GES Transport & Logistic Report · Dighi Jaigarh Mormuguo NMPT Belikeri Cochin Kolkata Sagar Island...
Transcript of GES Transport & Logistic Report · Dighi Jaigarh Mormuguo NMPT Belikeri Cochin Kolkata Sagar Island...
SECTOR PROFILE
WHY INDIA?01
CHAMPION SECTORS02
PROFILE03
INVESTMENT OPPORTUNITIES04
BUSINESS & REGULATORYENVIRONMENT IN INDIA
05
WHY INDIA?01
ADVANTAGE INDIA
World’s largest democracy with
1.3 billionpeople
Expertise acrossa spectrum of
services
Largecompetitively-priced skilled
talent pool
Large andgrowing domestic
consumermarket
Demonstratedcapability to deliver
high-quality,cost-effective
solutions
Integrated taxstructure
Enablingbusiness
environment
Focus oninfrastructuredevelopment
Access totechnology
INDIA – A FAVORED INVESTMENT DESTINATION
Fastestgrowing major economy in the world in 2018 and 2019
6th largest economy in the world by nominal GDP and 3rd largest economy globally by PPP
1st rankglobally in inward greenfield FDI inflows in 2016
India ranks 8thin global services exports accounting for 3.4% ofworld trade incommercialservices
Services,
57%
Automobile, 5%
Pharma, 4%
Power, 4%
Others,
26%
Chemicals, 4%
Agriculture17%
Industry22%
Services61%
6.1
60.1Mauritius, 34%
Singapore, 17%Japan, 8%
UK, 7%
USA, 6%
Netherlands, 6%
Others,22%
India’s GDP is likely to touch US$ 5 trillion by 2025
2.6
4.7
2017 2023
GDP in current prices (US$ Trillion) GVA share of sectors in FY18
43.2
163.1
27.8
95.7
2004-05 2016-17
Exports
Imports
Services Trade (US$ Billion)
14%
10%
1%
1%74%
Category-wise Services Export (2016-17, % share)
17%
15%
1%
1%
66% Travel
Transport
Insurance
G.n.i.e
Miscellaneous*
Category-wise Services Import(2016-17, % share)
Gross Foreign Inflows-FDI (US$ Billion) Top FDI source countries (% share in inflows- Apr’00 to Mar’17)
G.n.i.e- Government not included elsewhere; * includes software, business, financial and communication services
20
04
-05
20
05
-06
20
06
-07
20
07
-08
20
08
-09
20
09
-10
20
10
-11
20
11
-12
20
12
-13
20
13
-14
20
14
-15
20
15
-16
20
16
-17
Sector-wise FDI inflows (% share in inflows-Apr ‘00 to Mar’17)
75
60
45
30
15
0
Source: IMF, FDi intelligence report 2017, RBI, WTO
GROWTH ENABLERS
Growing domestic consumer base Large, young human capital base
Rising disposable income and urbanization More than 800 million people under the age of 34 years
Urb
an p
op
ula
tio
n (%
of
tota
l)
Pe
r-c
ap
ita I
nc
om
e (
INR
)
18,523
61,855
27.8
31.270000
60000
50000
40000
30000
20000
10000
0
32.0
31.0
30.0
29.0
28.0
27.0
26.0
2001 2011
Urban Population and Per-capita Income
Per capita income Urban population
Per-capita Income data pertains to 2001-02 and 2011-12Source: Census 2011, MOSPI
Size of the workforce (millions)*
37
35
27
1400
1200
1000
800
600
400
200
0
Korea Thailand Japan US Europe China India
2015 2025 (Projected) 2050 (Projected)
49
47
36 77
71
55
213
217
235
492
466
405
1008
984
795 860
985
1145
* Population aged 15-64 yearsSource: United Nations population statistics
CHAMPIONSECTORS
02
Transport
& Logistics Healthcare Accounting
& Finance
Construction
& Related
Engineering
Services
Media &
Entertainment
Education
Services Financial
Services
Environmental
Services
Tourism
& Hospitality
IT & ITeS Legal
Services
Communication
Services
((( (((
TRANSPORT & LOGISTICS SECTOR: INVESTMENT ANNOUNCEMENTS
Ascendas-Singbridge
Ascendas-Singbridge to set up Rs 350 Crores in a joint venture with Firstspace Reality near Chennai
Flipkart
Flipkart logistics park near Bangalore to help create 20000 jobs in next two years
CONCOR
CONCOR ready to open MMLP in Naya Raipur (Chhatisgarh) and MIHAN (Nagpur, Maharashtra)
Dubai Ports World
Dubai Ports World to invest Rs 5000 Crores to establish Multi Modal Logistics Park through a joint venture with J&K Government
PROFILE: TRANSPORT & LOGISTICS SERVICES
03
SIGNIFICANT INFRASTRUCTURE INVESTMENTS IN THE ENTIRE LOGISTICS VALUE CHAIN
• Govt. to build > 80,000 Km of roads, highways, greenfield expressways, bridges with an investment of ~US$107 Bn.
