2009 4th Global Shipping Summit International Logistics Connection Conference

“

Splitting, Discovering, Consolidating

”

“

A Fast Emerging Market in India

–

Development of Eastern Seaboard

”

.

Capt. Sriram Ravi Chander Chief Operating Officer Visakha Container Terminal Pvt Ltd

India Foreign Trade Policy 2009-14

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The long term policy objective for the Government is to double India’s share in global trade by 2020.

•

By 2011, India has set a policy objective of achieving an annual export growth of 15% with an annual export target of US$ 200 billion and by 2014. double India’s exports of goods and services

•

Focus Market Scheme & Focus Product Scheme - 26 new markets have been added under focus market scheme. These include 16 new markets in Latin America and 10 in Asia – Oceania. A large number of products included in the Focus Product Scheme.

•

Enhanced market access - Comprehensive Economic Partnership Agreement with South Korea, The Trade in Goods Agreement with ASEAN and the Mercosur Preferential Trade Agreement with Latin American countries

World Economic Growth Prospects

8 6 4 2 0 -2 -4 -6

GDP(annual growth rate%)

6 7.3

5.4

4.7

6 3.1

0.8

1.5

2.5

0.6

2008 2009 2010 -1.4

World -3.8

Advanced economies Developing economies India Source IMF

The Emerging Economies

•

‘E7’ emerging economies: the BRIC economies of Brazil, Russia, India and China, plus Mexico, Indonesia and Turkey.

•

By 2050, the E7 emerging economies will be around 50% larger than the current G7 (US, Japan, Germany, UK, France, Italy and Canada)

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China is expected to overtake the US as the largest economy in around 2025

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The projected list of fastest growing economies to 2050 is headed by Vietnam, and the top 10 includes Nigeria, Philippines, Egypt and Bangladesh

India has the potential to catch up with the US by 2050 Sources: Price Waterhouse Coopers, Goldman Sachs, The Times of India

Defying the Slowdown

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India continued to grow even during slowdown

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Emerging economies recovered faster than the developed economies

•

As the global economy recovers India and China will lead the expansion and will grow at rates of 5.4 and 8.5 % respectively.

•

Boosted by large policy stimulus that is increasing demand from domestic sources and a turn in the global manufacturing cycle, the two Asian giants are leading the rebound in emerging and other developing economies

Source World Bank

Defying the Slowdown

•

Despite slowdown, India ranked among top five investor’s destination for the next two years according to UNCTAD

•

India to attract major investments in Power Projects, Highway Projects, Petroleum, Telecom, Auto and Chemical sectors FDI inflows USD million

40000 35000 30000 25000 20000 15000 10000 5000 0 2006-07

Financial Year : April - March

2007-08 2008-09 Source RBI

India Trade Agreements

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Free Trade Agreement (FTA)

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Srilanka

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Thailand

– – – –

ASEAN EU (under negotiation) Switzerland (under negotiation) New Zealand (under negotiation)

• •

Trade Agreements

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Bangladesh

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Bhutan

– – –

Maldives China Japan Mongolia

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Trade Treaty

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Nepal

– –

Comprehensive Economic Partnership Agreement (CEPA) - South Korea Singapore

India Trade Agreements

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Framework Agreement

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GCC states i.e. The Member States of the Cooperation Council for the Arab States of the Gulf.

–

ASEAN i.e. The Association of South East Asian Nations.

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Chile.

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Regional Agreement

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South Asia Free Trade Agreement (SAFTA) with Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives.

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Preferential Trade Agreement (PTA)

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Afghanistan

–

Chile

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MERCOSUR - It is a trading bloc in Latin America comprising Brazil, Argentina, Uruguay and Paraguay. It has Chile and Bolivia as its associate members.

‘

Look East

’ •

In a major success in its `Look East' policy, India has signed a Free Trade Agreement (FTA) with the 10 member Association of South East Asian Nation (ASEAN) bloc that would eventually eliminate duty on 80% of the goods traded at present.

•

The two sides have set an ambitious target of achieving an increase of $50 billion worth of trade in the first year after the agreement comes into force from January 2010.

•

Indian exporters of Machinery and machine parts, Steel and steel products, agriculture products such as Oilcake, Wheat and Buffalo Meat, Auto Components, Chemicals and Synthetic Textiles would gain additional market access as a result of tariff liberalisation by ASEAN. ASEAN member countries: Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam

‘

Look East

’ •

India and South Korea has signed the Comprehensive Economic Partnership Agreement (CEPA)

•

The pact expected to boost bi-lateral trade by $ 3.3 billion annually

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Tariffs on South Korea auto parts are to be reduced to one percent over a period of eight years from the current average of 12.5 %

The

‘

Dragon-Elephant Tango

’ •

India – China trade to cross $60 billion this year

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By 2013-14 expected to cross $100 billion

