Globalization of Port

Logistics: Opportunities and Challengesfor Developing Countries

Role of PPP – Adani Experience

Yogendra Sharma

President, Adani Logistics, INDIA

Presentation- Layout

Indian Economic Scenario EXIM trade in India Factors Contributing success of

Container Terminal development Role of the Govt – Policy Initiatives Role of Public-Private-Partnership Adani experience – a case study

In India much has been done in the field of port infrastructure. Much more needs to be done if India is to avail of the opportunity to secure and maintain a competitive advantage for its industry and thereby its people.

India’s Growth Story • India is the third fastest growing economy in the world• GDP growth – moving continuously upward

• 5 – 6% in Previous two decades • 7.5 % in years 2003-04 and 2004-05• 8.5% in year 2005-06• 9.3% in year 2006-07• 10% + GDP growth is achievable

• This growth represents a structural increase rather than a cyclic upturn

• India’s GPD shall grow four times by 2020• Import of capital goods increasing• According to the Mc-kinsey report – India shall

– Become 5th largest consumer market by 2025. She is at 12th position today

– Have 400 million people with annual disposable income of US $ 25000

– Have market size of US$ 1750 million

Few Growth Drivers Industries Cement

Overall

0.0

2.0

4.0

6.0

8.0

10.0

12.0

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

Year

Ove

rall

% G

row

th R

ate

Overall

Production (In MT)

0.00

50.00

100.00

150.00

200.00

2000-01 2001-02 2002-03 2003-04 2004-05

Year

Mil

lio

n T

on

nes

Production (In MT)

Production (In MT)

0.00

50.00

100.00

150.00

200.00

2000-01 2001-02 2002-03 2003-04 2004-05

Year

Mil

lio

n T

on

nes

Production (In MT)

Finished Steel Automobile

Commercial Vehicles Production(Numbers in 000)

050

100150200250300350400

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

Year

Pro

du

ctio

n (

In 0

00)

Commercial VehiclesProduction(Numbers in 000)

Manufacturing Foreign Tourists arrivals

Manufacturing

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

Year

% A

nnua

l Gro

wth

Rate

Manufacturing

Foreign Tourists Arrivals (In Lakhs)

0.00

10.00

20.00

30.00

40.00

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

Year

Num

ber i

n La

kh Foreign Tourists Arrivals (In Lakhs)

Few Growth Drivers

Others • Positive demographics – over 50% population under 25 years • A high 60% literacy rate • Increasing Domestic Consumption

Growth drivers of Logistics • Globalization:- India , which has a low-cost

manufacturing base, is establishing itself as the world’s manufacturing hub. The lowering of trade barriers by various countries, combined with rapid advances in global transportation and information technology, has led to the proliferation of global manufacturing networks. As companies operates globally, their logistics needs increase correspondingly.

• FMCG:- It accounts for 80% of consumer spending in India. Rapid Growth in the processed food segment, as is evident from expansion of branded food outlets and café chains, provide ample opportunities for logistics service providers.

Ocean Logistics

Indian coast line -7517 Kms

India has 12 major and 184 minor ports

Sea traffic in India carries 95% of India’s exports by volume and 70% in value terms

Major Ports in India(Controlled by Central Govt)

Kandla JNPT Mumbai New Mangalore Marmagoa   Cochin Tuticorin   Chennai Ennore   Visakhapatanam  Paradip Haldia

Ennore

1933

5680

152

281

88

288

96

314

105

345

113384

138

423

153*

465

185

0

100

200

300

400

500

600

700

50-51 60-61 70-71 80-81 90-91 00-01 01-02 02-03 03-04 '04-05 '05-06 '06-07

MAJOR PORTS NON-MAJOR PORTS

369

• 1950-51 and 1980-81 (30 Years) + 61 Million Tonnes• 1980-81 and 1990-91 (10 Years) + 72 Million Tonnes• 1990-91 and 2000-2001 (10 Years ) + 217 Million Tonnes

• 2000-01 and 2006-07 (7 Years) + 281 Million Tonnes

TRAFFIC AT INDIAN PORTS

384419

458

576

In Million Tonnes

650

522

Traffic Projections at Indian Ports.