• Will improve road connectivity & speed of road transport
• 1st phase involves construction of ~35,000 Km highways by 2022
Source: Press announcements, expert interviews
• DFC is India's largest infrastructure project worth US$12.6 Bn and spread across 3,317 km
• ~70% of freight is expected to shift to DFC, freeing up capacity on Indian Railways
• DFC would aid in decongestion of highways, as one freight train would be able to carry load equivalent to 1,300 trucks
• ~US$31 Bn investment planned by govt. to build 34 MMLPs
• Parks would lease space to private companies to run central operations & save on warehousing cost
• Will act as freight aggregation & distribution hubs & will enable long haul freight movement to reduce transport costs
• Sagarmala is a flagship programme to promote Port led development, harnessing India’s 7,500 KM coastline.
• 508 projects with estimated investment of more than 8 lakh Crore have been identified
• 111 inland waterway channels have been declared as National Waterways,
• Waterways can carry 4x amount of cargo on a liter of fuel & are ~50% cheaper compared to roads
Bharatmala Pariyojana
Dedicated Freight Corridors (DFC)
Multi modal logistics parks
Sagarmala and Inland waterways
RECENT POLICY & REGULATORY CHANGES TO SUPPORT GROWTH OF THE LOGISTICS SECTOR
• Will enable the logistics sector to access infra lending at easier terms
• Will allow for enhanced limits, larger funding as ECBs, longer tenor funds from insurance companies
• Making logistics sector eligible to borrow from IIFCL
Source: Expert discussions, press search
• India, Bangladesh, Bhutan, Nepal signed the MVA in 2015 for seamless movement of goods across borders
• Does away with trans-shipment of cargo, saving on time and cost
• Will provide faster connectivity to North East India
• Creation of an integrated action plan for development of the logistics sector
• Aims to bring down logistics cost from 14.4% to 10% of GDP by 2022
• Bringing logistics sector to global level in terms of cost & efficiency
• Lays down measures for infrastructure development
• Identify measures for overall enhancement of trade ecosystem
• "Trade Infrastructure for Exports Scheme" launched to assess gaps in logistics infra
Logistics given infra status
BBIN Motor Vehicle Agreement (MVA)
Creation of a LogisticsDivision at DoC
Foreign Trade Policy 2015-20
1 2 3 4
GLOBAL SCENARIO
Global transport and logistics sector (T&L) sector is expected to reach to
US$15.5 Trillion by 2024 at a CAGR of 7.5%
Asia-Pacific region
accounts for nearly
47% of the global
T&L industry, at an
estimated size of
US$3.8 Trillion in
2015.
Global transport and logistics sector (T&L) markets in terms of volume was valued at
54.7 Billion tons in 2015 and is expected to reach 92.10 Billion tons by 2024
8.2
15.5
2015 2024
Size (US$ Trillion)
Volume (Billion Tonnes)
54.7
92.1
2015 2024
CAGR:7.5%
CAGR:6.0%
Source: Transparency Market Research
INDIAN SCENARIO
India jumped 19 places to 35 in 2016 from 54 in 2014 in the ‘World Bank
Logistics Performance Index (LPI)’
39
4746
54
35
2007 2010 2012 2014 2016
LPI Rank: India
Source: World Bank Source: NITI Aayog, Economic Survey
2018 2020
160
215
Logistics Sector: Size(US$ Billion)
CAGR:16%
India’s logistics sector currently employs nearly 22 million people and is
expected to grow at a rate of 16% over the next two years.