The

‘

Dragon-Elephant Tango

’ •

India and China – Billion plus population. Together accounting for 35% of world population

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300 years ago – India & China formed 50% of world GDP

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Today it stands at 17%

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% share in world trade is less than 10%

India Exports

7% 19% 14% 3% 2008 33%

East Asia Europe Middle East Africa North America South America

24%

Data Source: DGCIS, Kolkata

India Imports

22% 6% 9% 2008 3% 31%

East Asia Middle East Europe Africa North America

29%

South America Data Source: DGCIS, Kolkata

Infrastructure Growth in India

SPLITTING

Bulk Cargo Handled During 2008

64893 110 2500 57039 55756 35128 36019 15810 21480 43% ‘000 Tons 57%

Kandla Mundra Kolkata Dock System Pipavav MBPT JNPT Gangavaram Paradip Haldia Visakhapatnam Mormugao Kakinada Krishnapatnam

16662 8209

New Mangalore Chennai Cochin Tuticorin

57282 42438 64597 2626 57154

137 717 179 3945 25 260 440

Containers Handled During 2008

28% ‘000 TEUs 72%

Kandla Mundra Pipavav JNPT Kolkata Dock System Haldia Paradip Visakhapatnam Mormugao New Mangalore Chennai Cochin Tuticorin

449 2 87 1140

Ports = Gateway or Funnel ?



More than 70% of Container movement through two gateways

Kandla Mundra Pipavav JNPT Kolkata Dock System Haldia Visakhapatnam Mormugao New Mangalore Chennai Cochin Tuticorin 

Back end infrastructure unable to support the growing infrastructure



Gateways tuned to funnels

Solution lies in de-hubbing congested ports and use alternate efficient gateways

DISCOVERING

Vibrant East

Kolkata Dock System Haldia Paradip Visakhapatnam Chennai

MAJOR INDUSTRIES IN TAMIL NADU

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Agro based Industry

• •

Automobile Bio-Technology

• • • • •

Chemical and Petro Chemical Industry Cotton Textile and Hosiery Engineering Industry Glass IT & ITES

• • • • • • •

Leather Industry Metals Mineral based Industry Paper Industry Pharmaceuticals Industry Readymade Garments Industries Wood Products Industry

Kandla MBPT JNPT Mormugao New Mangalore Cochin Chennai Tuticorin Kolkata Dock System Haldia Paradip Visakhapatnam

MAJOR INDUSTRIES IN ANDHRA PRADESH

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Agro based Industry

• •

Bio-Technology Bulk drugs and Pharmaceuticals

• • • • •

Chemical and Petro-Chemical Industry Cotton Textile and Hosiery Cement Engineering Industry Fertiliser

• • • • • • • •

Horticulture IT industry Mines and Minerals Oil & Natural Gas Paper Poultry & Fisheries Spices Textiles and Apparel industry

Kandla MBPT JNPT Mormugao New Mangalore Cochin Chennai Tuticorin Kolkata Dock System Haldia Paradip Visakhapatnam

MAJOR INDUSTRIES IN ORISSA

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Agro Based Industry

• •

Cement Fertilizer

• • • • •

Forest Based Industry Handloom Iron and Steel Information and Technology Minerals & Metals

• • •

Mining Paper Sugar

Kandla MBPT JNPT Mormugao New Mangalore Cochin Chennai Tuticorin Kolkata Dock System Haldia Paradip Visakhapatnam

MAJOR INDUSTRIES IN CHATTISGARH

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Agro Based Industry

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Biotechnology Cement

• • • •

Power Minerals &Metals Mining Iron & Steel

Kandla MBPT JNPT Mormugao New Mangalore Cochin Chennai Tuticorin Kolkata Dock System Haldia Paradip Visakhapatnam

MAJOR INDUSTRIES IN WEST BENGAL

• •

Agro based Industry Automobile

• • • • •

Bio-Technology Cotton Textile Engineering Industry IT & ITES Jute

• • • •

Leather Industry Metals Mineral based Industry Tea

Kandla MBPT JNPT Mormugao New Mangalore Cochin Chennai Tuticorin Kolkata Dock System Haldia Paradip Visakhapatnam

MAJOR INDUSTRIES IN BIHAR

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Agro Based Industry

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Power Oil Refinery

• • • •

Textiles Engineering Industries Steel Mining

Kandla MBPT JNPT Mormugao New Mangalore Cochin Chennai Tuticorin Kolkata Dock System Haldia Paradip Visakhapatnam

MAJOR INDUSTRIES IN EASTERN MHARASHTRA

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Agro Based Industry

• •

Power Engineering Industries

• •

Steel Paper

Kandla MBPT JNPT Mormugao New Mangalore Cochin Chennai Tuticorin Kolkata Dock System Haldia Paradip Visakhapatnam

