Why India needs New cities - Exhaustive .

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Why India needs New cities - Exhaustive .

  1. 1. <ul><li>India’s Growth & Potential – Overview </li></ul><ul><ul><li>Population </li></ul></ul><ul><ul><li>Economy </li></ul></ul><ul><ul><li>Infrastructure </li></ul></ul><ul><li>Designer Cities </li></ul><ul><li>3. Designer Cities Augmented with Ports </li></ul><ul><li>4. The Agricultural Plug-In </li></ul>AEON Consultants Contents :
  2. 2. AEON Consultants India’s Growth & Potential – Overview ( Population )
  3. 3. AEON Consultants Growing Indian Urban Population
  4. 4. <ul><li>Urban population has grown at about 4% p.a. vis-à-vis 1.5% growth in rural areas </li></ul><ul><ul><ul><li>Level of urbanisation increased from 23% in 1981 to 29% in 2001 </li></ul></ul></ul><ul><ul><ul><li>Expected to reach about 36% by 2011 </li></ul></ul></ul><ul><ul><ul><li>Pace of urbanisation has rapidly increased in the last 2 decades </li></ul></ul></ul><ul><li>Increase in Urban incomes also having an impact on the demand for urban infrastructure </li></ul><ul><ul><ul><li>Share of service sector in the Indian GDP has increased significantly </li></ul></ul></ul><ul><ul><ul><li>Has resulted in increase in income levels in the Urban areas </li></ul></ul></ul><ul><li>Of the 21 mega cities (population. 10 million+) in the world , 17 are estimated to be in developing countries, 3 in India </li></ul><ul><li>India has the second largest urban system in the world. Comprises of over 3700 urban local entities </li></ul><ul><li>About 30% of the total population resides in Urban areas </li></ul><ul><ul><ul><li>Two-thirds of the above live in Class I (100k plus) cities </li></ul></ul></ul><ul><li>Metropolitan (million plus) cities have increase from 5 in 1951 to 27 cities in 2001 </li></ul><ul><ul><ul><li>About 1/3rd of the urban population lives in these cities </li></ul></ul></ul><ul><li>Engine of productivity and growth in the country </li></ul><ul><ul><ul><li>Contributes about 60% of the national income </li></ul></ul></ul>AEON Consultants Indian Urban Growth- Features
  5. 5. AEON Consultants India’s Growth & Potential – Overview ( Economy )
  6. 6. AEON Consultants Burgeoning Indian Economy 1991 2006 <ul><li>GDP GROWTH -> negative </li></ul><ul><li>INFLATION -> double digit </li></ul><ul><li>FOREX RESERVES < US$ 2 b </li></ul><ul><li>EXPORT GROWTH > marginal </li></ul><ul><li>FISCAL DEFICIT -> 10%(Apppx) </li></ul><ul><li>SENSEX -> around 1500 </li></ul><ul><li>ANNUAL FII INFLOWS > nil </li></ul><ul><li>GDPGROWTH > 7% </li></ul><ul><li>INFLATION < 5% </li></ul><ul><li>FOREX RESERVES > US$ 140 b </li></ul><ul><li>EXPORT GROWTH > 20% </li></ul><ul><li>FISCAL DEFICIT < 4% </li></ul><ul><li>SENSEX(11700) > DOW JONES </li></ul><ul><li>RETURN IN LAST YEAR = 74% </li></ul><ul><li>CORORATE EARNINGS GROWTH > 20% </li></ul><ul><li>ANNUAL FII INFLOWS > US$ 10b </li></ul><ul><li>MARKET CAPITALISATION > US$ 700b </li></ul><ul><li>MARKET CAPITALISATION(1998) = US$ 100b </li></ul>
  7. 7. <ul><ul><li>A liberalizing economy and rated as 4th largest country based on Purchasing Power Parity [PPP] </li></ul></ul><ul><ul><li>World’s largest democracy & among the strongest emerging markets </li></ul></ul><ul><ul><li>1..2 billion people with 300 million in the middle class bracket </li></ul></ul><ul><ul><li>Well matured financial and securities market </li></ul></ul><ul><ul><li>Time-tested judicial systems </li></ul></ul><ul><ul><li>WTO member committed to providing opportunity to the global market </li></ul></ul><ul><ul><li>Constantly undertaking reforms in every sector with Infrastructure Sector receiving Government’s fullest attention </li></ul></ul>AEON Consultants Indian Scenario- Features
  8. 8. <ul><li>India has potential to attract US $ 100 billion over next five years </li></ul><ul><li>Export Oriented Sectors alone to attract US$ 11 billion investments </li></ul><ul><li>Increase in FDI will lead to increase in GDP by another 2-3 % </li></ul><ul><li>Potential for creation of 1 Million direct and indirect jobs each year </li></ul><ul><li>Large pool of educated manpower available at affordable cost </li></ul><ul><li>Significant Impact on lifestyle and standard of living </li></ul><ul><li>Cities with world class integrated infrastructure recognized as necessary drivers of economic growth </li></ul><ul><li>Between 2002 to 2007 India has improved its FDI confidence ranking from Rank No. 15 to Rank No. 2 </li></ul>Source: AMCHAM with McKinsey&Co. AEON Consultants Indian Economy Growth- Features
  9. 9. On a scale of 0 to 3 . Source : A.T. Kearney AEON Consultants Indian Economy Growth- Features
  10. 10. AEON Consultants India’s Growth & Potential – Overview ( Infrastructure )
