further result in substantial cost saving for the company.

Trading and Regulatory Points

Office & Social

infrastructure
 Cold chain facilities have the potential to cater to the needs of pharmaceutical,

Trading
House
biotechnology and food processing companies. A central unit will facilitate distribution
Warehouses Refrigerated Storage
in the wider area without locking investment in creating such expensive facilities in CFS / ICD

multiple places. Proposed MPSIDC project

 Madhya Pradesh State Industrial Development Corporation (MPSIDC) is planning to
construct a state-of-the-art Integrated Transport Terminal, which will provide one stop-
Central Warehouse

Key Investment Opportunities

shop solution for all the logistics requirements of a company. The State Government is
willing to partner with private players, foreign investors and other domestic and
Inland Container Ports
international companies in its endeavour.
 The investment opportunities are ideal specially for 3rd Party Logistics and 4th Party
Integrated Transportation Hub
Logistics services provider to make MP as the key hub for their various services
component operations.
Cold Chain Facilities

The untapped opportunities of the sector has the potential to render key
competitive and strategic advantage for companies establishing their
logistics operations in Madhya Pradesh.

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Connecting Further

Madhya Pradesh Warehousing & Logistics Corporation www.mpwarehousing.com

M.P. State Industrial Development Corporation http://mpsidc.org,com

Madhya Pradesh Road Development Corporation Ltd. http://www.mprdc.nic.in

Madhya Pradesh Portal http://www.mp.nic.in/

Government of Madhya Pradesh http://www.mpgovt.nic.in

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