384

138

465

185

616

261

0

100

200

300

400

500

600

700

800

900

04-05 06-07 11-12

Major Ports Non Major Ports

(#) CAGR = Compounded Annual Growth Rate between 2000-01 and 2006-07

8.08 % for Major Ports, 10.59 % for Non-Major Ports and Overall 8.69%

522

650

877Overall CAGR : 7.70%Major Ports : 6.99%Non Major Ports : 9.55%(2004-05 onwards)

In Million Tonnes

Container Traffic Projections

4.23

0.27

4.61

0.35

11.7

0.8

0

1

2

3

4

5

6

7

8

9

10

11

12

13

04-05 05-06 11-12

Major Ports Non Major Ports

(#) CARG = Compounded Annual Rate of Growth for Container Traffic is 15.71%

4.5 4.96

12.5

In Million TEUs

Container Traffic Throughput Growth Projections

JN PORT- CONTAINER TRAFFIC PROJECTION UPTO 2013-14

0

2

4

6

8

4TH CT-PH1 0.5 1 1.6

EXT. 330 MTRs 0.2 0.4 0.5 0.5 0.5 0.5

GTIPL 0.89 1.01 1.3 1.3 1.3 1.3 1.3

NSICT 1.2 1.3 1.3 1.3 1.3 1.3 1.3

JNPCT 1.25 1.3 1.35 1.35 1.35 1.35 1.38

'07-08 '08-09 '09-10 '10-11 '11-12 '12-13 '13-14

3.33.81

4.35 4.454.95

5.45

6.08TRAFFIC FIGURES IN MILLION TEUs

Few Facts • The major ports – contribute to more than 75% of the total traffic

handled. A total of 463.84 MT in 2006-07 as compared with 423.56 MT in 2005-06, grew @ 9.51 %. Projected capacity of 1 billion ton by 2011-12.

• Five ports – Vishakhapatnam, Kolkata, Mumbai, Chennai and Kandla – crossed 50 MT each. All have inadequate draft for mainline vessels.

• The Jawaharlal Nehru Port crossed the 3 million TEU mark, handled 3.30 million TEUs in 2006-07 as against 2.67 million TEUs in 2005-06 – to register a 23.6 per cent growth in container traffic.

Container Traffic In India grew @ 17.85% in 2006-07 as compared to 13.6% in last five years.

• The turnaround time at Indian ports improved from 8.5 days in 1996-97 to about 3.5 days in 2006-07.

• Today ports capacity is short of 7 container berths. Current container handling capacity at terminals is about 7 m TEUs. 60% containers transshipped at Colombo, Singapore and Salalah.

• US$ 20 billion - estimated investment by the end 0f 11th plan

Market Segments

• Imports 1.ICD by Rail (33.3 %)2.ICD by Road (4%)3.En Bloc CFS (59.7%)4.Green Channel (3%)

• Export1.ICD by Rail (22.6%)2.ICD by Road (7.5%)3.CFS by Road + Buffer Yard ( 26.5 % + 7.7%)4.Factory Stuffed under Excise Seal –35.7%)

The above movement pattern throws some basic questions?

The JNPT Case

Movement Pattern of Containerized Cargo • Unevenly distributed over the hinterland

• Total market share – 5.5 MTEUS (06-07)

– North 1.5 million TEUs – 26% – West 2.1 million TEUs – 40 %– South 1.5 million TEUS - 26%– East 0.40 million TEUs – 8 %

• About 70% traffic is on the North- West corridor

• This uneven distribution of origin/destination of goods poses a challenge for transporters

NUMBER OF CONTAINER TRAINS AT JNPT (Projections between 2006-07 - 2011-12)