  11. 11. <ul><li>Only 60% of the Urban households have piped water supply </li></ul><ul><li>Only 46% of households have water toilets and only 28% are connected to public sewerage system </li></ul><ul><li>Only 60% of them have their garbage collected by the municipal authorities </li></ul><ul><li>O ver 2 1% of the urban population lives in squatter settlements/slums </li></ul><ul><li>The Tenth Plan Document has assessed a shortage of 22.4 million houses during the period 2002-07, which requires an investment of Rs. 4 lac crores </li></ul><ul><li>The city roads inadequate/poor for traffic requirements, leading to congestion </li></ul><ul><li>None of the Indian cities have proper MRTS </li></ul><ul><li>Inadequate medical and health facilities (Appx. 26 beds per 10000 population in Public Hospitals) </li></ul><ul><li>Demand for Urban Infrastructure investment - Grown beyond the resources of Govt. </li></ul>AEON Consultants Indian Urban Infrastructure – Shortcomings
  12. 12. <ul><li>India Urban Sector is competing with the best cities in the developing countries to attract investments. Thus creating urban infrastructure is mandatory to increase India’s competitiveness </li></ul><ul><li>Sustaining Industrial growth requires development of cityscapes </li></ul><ul><li>Industrial growth faces a major impediment as Inadequate infrastructure is identified as one of the biggest constraints of doing business in India </li></ul><ul><li>Infrastructure plays a major role when it comes to deciding between China, India and other Asian countries for FDI and FII decisions </li></ul>AEON Consultants Inadequate Indian Urban Infrastructure – Impact ?
  13. 13. Hampers Economic Growth Lower Corporate Investments Affects Country’s Global Competitiveness Affects the profitability of production, levels of income, output and employment Slows down the pace with which a country can integrate its’ economy into the global system Hinders expansion in areas with poor infrastructure and lesser developed areas Poor Urban Infrastructure AEON Consultants Poor urban service coverage is the main hindrance to a city’s ability to attract investments which promote economic development Inadequate Indian Urban Infrastructure – Impact ?
  14. 14. Source: Economic Forum’s Global Competitive Report of FY07; *From a list of 14 factors, respondents were asked to select the five most problematic for doing business in India and to rank them from 1 to 5. Figure 27 shows responses weighted according to their rankings, where higher the figure the more problematic the factor AEON Consultants Inadequate Indian Urban Infrastructure – Impact ? Total 4 11 1.2 3.1 1 27 3 18 1.3 4.5 3.2 15 5 7 0 5 10 15 20 25 30 Access to finance Corruption Crime and theft Foreign currency regulations Government instability/coups Inadequate supply of infrastructure Inadequately educated w orkforce inefficient government Inflation Policy instability Poor w ork ethic in national labor Restrictive labor regulations Tax rates Tax regulations Total weighted responses Bottlenecks
  15. 15. <ul><li>India’s investment in infrastructure at around 4.6% of GDP is far lower than that of China’s at 11% </li></ul><ul><li>China is investing 8-10x in highways every year since the mid-1990s compared with India’s investment </li></ul><ul><li>In ports, China has on average added 350 million tonnes in capacity every year. This compares to overall traffic of 650 million tonnes in India </li></ul><ul><li>China added 100 gigawatts in electricity generation capacity in 2007 alone. This compares to total electricity generation capacity of 140 gigawatts in India </li></ul><ul><li>The gap in infrastructure between India and China is so large that for India to catch up with China’s present level of stocks per capita by 2015, India’s infrastructure investment to GDP should rise to 12.5% as against the current 3.6% </li></ul><ul><ul><li>2.8% of GDP(Govt.) </li></ul></ul><ul><ul><li>0.8% of GDP(Private) </li></ul></ul>Indian Urban Infrastructure – Requirements AEON Consultants Indian vs. China – a comparison
  16. 16. <ul><li>The Gross Capital Formation (GCF) in infrastructure as a proportion of the GDP emerges as the most important key in sustaining high economic growth. </li></ul><ul><li>However GCF as a proportion of GDP continues to be lower at around 5% only </li></ul><ul><li>As per the Indian Prime Minister’s speech at NYSE 2004 US$150/year bn would be required in next 10 years for infrastructure alone </li></ul><ul><li>According to the United Nations Population Division (UNDP) by 2030 while the rural population will increase only marginally, urban population will double by 2030 to around 600 million people . </li></ul>Indian Urban Infrastructure – Requirements AEON Consultants Indian Urban Infrastructure – Requirements
