“A Fast Emerging Market in India – Development of Eastern Seaboard”.

Capt. Sriram Ravi ChanderChief Operating Officer

Visakha Container Terminal Pvt Ltd

2009 4th Global Shipping SummitInternational Logistics Connection Conference

“Splitting, Discovering, Consolidating”

India Foreign Trade Policy 2009-14

• 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

GDP(annual growth rate%)

3.1

-1.4

2.5

0.8

-3.8

0.6

6

1.5

4.7

7.3

5.46

-6

-4

-2

0

2

4

6

8

2008 2009 2010

World Advanced economies Developing economies India

World Economic Growth Prospects

Source IMF

• ‘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)

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

The Emerging Economies

• 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

• India continued to grow even during slowdown

• 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

0

5000

10000

15000

20000

25000

30000

35000

40000

2006-07 2007-08 2008-09

Financial Year : April - March

Source RBI

India Trade Agreements

• Free Trade Agreement (FTA) – Srilanka – Thailand – ASEAN– EU (under negotiation)– Switzerland (under negotiation)– New Zealand (under negotiation)

• Trade Agreements– Bangladesh – Bhutan – Maldives – China – Japan – Mongolia

• Trade Treaty– Nepal – Comprehensive Economic Partnership Agreement (CEPA) - South

Korea– Singapore

• Framework Agreement– 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. – Chile.

• Regional Agreement– South Asia Free Trade Agreement (SAFTA) with

Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives.

• Preferential Trade Agreement (PTA)– Afghanistan – Chile – MERCOSUR - It is a trading bloc in Latin America

comprising Brazil, Argentina, Uruguay and Paraguay. It has Chile and Bolivia as its associate members.

India Trade Agreements

‘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

• 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

• By 2013-14 expected to cross $100 billion

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

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

• Today it stands at 17%

• % share in world trade is less than 10%

The ‘Dragon-Elephant Tango’

India Exports

2008

33%

24%

19%

7%

14%

3% East Asia

Europe

Middle East

Africa

North America

South America

Data Source: DGCIS, Kolkata

India Imports

2008

31%

29%

22%

6%

9%3%

East Asia

Middle East

Europe

Africa

North America

South America

Data Source: DGCIS, Kolkata

Infrastructure Growth in India

SPLITTING

21480

Bulk Cargo Handled During 2008

New Mangalore

Tuticorin

Chennai

MBPTJNPT

Kolkata Dock SystemHaldia

Cochin

Kandla

Visakhapatnam

Paradip572824243864597

57154

15810

36019

Mormugao35128

5703955756

64893

‘000 Tons57%

43%

Mundra110

GangavaramKakinada

Krishnapatnam26261666

2 8209

2500 Pipavav

Containers Handled During 2008

440

New Mangalore

Tuticorin

Chennai

JNPT

Kolkata Dock SystemHaldia

Cochin

Kandla

Visakhapatnam

Paradip

449

87

1140

260

25Mormugao

717

3945

137Mundra

Pipavav179

‘000 TEUs

72%

28%

2

More than 70% of Container movement through two gateways

Back end infrastructure unable to support the growing infrastructure

Gateways tuned to funnels

New Mangalore

Tuticorin

Chennai

JNPT

Kolkata Dock SystemHaldia

Cochin

Kandla

VisakhapatnamMormugao

MundraPipavav

Ports = Gateway or Funnel ?

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

DISCOVERING

Vibrant East

Chennai

Kolkata Dock System

Haldia

Visakhapatnam

Paradip

MAJOR INDUSTRIES IN TAMIL NADU • 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 New Mangalore

Tuticorin

Chennai

MBPT

JNPT

Kolkata Dock System

Haldia

Cochin

Kandla

Visakhapatnam

Paradip

Mormugao

MAJOR INDUSTRIES IN ANDHRA PRADESH• 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

New Mangalore

Tuticorin

Chennai

MBPT

JNPT

Kolkata Dock System

Haldia

Cochin

Kandla

Visakhapatnam

Paradip

Mormugao

MAJOR INDUSTRIES IN ORISSA• Agro Based Industry• Cement • Fertilizer• Forest Based Industry • Handloom • Iron and Steel • Information and Technology • Minerals & Metals• Mining • Paper • Sugar

New Mangalore

Tuticorin

Chennai

MBPT

JNPT

Kolkata Dock System

Haldia

Cochin

Kandla

Visakhapatnam

Paradip

Mormugao

MAJOR INDUSTRIES IN CHATTISGARH • Agro Based Industry • Biotechnology • Cement• Power• Minerals &Metals• Mining• Iron & Steel