YEAR TRAINS PER DAY

2006 / 7 25.6

2007 / 8 30.0

2008 / 9 35.3

2009 / 10 44.6

2010 / 11 52.4

2011 / 12 61.6

Are We Aware ?That in India containerized trade is JNPT centric

Year Total (MTEU)

JNPT

(MTEU)

% Others

(MTEU)

% North bound

2006-07 5.50 3.30 60% 2.20 40% 2.31

2011-12 12.50 4.95 40% 7.55 60% 5.25

• This is putting undue pressure on land bridging, both on roads and rail.• If JNPT grows as per plan, its market share will come down from 60%

to 40% in next five years.• And market share of other ports shall reverse from 40% to 60%

So What is the Challenge ?• By 2011-12, India will have to create additional 5.35 MTEU capacity in non

major ports as JNPT shall add only 1.45 MTEU by that time.

• Due to their location, additional berths shall come at Mundra, Pipavav, Hazira and Dholera or the cost of inland transportation shall go if southern ports have to deal north bound cargo.

• By 2011-12, we will need 150 trains daily from north to western ports to evacuate the cargo.

• While JNPT shall deal 60 trains, other ports ports shall have to deal with 90 trains per day.

• It shall be a serious issue as neither ports, dry ports, or the railway are prepared for it.

• Of late Govt has initiated some action, It is enough? Let us examine?

Factors Contributing Terminal Development

Composite growth of port logistics depend upon the development of following infrastructure

•Ports Side Facilities – Ocean side development– Ports terminal development

•Hinterland Connectivity – Dry ports development – Railways connectivity– Roadways connectivity– Container Trains

Government Initiatives

Looking into impressive growth indicators in EXIM business, Indian govt has taken many initiatives in development of port logistics through Public-Private- Partnership

This has shown impressive results

1. Port Terminals Development

The Government has redefined the role of ports - from being mere trade gateways to becoming integral components of the global logistics and transportation chain by:

Increasing the plan outlay for ports by 88.57 per cent from US$ 175 million in 2006-07 to US$ 330 million for 2007-08.

Launching National Maritime Development Programme (NMDP) for a 10 year period, to ensure holistic development of the maritime sector. It covers 276 projects with investment of US$ 12.7 billion, of which US$ 7.9 million is expected to come from private investment.

Setting up a Committee of Secretaries under the chairmanship of the Prime Minister to oversee projects implementation

1. Port Terminals Development

Opening up all the areas of port operation for private sector participation.

Allowing FDI up to 100 per cent in construction and maintenance of ports/harbours and in other area providing support services, such as operation and maintenance of piers, loading and discharging of vehicles.

Leasing out of existing assets of the ports to private operators for providing port services up to 30 years.

Establishing an independent tariff regulatory authority, Tariff Authority for Major Ports (TAMP), to regulate tariffs in ports, 100% income tax exception for 10 years..

1. Port Terminals through PPP

• Already US$ 1052 million invested in 15 port development projects, including 7 container terminals, 4 liquid cargo berths and 4 dry cargo berths projects.

• Further 1 container terminal, 2 for liquid cargo berth and 2 for dry bulk cargo berths – with an investment of US$ 562 million are under way.

• PSA Singapore-SICAL operates one terminal with 0,4 Million TEU capacity at Tuticorin port, Also developing another terminal at Chennai

• Maersk - APM Terminals in Joint Venture with Container Corporation of India Ltd.operates at terminal at JNPT. Maersk also invested in Pipavav port, their total investment is of the order of US$ 500 million in India

1. Ports Terminals through PPP• DP World - developed one terminal each at

JNPT Cochin Mundra port Kulpi ( West Bangal), their total investment to touch US$

2 billion. Vallarpadam transhipment port in association with

Cochin port at an investment of US$ 516.78 million. • ABG Volti- Kandla Port• Shell - Hazira • Adani – Mundra • Reliance – Rewas • Tata – Dhamra

Private developers offered revenue sharing between 33.3%(DPW at Cochin) to 48.99%(ABG at Kandla) while bidding.