  17. 17. <ul><li>It is estimated that INR34,385 billion (~USD860 billion) worth of construction opportunity in India for the next five years, representing a CAGR of 20% versus a CAGR of 14% for the past five years </li></ul><ul><li>The Central Public Health Engineering (CPHEEO) has estimated fund requirement of Rs. 172,905 crores (~USD38.42 billion) for 100% coverage of the urban population under safe water supply and sanitation services by 2021 </li></ul><ul><li>The Rail India Technical & Economic Services (RITES) has estimated fund requirement for Urban Transport Infrastructure at Rs. 207,000 crores (~USD46 billion) over the next 20 years </li></ul><ul><li>Comparing the demand with the estimated annual institutional finance flow of about Rs. 5,000 crores (~USD1.1 billion) leaves a huge gap in Infrastructure funding requirements </li></ul>AEON Consultants Indian Urban Infrastructure – Requirements
  18. 18. <ul><li>Recent initiatives have seen India create a liberalised and free policy regime in all infrastructure sectors i.e </li></ul><ul><ul><li>Roads – Highways & Road development projects worth US$ 12 billion being implemented through National Highway Authority of India (NHAI), have attracted extensive participation of world majors </li></ul></ul><ul><ul><li>Telecom – India is rated as amongst the fastest growing markets </li></ul></ul><ul><ul><li>Seaports – Leading port operators across the world participating in government port privatization and to develop greenfield ports. </li></ul></ul><ul><ul><li>Power – Huge investment plans in power generation, transmission and distribution through both government and private sectors are being planned </li></ul></ul><ul><ul><li>Railways – Moves to augment rail infrastructure through private sector being brought in place </li></ul></ul>AEON Consultants Indian Urban Infrastructure – Government Initiatives
  19. 19. <ul><li>DESIGNER CITIES </li></ul>AEON Consultants OUR SOLUTION….
  20. 20. <ul><li>Although, each city or town has a master plan and zoning plans and is technically supposed to expand in conformity with that in a planned manner, the coming up of slums shows a definite weakness in the system if not a failure of the development authorities </li></ul><ul><li>The growing urbanization has posed a new challenge to the authorities as there is a continuous pressure on available basic civic services like shelter, drinking water, electricity, sanitation, transport, health and education </li></ul><ul><li>The advantage a new Designer City will have is that they wont carry any historical baggage of improper urban planning and development </li></ul><ul><li>The expenditure on improving the infrastructure in cities is massive and even when incurred, the cities will soon reach saturation. </li></ul><ul><li>Cost of building new cities is much lower than providing different services to the people scattered in different slum areas of a city or providing all the rural areas with infrastructure. </li></ul><ul><li>Increased production of goods and services at a lower cost there by creating efficient contribution towards Indian Economy </li></ul><ul><li>One city will not solve India’s problems, but a chain of such cities will go a long distance in urbanising India. </li></ul>AEON Consultants Why build a whole new city ??
  21. 21. <ul><li>It is planned to build the city as one Multi-Product SEZ </li></ul><ul><li>The area for a multi-product SEZ varies from 2500acres(min.) to 12500acres </li></ul><ul><li>It is mandatory for a minimum of 35% of the area known as processing area to have industries involved in exporting goods and services </li></ul><ul><li>An SEZ is the most sought after status by the industry players keeping in mind the tax incentives </li></ul><ul><li>Special Economic Zones (SEZs) in India defined as : </li></ul><ul><li>“ Specifically delineated duty-free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs” </li></ul><ul><li>Apart from tax benefits, the world class infrastructure will further lure the industries in to the city </li></ul><ul><li>The SEZ act requires the developer to further develop the social infrastructure in the remaining 65% or less area of SEZ known as non-processing area </li></ul>AEON Consultants Proposed concept – A Multi-Product SEZ City
