India ‘dream’ plan to cut freight times to 14 hours from 14 days
The sprawling assortment of smart cities and industrial parks on both sides of the freight railway could cut logistics charges that amount to roughly 14 per cent of total costs
A $7.1 billion rail corridor in Rajasthan that’s set to cut freight times between India’s capital New Delhi and the business hub of Mumbai to 14 hours from 14 days is finally showing signs of progress.
About 800km away in Gujarat, a 920-square-km industrial area is taking shape near the village of Dholera, with hundreds of workers fusing concrete sections of a sewerage system on a recent visit. Summing up the massive project’s ambition, a sign for a yet-to-be-built housing development reads: “Dream City.”
Plagued by delays, red tape and disputes over land acquisition, for years it seemed the $100 billion Delhi-Mumbai Industrial Corridor would remain just that — a dream. First proposed more than a decade ago, the sprawling assortment of smart cities and industrial parks on both sides of the freight railway could cut logistics charges that amount to roughly 14 per cent of total costs by bypassing the country’s infamously chaotic major cities.
“It’s not merely a pie-in-the-sky project,” said Michael Kugelman, senior associate for South Asia at the Woodrow Wilson Center in Washington. “It’s a very real initiative that’s gotten off the ground. If it can get over some significant humps, it could make some very real progress.”
Japan, seeking to boost ties with India as a counterweight to China, is partly financing the DMIC project and holds a 26 per cent stake. Indeed, Japan’s Tokyo-Osaka industrial corridor is an inspiration. NEC Corp has invested in a joint-venture project with the Indian government that is already providing logistics support along the route.
“In the last couple of years, we’ve seen that the pace of construction has quickened considerably,” said Piyush Sinha, who heads the joint venture as NEC’s India director.
For others, initial pledges remain contingent on the project’s progress. Airbus SE signed an agreement to assist in planning an “aerospace and defence manufacturing cluster” in Dholera, but pending an order of military helicopters from the Indian government, the French aviation giant hasn’t made any firm plans to invest there yet.
“We are in touch with several states to identify the right location for setting up the final assembly line and certainly we are looking at Dholera,” said Ashish Saraf, a vice-president at Airbus India, in an email.
Workers in Dholera are laying infrastructure over a 22.5 square km area in plots that are mostly owned by the government. Officials say this will be completed by the end of 2019, and they can then sell plots to factories. In three decades, they envision a city larger than Berlin.
The goal is to set up a “plug and play” environment for investors, says Jai Prakash Shivahare, managing director of the Dholera Industrial City Development. “We are looking to tie up with anchor investors so that they can also start their construction and in one-and-half-years, when our site is ready, their factories can also be ready.”
Work has now begun in four of the eight manufacturing destinations proposed in the first phase of the industrial corridor. But it has been far from smooth sailing to get to this point as red tape and budget constraints across six states and numerous sprawling ministries slowed progress, causing some to walk away altogether.
Hindustan Construction Company Ltd signed two separate agreements in 2009 and 2011 with Gujarat to invest roughly $8 billion for a waterfront city and a renewable energy park. Later the company abandoned the plans. Company spokesman Sandeep Sawant declined to comment.
Development beyond the initial 22.5-square km area in Dholera remains uncertain as farmers opposing land sales have a case pending in the Gujarat High Court demanding the government scrap its plans. “The future of Dholera is dark,” said Sagar Rabari, a farmer activist in Gujarat.
In Rajasthan, where roughly 40 per cent of the freight line passes, the state still hasn’t taken possession of land five years after the process began, even as bureaucrats seek to woo investors by publicising two proposed industrial townships. Unlike Dholera, farmers in the Khushkhera-Bhiwadi-Neemrana area do want to surrender their plots, but can’t as the state government doesn’t have enough money to pay for the 14 square km of land.
Villagers, meantime, aren’t allowed to sell to anyone else. “Farmers are the losers,” says Sube Singh Yadav, 64, a villager in Sahajahanpur.
Rajasthan authorities say they are arranging Rs32 billion for the land acquisition. “We will be proceeding with the land acquisition with innovative ways of financing,” says Rajeeva Swarup, additional chief secretary for Rajasthan’s industry department.