SECTOR CONTRIBUTION TO INDIAN ECONOMY
Logistics sector as a whole contributes nearly 5% to the economy
Source: MOSPI
Railways, 0.77%
Service Incidentalto Transport, 0.75%
Air Transport, 0.15%
Water Transport, 0.05%
Storage, 0.05%
Road Transport,
3.14%
Share of logistics sector in Gross Value Added
(2016-17)
Approved Freight Corridors
Proposed Freight Corridors
Mumbai Rajdhani Line
Broad Gauge
Narrow Gauge
Major Stations
RAILWAYS
Desired investment in the next 5 yearsUS$
130.7Bn
US$ 15
Bn
700
48
3500
3360
Sanctioned for Mumbai-Ahmedabad high speed
rail (Bullet Train) project
Stations to be fed with solar power in medium term
Stations to be redeveloped in 2017-18
Kilometers of railway lines to be commissioned in
2017-18
Kilometers of dedicated freight corridors by 2019
rd• 3 Largest railway system globally
• Employs 1.4 million peopleth• 4 Largest rail freight carrier
Dedicated Freight Corridors (DFC)
Source: Invest India, Ministry of Railways
Ambala
Delhi
Ajmer
Kota
RatlamAhmedabad
Vadodara
Agra
Jhansi
Mughal Sarai
Bhopal BilaspurAdra
Allahabad
VaranasiDhanbad
Nagpur
RaipurBhusawal
Mumbai
Panaji
Hubli
Chennai
Vijaywada
Kolkata
Kharagpur
AIR TRANSPORT
Strong growth in domestic passenger traffic as well as freight volume in air transport.
Source: DGCA
57.9
373.1
103.7
637.8
Air Transport
CAGR:15.7%
CAGR:14.3%
Passengers (Million)
2012-13
Cargo ('000 Tons)
2016-17
Air Transport recorded a GVA growth of 14.5% between 2013 and 2017.
CAGR:14.5%
4.18
7.18
2013 2017
Air Transport: GVA(Rs’000 Crores)
Source: MOSPI
ROAD TRANSPORT
National Highways constructed at record average of about 27KM/day at a cost of over US$18 Billion. Target of constructing highways at 40KM/Day in FY19.
Source: MORTH, *Targeted
• US$82 bn to be invested for 34,800 km of highways by 2022 under Bharatmala.
• 100% FDI allowed through automatic route
Bharatmala Pariyojana
Source: Invest India11.7 12.1
16.6
22.6
26.9
40.0
FY14 FY15 FY16 FY17 FY18 FY19*
Highway Construction(KM/Day)
Economic Corridors
Inter Corridors
Golden Quadrilateral
Feeder Routes
NS- EW Routes
SHIPPING AND PORTS
Source: Ministry of Shipping1:Gross Registered Tonnage
1030810508
11425
12352
2014 2015 2016 2017
Shipping: Indian Fleet Capacity 1(GRT )
The freight capacity (GRT) by Indian fleet increased at a healthy rate of 6.2% per year between 2014 and 2017.
• Cargo traffic handled by Indian ports increased from 649 Million Tonnes in FY07 to 1134 Million Tonnes in FY17
MundraKandla
Sikka
Pipavan
Dahej
Hazira
VadhavanMumbaiJNPT
DighiJaigarh
Mormuguo
NMPTBelikeri
Cochin
Kolkata
Sagar Island
DhamraParadip
GopalpurVizagGangavaram
Kakainada
Krishnapatnam
Katupalli
EnnoreChennai
KaraikalEnayam
Tuticorin
Cuddalore/Sirkazhi
Major Port
Non-major Port
Proposed CEZ
Greenfield Port
Source: Invest India
Coastal Economic Zones (CEZs)
LOGISTICS
Development of 35 Multi Modal Logistics Park (MMLP)
Jammu
Ambala
Jaipur
Kota
Valsad Nagpur
Pune Hyderbad
Cochin
Coimbatore
Chennai
Bangalore
Vijaywada
Visakhapatnam
Jagatsinghpur
Kolkata
Guwahati
Salience of Each Node
1-10
11-20
21-35
Source: Invest India
North Punjab
JalandharAmritsarGurudaspur
Delhi - NCR
DelhiFaridabadGurgaonGhaziabadSouth Punjab
LudhianaSangrurPatiala
North Gujarat
AhmedabadVadodara
South Gujarat
SuratBharuch
Mumbai
MumbaiMumbai SuburbsJnptMumbai PortThanaRaigad dist.