  22. 22. <ul><li>High Point - Preferential Policy framework with a package of incentives </li></ul><ul><li>Benefits of local advantages within an international business environment </li></ul><ul><li>Business Infrastructure combined with social facilities </li></ul><ul><li>Development, Administration and Operation to be undertaken by private sector to enable a hassle free operating environment </li></ul><ul><li>Envisaged as areas of excellence to enable global companies to derive domestic advantages for doing business </li></ul><ul><li>An SEZ is ensured of infrastructure support for development in terms of resources like water, power, roads connecting to SEZ by the government </li></ul><ul><li>Further, government goes a long distance in acquiring the land for an SEZ, which to a great extent simplifies the process of land acquisition </li></ul><ul><li>Sectored restrictions on manufacturing sector inapplicable within SEZ </li></ul><ul><li>Single window clearance </li></ul><ul><li>All SEZ activities on self certification basis </li></ul>AEON Consultants SEZ – Added Incentives
  23. 23. <ul><li>Inter unit transfer of goods permitted </li></ul><ul><li>The SEZ developer enjoys various benefits, a few of which are listed below: </li></ul><ul><ul><ul><ul><li>Exemption from customs/excise duties for development of SEZs for authorized operations approved by the BOA. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Income Tax exemption on export income for a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Exemption from dividend distribution tax under Section 115O of the Income Tax Act. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Exemption from Central Sales Tax (CST). </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act). </li></ul></ul></ul></ul><ul><ul><li>Integrated Greenfield cities are the most sought after projects by all state governments under a PPP(Public Private Partnership) model </li></ul></ul>AEON Consultants SEZ – Added Incentives
  24. 24. <ul><li>No routine customs examination of export and import cargo </li></ul><ul><li>Forward looking Labour Laws under consideration </li></ul><ul><li>100% FDI for manufacturing units operating inside SEZs through automatic approval route in almost all sectors </li></ul><ul><li>100% exemption of income tax for the first 5 years and a 50% exemption for the subsequent 2 years from the date of commencement of operations. </li></ul><ul><li>100% profit repatriation facility from export earnings </li></ul><ul><li>Permission to sell within the Domestic Tariff Area (DTA) and an exemption from a Special Additional Duty (SAD) subject to the company having a positive Net Foreign Exchange Position (NFEP) </li></ul><ul><li>Supplies from DTA to be treated as exports while those from SEZs to DTA to be treated as imports. </li></ul><ul><li>Investments in SEZ treated as infrastructure development and eligible for exemption </li></ul><ul><li>Local inputs at reduced cost without the excise, VAT other levies of India </li></ul><ul><li>Duty free import of materials for construction, capital goods and goods required for O&M </li></ul>AEON Consultants SEZ – Added Incentives
  25. 25. <ul><li>Goals </li></ul><ul><ul><ul><ul><li>Use Government resources to attract private investments </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Improve efficiency in service delivery </li></ul></ul></ul></ul><ul><li>PPP approach </li></ul><ul><ul><ul><ul><li>Private Sector contribution for: </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Financial investments </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Improved Technologies </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Efficiency in service delivery </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Public Sector contribution for: </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Financial gap funding to make projects commercially viable </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Providing institutional support guidance & regulation </li></ul></ul></ul></ul>AEON Consultants PPP – Public Private Partnership ?
  26. 26. AEON Consultants PPP – Public Private Partnership ? Types of Contracts Asset Ownership O&M Capital Investment Commercial Risk Duration (Yrs) Service Contract Public Private & Public Public Public 1-2 Management Contract Public Private Public Public 3-5 Lease Public Private Public Private 8-15 Concession Public Private Private Private 25-30 BOT/BOOT Private & Public Private Private Private 25-30
  27. 27. <ul><ul><li>Public Private Participation is gaining increased prominence in developing countries </li></ul></ul><ul><ul><li>Investments flows to infrastructure projects with private participation in developing countries grew by 12% to US$ 64 billion </li></ul></ul><ul><ul><li>China has executed around 406 infrastructure projects during the period 1990-2004 with a cumulative investment of US$ 67 billion </li></ul></ul><ul><ul><li>Greenfield projects (i.e., BOO, BLO, BOT, BOOT) most common format of Public Private Partnerships </li></ul></ul><ul><ul><li>Indian Urban Infrastructure sector needs to learn from and build upon the international experience to harness the potential of PPP </li></ul></ul>AEON Consultants PPP – Public Private Partnership ?
