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India Freight Transport Report Q4 2011
Business Monitor International, Sep 2011, Pages: 55
'The Indian freight transport sector continues to grow rapidly, in line with the growth of the country's economy and trade. There are fears, however, that the industry cannot keep pace with the rate of change. There have been recent instances of congestion at two of India's primary government-owned ports. Further investment is needed to expand India's facilities, and new terminals are planned at Tuticorin, Kolkata and Mumbai's Jawaharlal Nehru, following the end of the saga over who should be allowed to bid for the development. As well as maritime investment, funds are going into developing the country's rail and air freight sectors, with projects such as the Dedicated Freight Corridor moving on apace.
Headline Industry Data
- 2011 port of Kandla tonnage throughput growth forecast is 8.8% and is projected to average 11.1% a year to 2015.
- 2011 rail freight tonnes/km growth forecast is 5.4% and is projected to average 6.1% to 2015.
- 2011 air freight tonnes growth forecast is 6.9% and is forecast to average 7.5% to 2015.
- 2011 total trade real growth forecast at 13.0%, and to average 12.1% to 2015. Key Industry Trends
Dedicated Freight Corridor Project Moves Forward With World Bank Loan India's ambitious Dedicated Freight Corridor (DFC) project has received a boost, having secured a World Bank loan to help finance the eastern segment of the scheme. BMI notes that the DFC will provide India's industries with an efficient railway system and at the same time decongest its overcrowded passenger trains.
Rajasthani 'Aerotropolis' Provides Upside Risk To BMI Air Freight Forecast Plans are being drawn up to develop a new cargo airport in Rajasthan, India. The airport would be part of a planned 'aerotropolis', a city built around airports to serve industries with a heavy reliance on aviation services. BMI notes that the venture will support the many Japanese firms already operating in the state. The Japanese firms have come as part of a memorandum of understanding (MoU) between the Rajasthan State Industrial Development & Investment Corporation (RIICO) and the Japanese External Trade Organisation (JETRO) signed in 2006, which led to the establishment of a Japanese investment zone.
East-Coast Ports Set To Rise As Indian Trade Patterns Change Changing Indian trade patterns are affecting the country's ports, with development of east-coast facilities gathering pace. Increased trade with China and other east-Asian countries, along with growing coal imports to fuel Indian power stations, is seeing the proportion of trade passing through east-coast ports rise steadily. BMI believes the changing flow of trade will likely lead to a raft of new developments and expansions on the east coast.
Key Risks To Outlook The key risk to our throughput forecasts for India's freight transport sector is if infrastructure investment does not manage to keep pace with the country's economic growth; in the ports sector we have seen congestion at two major ports during the quarter, JNPT and Chennai.
There are downside growth risks from spiralling inflation. Should food prices and oil prices maintain their upward march, there is a risk that we could see additional monetary tightening, which would surely come at the expense of headline economic growth. This would have a negative effect on throughput at the country's ports.
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