2. Container Freight Station/Dry ports

• Dry ports play an integrated role in promotion of EXIM trade of a country having big land mass like that of India.

• Rail linked dry ports, known as ICDs, facilitate smooth movement of containers by rail over a long distance and reduce pressure on roads, to avoid case like Diesel clouds in China as reported in papers recently.

• So far only state owned CONCOR was operating container trains in India. Today they have 56 terminals across country.

• Due to monopoly of CONCOR, there has been limited growth of dry ports, leading to spurt in Freight Stations near port causing congestion on roads, pollution in Cities.

• Quality of terminal services has also been a major issue due to monopolistic environment

2. Development of Dry Ports through PPP So far Private parties were free to open Container Freight Stations any where in

the country, However they were not given rail connectivity

Result – They were using roads for moving goods to the gateway ports, leading to high cost and inefficiency.

Govt in Jan 2007 has signed a 20 year agreement with 14 other private operators for setting up rail side container terminals

Already 3 private terminals with annual rated capacity of 0.2 million TEUs have become operational.

At least 10 terminals are likely to come in year 2008.

Private party arrange land, building, equipment, rail facility, manpower, etc.

Govt only facilitates rail connectivity and provides locomotive for evacuation of their trains. Operators is free to market its services and retains revenue.

This will create capacities for meeting growing demands of EXIM trade . Also there shall be technological advancement due to competition

Port-Hinterland connectivity

• According to Govt policy, all major ports should have a minimum of

• four-lane road connectivity and • double line rail connectivity

• In case of projects having low IRR, govt provides budgetary assistance or viability gap funding

• Road connectivity upto 50 kms shall be part of port infrastructure.

• This is to create supply ahead of demand

3.Port Connectivity – Roads • India has second largest road network in the world, with

3.32 million km roads, however congested, leading to over 75000 deaths every year..

• National Highway Authority of India set up to take development of national highways, including development of

– 4 lane highways to six lane, 6500 kms– 2 lane roads to four lane highways, 12,000 kms– Single roads to 2 lane roads, 20,000 kms, – New Expressways 1000 kms– Ring roads, grade separators, bypass, and service roads, etc.

• Needs US$ 50,000 million for next five years.

• Private sector investment is pouring in toll roads, accelerating speedy implementation.

• However, Such PPP projects some time become unaffordable for the consumer and expectations fall leading to backlash as seen in south America, Eastern Europe and Russia

• Govt encourages 100% FDI in such projects

The Golden Quadrilateral and North- South, East- West projects

4. Port Connectivity – Rail In 2000 – Railways in association with a private developer, set up a Special

Purpose Vehicle under PPP to provide rail connectivity to Papavav port( 270 km).

In 2003 – under National Rail Vikas Yojna, Ministry of Railways set up Rail Vikas Nigam Limited to develop various railway projects under PPP in order to

Improve rail connectivity to various ports Augment rail capacity on golden quadrilateral

In 2004 – Another SPV (Kutch Rail Company) was set up to convert 301 Km MG line to provide double line to Kandla and Mundra ports. Other partners were Kandla port, Mundra port and Govt of Gujarat.

In 2005 – Another SPV set up to improve connectivity to New Mangalore port.. Other partners are State Govt, Financial institutions.

In 2007 – 3 more SPVs formed for providing connectivity to Paradip, Krishnapatnam and Dahej ports

In 2007- Dedicated Freight Corridor Company limited set up to plan and construct two Freight corridors at the cost of US$12500 Million

New Rail Freight Corridor Routes

5. Opening of Container Train Operations to the private sector

• So far only govt owned company CONCOR was in container train operations in India.

• CONCOR market share has been only 30%, other 70% cargo either moves by road or gets de-stuffed at port and moves in break bulk.

• It defeats very purpose of multimodal transport, which is based on the principle of Door to Door delivery of goods in containers.