  28. 28. <ul><li>India has got 14,500 km of navigable waterways, which comprise of rivers, canals, backwaters, creeks, etc </li></ul><ul><li>Presently, about 37,00 km of major rivers is navigable by mechanized crafts but actually only 2000 km is being used </li></ul><ul><li>160 tonnes of cargo is transported through Inland Water Transport </li></ul><ul><li>There are 12 major ports in the country apart from 139 minor working ports along the coastline of about 5,600 km. </li></ul><ul><li>The 12 major ports of the country have, on the other hand, handled a total of 519 million tonnes of cargo during the year 2007-08, registering a growth of 12% in cargo throughput. Last year, the ports handled 463 million tonnes </li></ul><ul><li>Major ports are the direct responsibility of the Central Government while the minor/intermediate are under the management of the state governments </li></ul><ul><li>Kandla, Mumbai, Mormugao, New Manglore, Cochin and Jawaharlal Nehru Port are the major ports of the west coast while </li></ul><ul><li>Indian ports handle large quantities of commodities such as crude, iron ore, steel products, fertilizers, food grains and cement. Apart from these electronics, textile, stationery, auto ancillaries, leather and jute products are also transported via ports </li></ul>AEON Consultants Indian Ports
  29. 29. <ul><li>Significantly, India's port sector has emerged the unsung hero in India's efforts to increase its global presence. </li></ul><ul><li>The country's booming economy along with its foreign trade has given a tremendous boost to the sector, which has been instrumental in increasing India's share in world trade from 1.1 per cent in 2004 to 1.5 per cent in 2006 </li></ul><ul><li>India's share in world trade is likely to increase to 2 per cent by 2009 </li></ul><ul><li>With a growth rate of 19 per cent, India's container cargo traffic is estimated to reach 21 million TEUs(Twenty Foot Equivalent Units) by 2016 </li></ul><ul><li>The share of non-major ports in cargo traffic has increased from less than 10 per cent in 1990 to the current level of 26 per cent </li></ul>AEON Consultants Indian Ports
  30. 30. AEON Consultants Indian Ports – all major(pink) and a few minor ports
  31. 31. AEON Consultants Traffic & Capacity for major ports for last 6 years YEAR TRAFFIC (Million Tonnes) GROWTH CAPACITY (Million Tonnes) GROWTH 2001-02 287.59   343.95   2002-03 313.55 9.03 362.75 5.47 2003-04 344.8 9.97 389.5 7.37 2004-05 383.75 11.30 397.5 2.05   2005-06 463 20.57 457.125 15 2006-07 519 12.09 660 15 AVERAGE GROWTH (%) 12.52 AVERAGE GROWTH (%) 8.97
  32. 32. AEON Consultants PROJECTED TRAFFIC (Million Tonnes) @ 15% growth per annum PROJECTED CAPACITY (Million Tonnes) 2007-08 583.64 2007-08 758.73 2008-09 671.18 2008-09 872.54 2009-10 771.86 2009-10 1003.42 2010-11 887.64 2010-11 1153.93 2011-12 1020.78 2011-12 1327.00 2012-13 1173.90 2012-13 1526.00 Projected traffic & capacity for major ports for next 6 years
  33. 33. <ul><li>In its representation to National Manufacturing Competitiveness Council (NMCC), FICCI has urged the Government of India to target over Rs 1 lakh crore(~USD22.2 billion) of investment in ports by 2012-13 so as to support the 12% manufacturing growth. </li></ul><ul><li>FICCI noted that Indian exports are growing at more than 20% since 2002-03 and last year (i.e. 2005-06) imports grew by 28% mainly on account of demand from manufacturing sector for raw materials, intermediate goods and capital goods </li></ul><ul><li>In addition to the current growth rate in cargo traffic if we consider the likely impact of various FTAs and multilateral trade agreements that India is going to have in the near future on our trade, FICCI feels that the projected traffic could reach 1174 million tonnes by 2012-13 at major ports </li></ul><ul><li>To support this traffic, around 1500 million tonnes of capacity is required at major ports by 2012-13, noted FICCI (Here, the underlying assumption is to add 30% surplus capacity over the projected traffic for the year). </li></ul><ul><li>The present capacity is only around 750 million tonnes </li></ul><ul><li>Already, 276 projects entailing an investment of US$ 13.70 billion have been identified. These include development of new berths, expansion and upgradation of existing berths, deepening of channels, equipment modernisation and upgradation of rail and road connectivity </li></ul>AEON Consultants Indian Ports – Presently Inadequate ?
  34. 34. <ul><li>Currently, Indian ports have a capacity of 750 million TPA. In comparison, China has an installed capacity of 5.6 billion TPA </li></ul><ul><li>Indian ports are working at much higher capacity utilization, 90%, as against world standards, wherein capacity is generally pegged at 120 per cent of estimated port traffic to ensure smooth functioning of the port </li></ul><ul><li>Currently, most of the ships carrying cargo from East to West break their bulk at Colombo, Hong Kong, or Singapore (this is trans-shipment port - shipment of goods to an intermediate destination before reaching its final port) </li></ul><ul><li>At present, 80 per cent of the Indian containers are trans-shipped at Colombo, Singapore, and Dubai. </li></ul><ul><li>Most of the major ports in India are not automated and require up gradation. They are grappling with low productivity compared with world-class ports such as Singapore </li></ul><ul><li>For instance, the time taken for clearing import cargo and shipping export cargo is 21 days and 19 days respectively in India as against 3 days and 5 days in Singapore. </li></ul><ul><li>In terms of railway costs Indian shippers incur 7.9 cents per km. as against Canadian railway cost of 2 cents. </li></ul><ul><li>Further, the logistics costs in India accounted for 13% of GDP compared to 11% in Japan; 10% in Europe and 9% in the US on account of poor logistics infrastructure at ports in the country </li></ul>AEON Consultants Indian Ports – Presently Inadequate ?
