How India is Meeting The Challenge of

A Booming Economy:
Developments in Port, Rail & Allied
Freight Infrastructure

TRB Annual Meeting, Washington DC, Jan 2007

S.N.Srikanth
Senior Partner
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 Hauer Associates
Maritime & Port Consultants
Services include:
• Infrastructure / Maritime & Port Policy
• Port Development & Privatization Strategy
• Project Viability Assessments
• Strategic Risk Management
• Project Finance
• Legal / Financial Appraisals & Due Diligence

• Hauer Associates also provides strategic

guidance to international investors seeking to
invest in India’s booming infrastructure
industry.
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 India: Economic Superpower?

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 GDP Projections
4th largest economy in the world by 2025
2006-07 3rd quarter growth rate 9.2%
Potential for sustained growth said to be
higher than China’s
20
18
16
US$ trillion 14
12
GDP 2025 10
8
6
4
2
0
USA China Japan India Germany UK
Source: Goldman Sachs BRIC Report - 2003
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 Foreign Trade Growth
Growth Rate (2005-06): 28.83%

US$ billion 240.885

185.411

114.13 141.99
95.10
72.60 75.61
54.98 95.24
42.22 40.32 68.48 86.49
76.49
45.54
37.28

-91 -92 -93 - 94 -95 - 96 -97 - 98 -99 - 00 -01 - 02 - 03 - 04 - 05 - 06

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20

Source: DGCI&S, Ministry of Commerce Govt. of India

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 Market Potential

• 1 billion people
• 300 million strong middle class
• 54% of population under 25 years
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 Is India’s Freight Transport
Infrastructure geared to meet the
Challenge of Growth?

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 Port Infrastructure

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 India: Coastline & Ports

7500 Kms of Coastline

12 Federal Ports
185 Regional Ports

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 Ports Inadequate by World Standards
Over 60% of containers transshipped through
Colombo, Singapore & Salalah
Hauer Associates Study for GoI (2003)

Federal Ports Regional Ports

Only
• Inadequate draught for
mainline vessels 30 with cargo traffic
Federal Regional 14 all weather
• Ageing equipment Ports Ports 17 fair weather
16 with alongside draught >
6M
• Evacuation bottlenecks
16 with cranes > 10 T
capacity
14 with maintenance
HAUER ASSOCIATES Source: Indian Ports Association dredgers
National Maritime Development Programme:
US$ 14 billion investment in Federal Ports by
2013-14 (Investment in regional ports not included)
65% from private participants
Others US $ billion
Government
1.06 (8%)
2.66 (19%)

Ports
1.18
(8%)

Private
9.13 (65%)
Source: Ministry of Shipping, Govt.of India

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 Privatized Ports / Terminals
Private investments range from US$ 25 milion to 1 Billion

Non Major Ports

Major Ports
Mundra - Adani
JNP-P&O ; Maersk
Sikka - Reliance
Mumbai – Gammon Dragados
Pipavav – Maersk
Chennai-P&O ; PSA
Hazira - Shell
Tuticorin-PSA
Dahej - Petronet
Vizag-Dubai Ports
Dighi - Balaji
Kandla-ABG Voltri
Rewas – Amma Lines /Reliance
Cochin-Dubai Ports
Gopalpur - Orissa Stevedores
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Dhamra – ASSOCIATES
TATA / L&T JNP; Tuticorin; Ennore
 Response to Privatization
Bullish Revenue Share Offers from Bidders
Port Year Successful Bidder Revenue
Share offered
Chennai 2001 P&O Ports 37.123%
Cochin 2004 Dubai Ports 33.300%
Jawaharlal Nehru 2004 Maersk- 35.503%
(3rd terminal) CONCOR
Kandla 2005 ABG - VOLTRI 48.997%
Chennai 2006 PSA 45.801%
Mumbai 2006 Gammon - Dragados 35.064%
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 Road Network
3.32 million
3.32 km
million network
km long
(2 largest in the world)
nd

2% 4%

20%

74%
National Highways
State Highways
Major District Roads
Other District Roads & Village Roads

Network carries 1442 btkm/ year

Source: NHAI – Planning Commission GoI

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 Road Network - Problems
• Less than 10% of National & 2% of State
Highways are 4 lane
• Mixed traffic of fast & slow vehicles
• Truck speeds 30-40 kmph
• Outdated vehicle fleet
• Vehicles overloaded by upto 100%
• 25% of National Highways and 50% of State
Highways in poor surface condition

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 Roads : Annual Toll
• 75,000 deaths
(10 times EU rate per
10,000 vehicles)
• 1.7 million serious
injuries
• 6.4 million minor
injuries
• Rs.550 billion in
economic losses

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 National Highways Development Project
US$ 50 billion investment in National Highways
by 2011-12

Private Participation
• Phase I & II: 7%
• Phase III – VII:
almost entirely

Golden Quadrilateral
to link metros
Source: NHAI

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 Rail Infrastructure

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 Rail Network
• 4th largest
(63,000 km) in
the world

• Carries 396
btkm /yr

• Over 7000
stations in 14
zones
Source: Indian Railways - RVNL
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 Rail Network - Problems
• Only 25% of network double or multitrack
• Freight trains run at average 23 kmph
• Poor average annual output per freight
wagon (1 million tkm)
• Freight tariff one of the highest in the
world, cross -subsidizes passenger fares

HAUER ASSOCIATES Source: Ministry of Railways GoI

National Rail Vikas Yojana /Other Projects
US$ 80 billion investment by 2015
• Private participation:
– Container train
operations
– Freight Terminals
(proposed)

• Dedicated Freight
Corridors from North to
West & East
(USD 5 billion, 2700 km)
Source: Ministry of Railways GoI

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 Multimodal Transport using
Coastal & Inland Waterways

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 Social Costs of Transport Modes
Road transport imposes 6 times the social
costs of water, rail 3 times (EU)
30

25 Euro per
1000 tkm
20

15

10

0
WATER RAIL ROAD

Accidents Noise Pollutants

Climate Change Infrastructure Congestion
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 Indian Waterways Underutilized
Modal share of waterway transport in India is a mere
9% as against 32% in the EU

Hauer study shows

significant diversion of
domestic cargo from
land modes to coastal
& inland waterways
inevitable
Source : IIM, Ahmedabad

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 Sethusamudram Ship Canal Project
US$450m project to promote inter-coastal shipping

From To Around Lanka Via Canal Less by

Chennai Tuticorin 753 NM 322 NM 431 NM
Chennai Mumbai 1496 NM 1120 NM 349 NM
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 Trade Flows

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 India’s Merchandise Trade
US remains No. 1 trading partner

21.5%
17.4% 17.1%
7.2%
30.0 %
26.1%

as % of total trade 2005

, figures in Red indicate exports from India figures in Blue indicate imports to India
Source: World Trade Organization
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 India’s Merchandise Trade
Trade with China is growing fastest
(12 fold in the last 10 years)
22.5 23.5 Total trade
1995 2001 2005
18.9
% of total trade
1995: US$ 65 bn
14.7
14.0 2005: US$ 230 bn
10.5

6.4

1.8 2.5

US EU PRC

Source: World Trade Organization & ADB

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 India - China Trade: 1st Century AD
The Silk Road passed through India

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 India - China Trade: 21st Century AD
Links 2/5th of Mankind
A Re-Emerging Trade Corridor?

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 Thank you

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