• It also poses many problem to the local administration as the roads leading to major ports are getting chocked.

• Also due to monopoly of one operator, quality of service was affecting too.

Private Container Train Operation. • In a land mark initiative, Ministry of Railways, in Jan 2007, threw open operation of

container trains to the private sector.

• CONCOR monopoly ends

• Licence to 14 more players granted – 10 for all India operations– 4 for operations to other than JNPT

• 20 year licence granted on payment of • US$ 12.5 million for all port routes and• US$ 2.5 million for ports other than JNPT.

• Operators to acquire rolling stock, plan ICDs and commence operations in 3 years time.

• Railways to maintain rolling stock and provide locomotive, crew, etc. for movement of their trains on payment of predetermined haulage charges.

• Private operators are free to market services and fix tariff based of market conditions.

Container Trains by Private Operations

• MOR guaranteed level playing field to all operators, including CONCOR.

• In less than a year, 10 private operators have commenced operations, putting 35 rakes into service so far. CONCOR has only 160 rakes in all. This means 22% expansion in capacity in less than a year.

• This has also lead to new innovations where due to competition, operators are busy in providing customized solutions, including new box types for domestic cargo.

• For the first time, automobiles have started moving in containers.

• It also opens up new opportunities for coastal shipping of domestic cargo.

Upto five cars are stuffed in one FEU

6. Double Stack Container Train• Due to multiple players, improving throughput on the

oversaturated railway system has been a big challenge

• Through an another innovative exercise, in March 2006, Indian Railway introduced operations of double stack container trains, India becomes 3rd in the world.

• IR is operating DSC trains on flat BLC wagons on diesel territory, thereby enhancing throughput by 100%

• With Average pay load of 12tonne per TEU, it is possible to operate DSC on IR with 20.32 Ton axle load

• Railways have also decided to increase axle load to 22.9 ton on DSC routes to carry heavier weight cargo

6. Double Stack Container Trains• Indian Railways also announced 50% concession in haulage

rates for the containers moving on the upper deck.

• According to an estimate, for moving 0.2 million TEUs in double stack form, there is direct saving of US$ 15 million.

• Cost of inland transportation in India is about 14% as compared to 8% in developed countries.

• DSC trains shall enable the operators to lower their cost for shifting cargo from road to rail.

• Operators are also trying to innovate for movement of cars in double stacks under electrified territory to reduce cost.

DSC trains Routes on IR

AJMERJODHPUR

RATLAM

NEW DELHI

BIKANER

AMBALA CANTT

MUMBAI

KOTA

KERALA

TAMIL NADU

KARNATAKA

ANDHRA PRADESH

MAHARASHTRA

ORISSA

CHHATTISGARH

MADHYA PRADESH

GUJ ARAT

RAJ ASTHAN

J HARKHAND

WEST BENGAL

BIHAR

UTTAR PRADESH

DELHI

HARYANA

UTTARANCHAL

PUNJ AB

PRADESHHIMACHAL

J AMMU AND KASHMIR

MIZORAMTRIPURA

MEGHALAYA

MANIPUR

NAGALAND

ASSAM

PRADESHARUNACHAL

SIKKIM

LUNI

RINGASMATHURA

PHULERA

MARWAR

SAMDARI

BHILDIPALANPUR

MEHSANA

VIRAMGAM

GODHRA

NAGDA

BOTAD

SAMAKHIALI

SURENDRANAGAR

LUDHIANA

DHURI

HISAR

GURGAON

AHMADABAD

PIPAVAV PORT

KANDLA PORTMUNDRA PORT

MERTA ROAD

REWARI

JAIPUR

BATHINDA

GARHI - HARSARU

GANDHIDHAMADIPUR

TUGLAKABAD

SURATHAZIRA PORT

JNPT

VASAI

LEGEND:

POTENTIAL DOUBLE STACK ROUTE

ELECTRIFIED LINE

DHANDARI KALAN

ANANDBARODA

PORTS

DIESEL - NON-DSCPHASE 1

What is PPP?A Public-Private-Partnership is a contractual agreement and a legal framework between a public agency (Federal, State or Local) and a private entity in order to execute an assigned project for sharing risks and rewards

Characteristics of PPP – Inadequate public funding leading to significant gap between

demand and supply

– Need for attracting private capital providing reasonable rate of return to them, who improve managerial efficiency

– All stakeholders share risks and rewards

– Government or the Principal agency develops projects and facilitates its execution, whereas Private investors bring in design, technology ,execute, and manage operations & maintenance.