  35. 35. <ul><li>Inefficiencies at the ports affecting the traffic has been a major reason behind not growing at a reasonable rate and lagging behind in the global race </li></ul><ul><li>Although container traffic has grown rapidly at the major ports in India, inefficiencies due to infrastructure bottlenecks still persist </li></ul><ul><li>Infrastructure bottlenecks have led to higher dwell time, thus hampering container traffic growth </li></ul><ul><li>Weak regulatory structures of major ports </li></ul>AEON Consultants Indian Ports – Bottlenecks ??
  36. 36. <ul><li>Gujarat state, with the pioneering work being carried out by its port authority, Gujarat Maritime Board (GMB), has already established its leadership position among maritime states of India </li></ul><ul><li>GMB ports have registered a cargo throughput of 147 million tonnes during the fiscal year 2007-08 as against 132 million tonnes they handled the year before.  </li></ul><ul><li>Maritime states of Maharashtra, Andhra Pradesh (AP) and Tamil Nadu (TN) are neck to neck in comparison when it comes to claiming the No 2 position after Gujarat in port development </li></ul><ul><li>In east coast it is Andhra Pradesh as in west coast it is Gujarat ! </li></ul><ul><ul><li>There is more of an integrated development happening in Andhra Pradesh than elsewhere in south, either SEZ or industrial activity and connectivity. The state is supporting in land acquisition etc </li></ul></ul><ul><li>TamilNadu (east coast) will come closer to Andhra Pradesh but the issues their are related to land acquisition and when you go down south hinterland gets narrower </li></ul><ul><li>In terms of traffic volume it is Maharashtra(West coast). There is plenty of cargo availability and ports like Rewas, Dharmadhar, Ratnagiri, Dighi would add more pace to throughput in due course </li></ul>AEON Consultants Indian Ports – Various State Scenarios
  37. 37. <ul><li>Under the National Maritime Development Program (NMDP), the major thrust is on private sector participation. </li></ul><ul><li>66 percent of the total investment outlay is expected to the contributed from the private sector </li></ul><ul><li>Of this, NMDP has expected a total capital expenditure requirement of RS 55,800 crore(~USD12.4 billion) to expand the existing port capacities </li></ul><ul><li>Private players are expected to pump in Rs 34,500 crore(~USD7.66 billion), either as operators of container terminals or by forming joint ventures with port authorities </li></ul><ul><li>Further, 360 projects have been outlined for all ports put together, including expansion of ports, improvement in hinterland - inland region lying behind a port - connectivity, and deepening of ports (aimed at improving ports statistics) </li></ul><ul><li>Opening up of this sector for private participation and inducing favorable policies to promote investments will turn out to be the key so successful implementation of the huge capacity expansion project </li></ul>AEON Consultants Indian Ports – Government plans..
  38. 38. <ul><li>PORT AUGMENTED </li></ul><ul><li>DESIGNER CITIES </li></ul>AEON Consultants What do we have planned for ports in India and AAJ ?
  39. 39. <ul><li>A designer city with a multi-product SEZ status would be an “ IDEAL ” location for any manufacturing industry when very near to a world-class port. </li></ul><ul><li>Not only would the tax benefits be applicable to the trading done via the ports but also to the developer of the port </li></ul><ul><li>The tremendous savings on transportation of goods from the factory to the port will further provide an incentive to the industries </li></ul><ul><li>The strategy is in line with FICCI (Federation of Indian Chambers of Commerce and Industry) – E&Y(Ernst and Young) paper on “ transforming Indian ports into world class facilities ” </li></ul><ul><li>The FICCI-E&Y paper calls for focusing on three imperatives if the Indian port and shipping sector is to become competitive and world class. These include: </li></ul><ul><ul><ul><li>Focussed infrastructure development </li></ul></ul></ul><ul><ul><ul><li>Facilitating trade through an innovative mix of IT and other value added services </li></ul></ul></ul><ul><ul><ul><li>Promoting competition through privatisation </li></ul></ul></ul>AEON Consultants Proposed concept – A Multi-Product SEZ City augmented with a PORT
  40. 40. <ul><li>Chennai-Bangalore-Mumbai industrial corridor </li></ul><ul><ul><ul><li>The Karnataka Government in the State has planned to develop an industrial corridor along the national highway connecting Bangalore and Mumbai and also between Hubli and Bellary </li></ul></ul></ul><ul><ul><ul><li>Main idea behind creating an industrial corridor was to see that all districts along the highway were industrially developed </li></ul></ul></ul><ul><ul><ul><li>The State had been divided into six industrial zones and the Government had already identified the nature of industries that could come up, based on locally available raw materials </li></ul></ul></ul><ul><ul><ul><li>Bellary, where iron ore was available in abundance, was suited for steel industries, while Gulbarga and its surrounding places, which were rich in limestone deposits, were ideal for cement factories </li></ul></ul></ul><ul><ul><ul><li>Hubli-Dharwad and Belgaum would be given an opportunity to start automobile industries and IT/BT units </li></ul></ul></ul><ul><ul><ul><li>Food processing units would be started in Bijapur, Bagalkot and Shimoga which are well known for their horticultural produce </li></ul></ul></ul>AEON Consultants PROBABLE AREAS IDENTIFIED…