WAREHOUSING INDUSTRY IN INDIA EXPECTED TO GROW AT 10.6% CAGR TILL FY20
Source: Market research, analyst report on Booming warehousing sector in India
INR Bn 10.6%
1,004
893
1,125
1,251
1,382
1,523
FY20eFY19eFY18eFY17eFY16FY15
Expected increase in demand for warehousing from 2014 to 2019(e)
CAGR of material handling, currently valued at ~INR 50,000 Mn
Warehouses planning to expand their level of automation by 2018
57%
20%
70%
RECENT INVESTMENTS IN THE WAREHOUSING SPACE
Source: Expert discussions, press search
Promoter Facility type Cost (USD Mn.) Location
Origo Commodities India Warehouses 39 Multi States
Container Corporation of India Warehouses 32 Chhattisgarh
Indian Oil Corporation Petroleum storage depot 31 Assam
Mahindra & Mahindra Distribution centre 23 West Bengal
Kesar Multimodal Logistics Composite logistics hub 21 Madhya Pradesh
M P Warehousing & Logistics Corporation
Composite logistics hub 19 Madhya Pradesh
Rajasthan State WarehousingCorporation
Warehouse 19 Rajasthan
Essar Oil Petroleum storage depot 14 Maharashtra
Musaddilal Properties Warehouse 11 Madhya Pradesh
Shiva Gases Cold storage 9 Uttar Pradesh
Container Corporation of India Inland container depot 8 Himachal Pradesh
KLG Imports & Exports Cold storage 8 Himachal Pradesh
Gujarat State Seeds Corporation Godown 7 Gujarat
MULTIPLE MARKET DRIVERS SUGGEST A POSITIVE FUTURE FOR WAREHOUSING
• The e-commerce market in India was estimated at US$28.4 Bn in 2016, and is expected to grow at a CAGR of 31% to touch US$83 Bn by 2020. 25% of this is from e-commerce retail which is ~US$ 7 Bn
• The logistics sector specific to e-commerce retailing in India was valued at US$0.5 Bn in 2016 and is projected to witness a CAGR of ~48% to reach US$2.3 Bn by 2020
Source: Expert discussions, press search
• Because of the lack of infrastructure and broken cold chain, more than 30% of agro-produce is lost in fields post harvesting
• There is a shortage of more than 10 Mn tonnes of cold storage for agro-produce in India
• This implies the untapped potential in the market which the players can capitalize upon
• The manufacturing sector drives the warehousing space which is growing at a CAGR of 8% - where annual additional space required during 2016-20 is 42 Mn sqft
• This is because of growing consumer demand and the respective requirement for storage facilities for meeting present and future demand
• EXIM cargo is expected to increase to 2,800 MMT by 2020
• The average containers handled per ship hour in India is 18, as compared to 28 internationally. Improved efficiency in container handling would directly result in increased warehousing demand
Consumption-led demand
Agriculture based demand
Manufacturing-leddemand
EXIM based demand
COLD CHAIN INDUSTRY IN INDIA ISEXPECTED TO GROW AT A CAGR OF 15%
Source: Analyst report, Phillip Capital
CAGR growth of Cold-Chain industry from
FY12-17
Expected market size
by FY22
US$7.92 B
12%
Size of Cold-Chain industry in FY17
US$ 3.95 B
Cold Chain industry
Temperature Controlled Warehouses US$3.67B
Temperature Controlled Vehicles US$0.28B
Lower penetration and high wastage
provides huge opportunities for
development of post-harvest logistics,
storage marketing infrastructure and
innovate technology in cold chain
infrastructure
LARGE INVESTMENT OPPORTUNITIES IN THE COLD-CHAIN STORAGE INDUSTRY
Source: NCCD
Shortfall- 69.8 K MT
Investment Reqd.-US$10.58B
Shortfall- 52.8 K MT
Investment Reqd.-US$10.12B
Shortfall- 11.7 Mn MT
Investment Reqd.-US$1.8B
Shortfall- 8.32 K MT
Investment Reqd.-US$12.8M
Packing House Reefer Vehicles Cold Storage Ripening Chamber
3PL MARKET WHILE CURRENTLY SMALL, GROWING STEADILY
Source: Technavio report on 3PL Market in India
3PL currently accounts for only 9% of total outsourced logistics revenue
Non-3PL revenue share
3PL revenue share
91%
9%
78%
22% Outsourced logistics rev.share
Non outsourcedlogistics revenue share
3PL expected to grow by 20%+ CAGR to US$ 10.4 Bn
3PL Market in India ( US$ Billion)
10.4
4.0 4.8
5.78
2013 2014 2015
7
8.52
2016 2017 2018
LOGISTICS SECTOR EMPLOYING OVER ~22MN PEOPLE
22
2017
26
2018
30
2019
34
2020
40
2021
46
2022
Employment Generated
Axis Title
• Simplifying requirements for incentives (skilling institutes)
• Providing incentives to logistic players to hire/train talent
• Provide incentives to employees to get trained
• Tailor all certification programs around identified job roles
• Standardize certifications across industries to ensure acceptability and drive systemic employment
• Dept. of Logistics to work with NSDC and LSC to develop competence plan for major Govt. projects
• Skilling can be embedded as a part of a logistics SEZ or MMLP as a critical enabler
Incentivise training/hiring of trained manpower
Improve certification quality and licensing regulations
Promote skilling as an enabler for Govt. logistics projects
GROWTH DRIVERS
Favourable Demographics
Increasing disposable income
Technological Efficiency
Infrastructure Upgradation
Government policy support
• India accounts for approximately 17.5% of global population and is set to be world’s most populous country by 2028.