– In case project is not viable, on the recommendations of the

nodal public agency, Govt provides viability gap funding

Govt Initiatives on PPP

To promote PPP, a committee on Infrastructure was set up under Chairmanship of the Hon Prime Minister

In 2005, Govt of India announced “Scheme for Financial Support to PPP in Infrastructure”

Under the scheme, Govt provides Viability Gap Funding to the important projects of relatively low Internal Rate of Return

VGF is granted for a maximum amount of US$ 50 Million, subject to 20% of the total project cost

Kinds of PPPThere are various types of PPPs based on the extent of Private Sectors Participation

Service/ Management

Contracts

BOT/ Concession

BOOT/ BOOLease

Complete Privatization

Public Private Partnership

Low High

Extent of private sector participation

Roles Allocation between Public and Private

PPP Options Asset Owned O&M Capital Exp Commercial risk

Duration

Service contract Public Private Public Public 1-3 yrs

Management Contract

Public Private Public Public 3-5 yrs

Lease Public Private Public Shared 8-15 yrs

Concession/ BOT Private/Public Private Private Private 25-30 yrs

BOOT/BOO Private/Public Private Private Private 25-30 yrs/ indefinite

Agents of PPP

• Principal– The principal is usually a government agency, a local or

federal government body that recognizes the need for a public facility to be provided under PPP

• Concessionaire– The concessionaire is usually a private party/consortium

that takes the responsibility of developing (designing, financing and constructing), maintaining and operating the facility, on behalf of the principal.

– The concessionaire is the owner of the facility during the concession period and realizes profits on their investment through the usage of the facility

Agents of PPP

• Investors

– The shareholders bring in capital in exchange for equity,– Lenders support the concessionaire in project

development and provide finances as debt through long term loans

• Contractor– concessionaire appoints a contractor for construction of

the project under an agreement– In some cases, the contractor is part of the

concessionaire’s consortium – contractor is responsible for the construction of the project

and for hiring subcontractors, suppliers and consultants

Agents of PPP

• Operator– The concessionaire either by itself or through its

agent manages the day to day operations

– The operator brings new technology and set higher benchmarks for improved efficiency

– – The Concessionaire either by itself or through

same /other operator maintains the facility

– The Operator recovers its cost on O&M from the concessionaire

BOT/BOOT – Legal Framework

PRINCIPAL

Concession Agreement

Shareholders SHA

Executing Agency Cons. Agreement

Special Purpose

Vehicle

Debt Financing

Lenders Agreement

Operations & Maintenance Agreement

Beneficiaries

Construction cost

Limited Equity Facility Concession

Dividends

Equity

Debt

Debt Servicing

O&M Cost

O&M Services

Revenue

Mundra Port – A successful PPP case

• With a coast line of 1600 km, Gujarat has 43 ports including only one major port.

• In 1995, state government invited private parties for development of minor ports in Gujarat

• Two ports were developed, including Mundra port by Gautam Adani • Mundra had no rail connectivity. Adani built 62 km line at his cost.

• Adani also took 20% equity in 315 km line providing alternate route to Mundra port.

• Adani asked P&O ports to operate one container berth.

• Adani provided all social infrastructure required for port operators and the users.

Mundra Port as a PPP case

• Today Mundra has 12 berths, including two for container handling. Mundra also has India’s first multi commodity SEZ spreading over 100 sq km area.