  41. 41. <ul><li>AP North Coastal Corridor </li></ul><ul><ul><ul><li>The Government of Andhra Pradesh intends to develop Coastal Corridor covering the Districts of Srikakulam, Vizianagaram, Visakhapatnam and East Godavari Districts for providing connectivity through various modes of transport to potentially identified ports both major and minor and power plants of different categories namely conventional, barge based, non-conventional power plants </li></ul></ul></ul><ul><ul><ul><li>The development is proposed for the integrated purpose to create infrastructure on design, finance and build under PPP mode </li></ul></ul></ul><ul><ul><ul><li>Government of A.P. proposes to conduct pre-feasibility and detailed feasibility studies on the existing pattern of road network, rail network and air links available and required for future facilities in order to create self sustaining infrastructure, which in turn generate revenue and improved facilities under the core sectors mentioned above </li></ul></ul></ul><ul><ul><ul><li>The principle objective behind this project is finally to develop the important connectivity of along the costal regions duly exploring the potentials under various natural resources in the coastal districts </li></ul></ul></ul>AEON Consultants PROBABLE AREAS IDENTIFIED…
  42. 42. Source : INCAP (Infrastructure Corporation of Andhra Pradesh) AEON Consultants SECTOR SKLM VZM VSP EAST GODV.     TRANSPORTATION         TOTAL PROJECT 1. a) Coastal Roads 130 km 52 km 100 km 156 km 438 KM Pre-feasibility study on 1.existing road pattern a. nature, serviceability, land availability, New alignment with connectivity to other salient units under, the proposed corridor b) Link roads 0 68 80 80 228 KM   130 120 180 236 666 KM 2. Rail Network 2 track Port link Railwayline   60 km     20 km     60 km     60 km     200 KM Study on existing rail links between ports and feasibility for further requirement in the light of goods & cargo handling in the ports. 3. Coastal Sea route Establishment of sea route along the North coastal districts.         Preliminary report prepared for total investment of Rs. 4628.80 crores(~USD1.028 billion) 4. Air Links             a) Air Ports 0 0 2 1 3 Pre-feasibility study to be done for each air port. b) Helistations 2 2 2 4 10 PORTS           Port wise feasibility study to be conducted for its initial feasibility. 1.Major Ports 0 0 1 1 2 2. Minor Ports 4 1 4 5 14 POWER           Pre-feasibility study to be done for each power plant for its potential features.     Power Plants           a) Conventional 2 2 2 2 8 b) Barge based 1 1 1 1 4 c) Non-conventional 6 6 6 6 24 AP NORTH COASTAL CORRIDOR – Development Plans
  43. 43. <ul><li>The lands to be acquired are vast and hence sometimes a few small chunks are unavailable due to the presence of a settlement </li></ul><ul><li>The government has been proactive in acquiring lands for the projects and SEZ’s but it faces opposition from a few opposition parties </li></ul><ul><li>The sole reason behind the opposition is the conversion of agricultural lands and inadequate compensation given to the farmers/owners of these lands </li></ul><ul><li>The development is also expected to change the natural settings of these areas, further strengthening the opposition </li></ul><ul><li>Most of the planned projects though ushering in development in the region, do not take care of the needs of the rural folk in these areas </li></ul>AEON Consultants PROBABLE AREAS IDENTIFIED - PROBLEMS/RISKS ??
  44. 44. <ul><li>THE AGRICULTURAL </li></ul><ul><li>CITY PLUG-IN </li></ul>AEON Consultants How do we plan to overcome these impediments ?
  45. 45. <ul><li>Conceived as a huge tract of land which will be utilised for large-scale mechanised agricultural activity </li></ul><ul><li>The agricultural activity shall be carried out in a corporate manner and will follow either a model of contract farming or co-operative, depending upon which is the more suitable one </li></ul><ul><li>The land owners shall have contracts with the corporate where-in they would retain the ownership of their land and receive an income which would be decided on the basis of his land area and produce per unit area. </li></ul><ul><li>The tract of land shall be provided with infrastructure facilities like reservoirs, irrigation grids, wind energy based power(windmills) if feasible etc., to provide the output an insulation from natural mishaps like floods, famine etc </li></ul><ul><li>The people stand to gain from the proposal as they get a fixed income, better equipment, improved farming practices, better infrastructure support and hence higher produce </li></ul><ul><li>The corporates mostly visualised as a food processing firm or a a firm like a textile firm shall have control over which crop to be grown based on their needs. This ensures availability of raw goods at cheaper rates and huge cost savings in transport, be it from the farm to the factory or factory to the port for export. </li></ul>AEON Consultants AGRICULTURAL CITY .. ! ?