MAJOR INDUSTRIES IN EASTERN MADHYA PRADESH

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Agro Based Industry

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Textiles Mining

• • •

Diamond Production Cement Sugar

Kandla MBPT JNPT Mormugao New Mangalore Cochin Chennai Tuticorin Kolkata Dock System Haldia Paradip Visakhapatnam

Development of the Notified SEZs

West Bengal

Uttar Pradesh, 8

Tamil Nadu,

Rajasthan,

27

4

, 6 Orissa , 2

Punjab, 2 , 24 Madhya Pradesh, 3 20 Kerala , 8 Others, 7

Andhra Pradesh, 68

Gujarat , 16 Haryana, 15

Soya Maize From the Fields

…

Rice Cotton

Center of Action

Highly Developed Developed Internal issues Developing

Center of Action

Major Investments in

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Steel

•

Cement

• • •

Oil Exploration & Refinery Power Chemicals

• • • • • • •

Refractories Aluminium Mining Apparel Engineering Sugar and Food Processing Bio- Diesel These new developments are happening within 700Km of Visakhapatnam

Krishnapatnam Ennore Kariakal

Ports on the Eastern Seaboard

Kolkata Major Ports

- Kolkata/Haldia

Gopalpur Gangavaram

- Paradip - Visakhapatnam - Ennore - Chennai Tuticorin (other side of Cape Camorin)

Large Non Major Ports

- Gangavaram - Kakinada - Krishnapatnam

Container Terminals on the Eastern Seaboard

Kolkata Gopalpur Gangavaram Krishnapatnam

- Kolkata/Haldia - Visakhapatnam - Chennai

East Coast Hinterland (Containers)

Kolkata Dock System Haldia VCTPL CCT, CITPL

The Right Thing on the Right Side

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New port and terminals should be patronised

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Warehousing and distribution hubs closer to the ‘center of the action’. Take Right, avoid round-about.

•

Evolve to 3PL and 4PL

CONSOLIDATING

Back to Barter

CASE: India exports Iron Ore to China and Imports Coal from China

Iron Ore Coal

Box

’

vantage

• •

Ultra Large Container Vessels of over 12000 TEU carrying capacity (Emma Maersk, MSC Daniella) are deployed on the major trunk routes. The next order vessels (8000 TEU) have to find employment on the minor trunk routes

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Two Way cargo movement between India and China

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Large volumes move in bulk vessels

• •

During a 24 hr operation in a Indian Port, an average of 20000 tons discharged / loaded in bulk operation using two cranes During the same period, 24000 tons can be loaded / discharged in container operations using same number of cranes

• •

Evacuation of bulk cargo takes days Goods rail run at 40Kmph

• •

Evacuation takes hours with containers Container trains run a 100Kmph

Back to Barter

The concept can be extended to all commodities traded between any pair of countries Intra- Asia has over 160 Free Trade Agreements

Free Pollution to Pollution Free

• • • •

Need of the Hour on the East Coast of India

Ports with deep harbour to accommodate bigger vessels Ports closer to the growing ‘action’ area Ports with efficient handling systems including dedicated container berths Ports that can cater to faster evacuation of cargo

• • •

Un-congested Ability to expedite large volumes of cargo

•

Rail and Road links to hinterland Capable to expand with growing needs

Regional Hubbing

– Kolkata , Chittagong, Yangoon, Renong, Andaman, Chennai, Vizag

Kolkata / Haldia

•

Old and established port with promising hinterland

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0.045 million TEUs handled every year

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Closer to land locked countries of Nepal and Bhutan

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Acute shortage of space and hence often congested

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Riverine Port - severe draft restrictions

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Absence of efficient container handling systems

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No possibility of further expansions

Visakhapatnam

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In the middle of the fastest developing region in India.

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Efficient container handling infrastructure

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Ample space and un-congested

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Deepest container terminal on the East Coast of India

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Possibility for further expansions

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Well connected to central, eastern, and southern India both by road and rail

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Feasible to cater to 5 ICDs across India and Nepal

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Limited ICD movement

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Proximity to the straits of Malacca

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Currently handling 0.08 million TEUs only

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Manufacturing base still growing in the immediate hinterland

Chennai

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Efficient container handling infrastructure

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1 million plus throughput

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New capacity added ( CITPL )

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Hinterland with large manufacturing base

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Presence of major Mainline and Feeder services

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No ICD movement

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Located down south

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Port approach through the city – poses congestion problems

International Logistics Connection to the Fast Emerging Market in India

Summary

• The nucleus of world trade shifting to Asia • Over 160 Free Trade Agreements in Inter-Asia region • India adopted “Look East” policy • East Coast is the center of action in India • Deep draft harbours with dedicated container terminals within close

proximity of the growing hinterland is the need of the hour

• Solution lies in directional distribution and regional hubbing • We need to grow pollution free