• Handled 19 million ton cargo in 2006-07, shall handle 50 million ton by 2010.

• With one additional berth becomes operational, port can handle 2 million TEU.

• Cargo handled in 2006-07 increased by more than 140 % over the previous year.

• Mundra port and SEZ is inviting huge investment, shall give rise to port traffic.

• Today Mundra has deepest draft (17.5 meter) in India • Mundra provides shortest route to the vast northern hinterland , providing cost

effective solutions to the customers.

• Now Adani is developing two more non major ports in Gujarat.

Mundra Port- Logistical Connected

RAIL

Connected to the Indian Railway

network at Gandhidham through the

Mundra – Adipur Broad Gauge line

AIR

Aerodrome at Mundra to land private jets, to

be opened to commercial plane

ROAD

Connected to the National Highway

(NH 8A) and State Highway (SH 6)

PPP Effect - How did Govt gain?• India’s expenditure in infrastructure has been only 4% of its GDP

during the period from 1997-98 to 2003-04. In recent years, the infrastructure deficiencies have become more visible because of high growth,

• Infrastructure at port, highways, railways, airports, etc. are overstretched, leading to overcrowding and queuing up.

• India need over US$ 490 billion in next five years in various infrastructure projects, including $200 billion from private investment.

• Unable to meet growing demands, India promoted PPP in infrastructure and received massive capital funds through Private investment.

• This has lead to availability of govt resources for other projects in social sectors.

• Through PPP govt is able to create asserts, which shall revert back to them after the expiry of concession period.

How did Promoters gain?• Private developers, who are able to raise money at the competitive rates,

due to innovation in design and new technology in construction are able to create assets at much faster pace and get fixed returns as annuity payments

• Or in case of BOT projects, developers recover their investment through access /toll charge as in case of highway /railway projects.

• In case of ports and airports, investors get direct revenue from the services provided based on revenue sharing mechanism.

• In case of Railways, JV companies get apportioned revenue after meeting their O&M cost. In addition, investors get rail connectivity, which is crucial to their project such as private green field ports because the existing rail infrastructure was inadequate in meeting growing demands.

• This is evident from the growth of private ports such as Mundra in state of Gujarat.

• Due to better connectivity, a large number of major industries moved into the area leading to more opportunities for the state and rapid growth in employment, real estate, power, roads, health, service sector etc.

How did Customers gain?• Under monopolistic situation it is the customer who suffers the

most as supply becomes limited.

• We have seen in case of telecom in India, how life of a ordinary customer changed after it was opened to the private sector. Today even daily wage earner is able to afford a cell phone.

• In case of transportation, customers are able to have better services at lower cost, meet their shipment needs.

• Today they can opt port of their choice for discharging their goods at much faster pace.

• Indian Manufacturers are increasingly becoming cost effective in the export goods.

• Global manufacturers are moving into India, which shall lead to better goods at low cost to the customers.

Recommendations• As JNPT shall not be able to handle projected growth and evacuation shall become

difficult, need to promote other ports to handle containerized cargo and improve rail linkages through PPP with consistent policy frame work.

• Govt to facilitate development of dry ports as land acquisition by the private parties is becoming difficult. Railways are on the other hand asking for a very high land lease for providing rail siding. Development of dry ports should be open to FDI as in case of ports.

• North- West dedicated rail freight corridor have to come fast, with the present speed it is not likely to come before 2013-14.

• Container train operators have to be given lower haulage rates as the present tares are not viable to start new business, particularly if you compete with roads.

• Railways to promote hub and spoke system by offering telescopic rates for the individual boxes as per their destination and not for a minimum number of boxes for a particular destination (80TEUs today). It will attract short lead traffic to rail and also improve frequency of service.

• Today acquisition of rolling stock and ICD equipments do not come under Export Promotion Scheme and there is no savings on excise/custom duty, as revenue does not come in foreign currency. Investment in EXIM trade logistics should come under EPCG.

Thank You for

your attention

Yogendra Sharma