Most of the land needed for the freight corridor has been acquired, funding has been completed, contracts have been awarded and a phased start from December 2019 is expected, the Dedicated Freight Corridor Corporation of India Ltd. said in a statement. The whole corridor will be completed a year later, it said.
Much like Moody’s Investors Service — which last month raised India’s sovereign rating for the first time since 2004 citing potential dividends from reforms — some analysts are looking through the haze of short-term uncertainties to bet on the project’s prospects. But even with progress picking up, few expect anything but a bumpy road ahead.
“It’s a national flagship project, yes, but despite a fair amount of coordination from the centre the fact remains that the project just has so many moving parts,” said Jan Zalewski, a Singapore-based Asia analyst at Verisk Maplecroft, a political risk firm. “The DMIC in its entirety will continue to move ahead at a snail’s pace.”
Founded in Dubai/UAE, SCLG is a membership driven industry business group with 200+ corporate members. SCLG is expanding internationally to continuously enhance its global foot-print.
Managing supply chain and logistics more effectively shall contribute to positive growth of economy in range of 3% to 5% (GDP terms).
Impact of climate change on managing supply chain should be on agenda of all supply chain professionals.
Oil and Gas industry should enlarge its theme to manage supply chains of larger energy domain.
Reduction in current level of wastage in food supply chain shall help mitigate poverty.
Managing Fresh water supply chain needs attention of all.
Sophisticated demand forecast and planning for sure helps improve efficiency of supply chain.
7th Black Sea Ports and Shipping 2018 , International Hotel Casino & Tower Suites, Varna, Bulgaria 08th -12th May 2018
Inflection Summit, Awards 2018 - Digital Manufacturing Supply Chain , Delhi, NCR 12th September 2018
IOT World Asia , Marina Bay Sands, Singapore 18th -20th September 2018
2nd LAST MILE ASEAN Conference & Expo , BITEC, Bangkok 20th -21st September 2018
2nd Baltic Ports & Shipping 2018 , Radisson Blu Latvija Conference & Spa Hotel, Riga, Latvia 25th -27th September 2018
SMART IOT Singapore , Marina Bay Sands, Singapore 10th -11th October 2018
E Commerce EXPO , Marina Bay Sands, Singapore 10th -11th October 2018
4th China International Internet & E-commerce Expo , Shenzhen Convention and Exhibition Center 11th -13th October 2018
Supply Chain and Logistics Conference , Four Seasons Hotel Riyadh 15th -16th October 2018
East Africa Utlities Expo , Kenyatta International Convention Center Nairobi, Kenya 25th -27th September 2018
3rd Annual Saudi Freight & Logistics 2018 , Riyadh, Saudi Arabia 22nd -23rd October 2018
15th Trans Middle East 2018 , Intercontinental Aqaba Resort, Jordan 23rd -25th October 2018
Procurement 4.0 , Pullman Bangkok Grande Sukhumvit, Thailand 24th -25th October 2018
2nd Annual Modern Warehousing , Pullman Bangkok Grande Sukhumvit, Thailand 24th -25th October 2018
4th Annual Fleet Management , Pullman Bangkok Grande Sukhumvit, Thailand 24th -25th October 2018
UAE-INDIA Economic Forum , Dubai, UAE 24th -25th October 2018
Global Illicit Trade , Abu Dhabi 30th October 2018
FoodEx Saudi 2018 , Jeddah Centre For Forums And Events Jeddah, Saudi Arabia 12th -15th November 2018
Auto Aftermarket EMEA Summit 2018 , JUMEIRAH CREEKSIDE HOTEL, DUBAI 14th -15th November 2018
7th Annual Supply Chain Innovation Summit 2018 Asia Pacific , Singapore 15th -16th November 2018
20th Intermodal Africa 2018 , Mövenpick Ambassador Hotel Accra, Ghana 27th -29th November 2018
Refining & Petrochemicals World China 2018 , Beijing, China 05th -07th November 2018
Refining & Petrochemicals World Thailand 2019 , Bangkok, Thailand 23rd -24th January 2019
5th Middle East Leasing summit 2019 , Dubai, UAE 16th -17th January 2019