New Mangalore

Tuticorin

Chennai

MBPT

JNPT

Kolkata Dock System

Haldia

Cochin

Kandla

Visakhapatnam

Paradip

Mormugao

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

New Mangalore

Tuticorin

Chennai

MBPT

JNPT

Haldia

Cochin

Kandla

Visakhapatnam

Paradip

Mormugao

Kolkata Dock System

MAJOR INDUSTRIES IN BIHAR• Agro Based Industry• Power • Oil Refinery • Textiles • Engineering Industries• Steel• Mining

New Mangalore

Tuticorin

Chennai

MBPT

JNPT

Kolkata Dock System

Haldia

Cochin

Kandla

Visakhapatnam

Paradip

Mormugao

MAJOR INDUSTRIES IN EASTERN MHARASHTRA• Agro Based Industry• Power • Engineering Industries• Steel• Paper

New Mangalore

Tuticorin

Chennai

MBPT

JNPT

Kolkata Dock System

Haldia

Cochin

Kandla

Visakhapatnam

Paradip

Mormugao

New Mangalore

Tuticorin

Chennai

MBPT

JNPT

Kolkata Dock System

Haldia

Cochin

Kandla

Visakhapatnam

Paradip

Mormugao

MAJOR INDUSTRIES IN EASTERN MADHYA PRADESH• Agro Based Industry• Textiles • Mining• Diamond Production• Cement• Sugar

Gujarat , 16

Haryana, 15Karnataka ,

20

Rajasthan, 4

Punjab, 2

Orissa , 2

Maharashtra , 24

Madhya Pradesh, 3 Kerala , 8

Andhra Pradesh, 68

Others, 7

Tamil Nadu, 27

Uttar Pradesh, 8

West Bengal , 6

Development of the Notified SEZs

Soya

Maize

Rice

From the Fields…

Cotton

Highly Developed

Developed

Internal issues

Developing

Center of Action

Major Investments in• Steel• Cement• Oil Exploration &

Refinery• Power• Chemicals• Refractories• Aluminium• Mining• Apparel• Engineering • Sugar and Food

Processing• Bio- Diesel

Center of Action

These new developments are happening within 700Km of Visakhapatnam

Ports on the Eastern SeaboardMajor Ports

- Kolkata/Haldia

- Paradip

- Visakhapatnam

- Ennore

- Chennai

- Tuticorin (other side of Cape Camorin)

Large Non Major Ports

-Gangavaram

-Kakinada

-Krishnapatnam

Gopalpur

Gangavaram

Krishnapatnam

Kolkata

Kariakal

Ennore

Container Terminals on the Eastern Seaboard

Gopalpur

Gangavaram

Krishnapatnam

-Kolkata/Haldia

-Visakhapatnam

-Chennai

Kolkata

CCT, CITPL

Kolkata Dock System

Haldia

VCTPL

East Coast Hinterland (Containers)

The Right Thing on the Right Side

• New port and terminals should be patronised

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

• Evolve to 3PL and 4PL

CONSOLIDATING

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

Back to Barter

Iron Ore

Coal

• 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

Box’vantage

• Two Way cargo movement between India and China

• 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

The concept can be extended to all commodities traded between any pair of countries

Back to Barter

Intra- Asia has over 160 Free Trade Agreements

Free Pollution to Pollution Free

• 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

Need of the Hour on the East Coast of India

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

• Un-congested • Ability to expedite large volumes of cargo

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

• Old and established port with promising hinterland

• 0.045 million TEUs handled every year

• Closer to land locked countries of Nepal and Bhutan

Kolkata / Haldia

• Acute shortage of space and hence often congested

• Riverine Port - severe draft restrictions

• Absence of efficient container handling systems

• No possibility of further expansions

• In the middle of the fastest developing region in India.

• Efficient container handling infrastructure

• Ample space and un-congested

• Deepest container terminal on the East Coast of India

• Possibility for further expansions

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

• Feasible to cater to 5 ICDs across India and Nepal

• Proximity to the straits of Malacca

Visakhapatnam

• Limited ICD movement

• Currently handling 0.08 million TEUs only

• Manufacturing base still growing in the immediate hinterland

• Efficient container handling infrastructure

• 1 million plus throughput

• New capacity added ( CITPL )

• Hinterland with large manufacturing base

• Presence of major Mainline and Feeder services

Chennai

• No ICD movement

• Located down south

• 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