  46. 46. <ul><li>The processing units shall be under the SEZ and hence the before mentioned tax incentives would apply </li></ul><ul><li>We on the other hand would not face the opposition other projects have faced as the people in this scenario will only stand to gain, though proper awareness regarding the project shall have to be done and any possible loop holes in the plan after discussion with experts plugged </li></ul><ul><li>In brief, we plan to promote even those industries in our SEZ which would find it in their best interest to enhance agriculture in the vicinity. The location of the land and it’s suitability for various crops shall determine the nature of both the industry and the crop </li></ul><ul><li>Further the agricultural plug-in would go a long way in bringing an urban lifestyle to the rural poor as time progresses soon </li></ul>AEON Consultants AGRICULTURAL CITY .. ! ?
  47. 47. <ul><li>About 70% of the population, and about 75% of the poor, live in rural areas and most depend on agriculture </li></ul><ul><li>Agriculture provides livelihood to 60 percent of the rural people and remains vital for food security </li></ul><ul><li>In the past decade (1995/96-2004/05) India's agricultural growth rate slowed down to less than 2 percent per year, compared to about 3.5 percent per annum in the preceding decade </li></ul><ul><li>In the poorest states, such as Madhya Pradesh, Orissa, and Rajasthan, growth in the last decade was below 1 percent per year </li></ul><ul><li>The stagnation of agriculture, the high proportion of poor dependent on it, and the widening rural-urban income gaps are the major concerns of the Government of India (GOI) </li></ul><ul><li>Yields of major crops (foodgrains, oilseeds, other cash crops) in India are lower than in many other countries - for example, rice yields in India are one-third of China’s and about half of those in Vietnam and Indonesia </li></ul><ul><li>The virtual collapse of the agricultural extension system in most states limits farmers' access to better technologies and practices </li></ul>AEON Consultants INDIAN AGRICULTURE – AN OVERVIEW
  48. 48. <ul><li>The effectiveness of the public agricultural research system is undermined by weaknesses in the agricultural research system such as: </li></ul><ul><ul><ul><li>bias towards irrigated agriculture </li></ul></ul></ul><ul><ul><ul><li>weak prioritization </li></ul></ul></ul><ul><ul><ul><li>proliferation of programs </li></ul></ul></ul><ul><ul><ul><li>top-down programs </li></ul></ul></ul><ul><ul><ul><li>weak cost effectiveness </li></ul></ul></ul><ul><li>The sustainability of land and water resources is at risk with increasing soil degradation and the over-exploitation of groundwater in many areas </li></ul><ul><li>In addition to erosion, salinity and alkalinity, soils are also losing carbon and micronutrients due to unbalanced fertilizer use </li></ul><ul><li>Nearly 30 percent of the blocks in the country are presently classified as semi-critical, critical or overexploited as groundwater use exceeds the rate of groundwater recharge </li></ul>AEON Consultants INDIAN AGRICULTURE – AN OVERVIEW
  49. 49. <ul><li>Succinctly put, following are the issues with indian agriculture </li></ul><ul><ul><ul><li>Farmers own small tracts of land making the use of machinery on their farms financially infeasible for them </li></ul></ul></ul><ul><ul><ul><li>Further due to the area being small and no uniformity followed in what is being grown by various farmers, the productivity decreases and sometimes also leads to degradation of soil fertility </li></ul></ul></ul><ul><ul><ul><li>Farmers are not provided with the adequate infrastructure support in terms of power, irrigation, flood protection etc. </li></ul></ul></ul><ul><ul><ul><li>Awareness of the modern farming practices is not there leading to farmers not getting optimum outputs </li></ul></ul></ul><ul><ul><ul><li>Farmers are taken advantage of by the intermediaries between them and the markets </li></ul></ul></ul><ul><li>Agriculture in India needs to be modernized, organised and carried out in a professional manner </li></ul><ul><li>India is a major exporter of cash crops like cotton which are the raw materials of various industries like textile </li></ul><ul><li>Properly planned co-ordination between agriculture and agri-industries can highly propel the incomes of both the farmers and the industries. </li></ul>AEON Consultants INDIAN AGRICULTURE – AN OVERVIEW
  50. 50. <ul><li>Thank you </li></ul>AEON Consultants

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