• A large and growing domestic market with 40% of its population below the age of 20
• Consumer class households are likely to reach 137 million in 2025 with a collective disposable income of US$ 1.5 trillion which would increase the demand for the sector.
• Adoption of latest technology and innovation is expected to reduce the transportation cost by bringing in efficiency and assist in consolidation of an otherwise fragmented market.
• Across spectrum infrastructure upgradation, e.g. logistics park, freight corridors, Bharatmala and Sagarmala projects etc. likely to provide a major fillip to the sector
• Infrastructure status to Transport sector
• GST regime will expedite to faster formalization of the logistics sector.
• Target to reduce the logistics cost from present 14% of GDP to less than 10% by 2022
INVESTMENTOPPORTUNITIES
04
BUSINESS FRIENDLY INVESTMENT ENVIRONMENT
• To serve 50% of freight movements
• Enable 10% reduction in transportation cost
• 12% cut in CO emissions2
• Economic corridors
• Inter corridors and feeder routes
• National corridor efficiency improvement
• Coastal and Port connectivity
• Greenfield expressways
• US$61.6 Billion infrastructure investment mobilization
• US$5.3-6.1 Billion logistics cost saving per annum
• US$110 Billion boost to exports
• Create additional capacity
• Set up MMLPs across DFCs to provide complete transport solution
• Efficient, reliable, safe and cheaper mobility option
Development of Multi Modal Logistics Parks (MMLP)
Bharatmala Pariyojana’ focuses on efficient freight and passenger movement
DFCCIL* setup to improve rail fright infrastructure in joint venture with foreign/private players
Increasing port efficiency via ‘Sagarmala’ Project
Source: MORTH, Invest India, DFCCIL ( *Dedicated Freight Corridor Corporation of India Limited)
INVESTMENT OPPORTUNITIES ACROSS THE VALUE CHAIN
{MMLP
• The concept is relatively new in India and hence untapped. Opportunities exist in management and operation of dry ports, warehouses, cargo terminals, cold chain, banking & office spaces and supply chain to transport commodities.
{Roadways• Fleet exchanges to bring together transport customers and vendors like the stock exchange model.
Electronic Toll Collection (ETC) would amount to estimated fuel savings of INR 86,000 Crores per annum.
{Railways • Re-development of railway stations, Freight terminal operations
{Ports & Shipping• Port Development, Port support services e.g pilotage, dredging, harboring and provision of marine assets
such as barges and dredgers
BUSINESS ®ULATORY ENVIRONMENTIN INDIA
05
REFORMS FOCUS
Fiscalprudence andaccountability
Integratedtax
regime
Enabling Ecosystem
Servicespush
Job creation and inclusive
growth
REGULATORY ENVIRONMENT – INDIA
Foreign Investment Framework
• Governed by Foreign Exchange Management Act, 1999
• Progressive liberalization in the policies
• Automatic route (No prior approval requirement) such as railway and road infrastructure
• Approval route (Prior government approval required before setup) such as multi brand retail trading
Foreign Direct Investment (FDI) in India
Evolution of foreign investment regulations
FDI INVESTMENT ROUTE
Under Automatic Route Prior Approval Route
No requirement of any prior regulatory approval
Filing an intimation with RBI in prescribed format within 30
days of investment
Filing particulars of issue of shares within 30 days of issue
of shares to foreign investors
Filing an intimation with RBI in prescribed format within 30
days of investment
Filing particulars of issue of shares within 30 days of issue
of shares to foreign investors
Required approval from Govt. of India – Considered by respective Administrative Ministry/Department.
BUSINESS PRESENCE IN INDIA – FORM OF ENTITIES
Establishes local presence
Operates as a foreign company
Foreign Company
Liaison Office Project Office Branch Office Joint Ventures Limited Liability Partnership
Wholly Owned Subsidiary
Key considerations for choosing
investment vehicles
• Commercial considerations
• Regulatory framework (prior approval requirements for Chinese companies)
• Tax considerations
• Cost of operations{
This Report has been prepared by CII.