NOL/Drewry report: India’s transport connections limiting GDP growth
Findings from a research report commissioned by Singapore’s Neptune Orient Lines, suggest that India’s booming manufacturing sector is being hampered by inadequate transport connections, potentially costing an additional 1 percent to 2 percent of annual GDP growth.
“Costs and productivity issues are largely the result of an inadequate physical infrastructure to support India’s greater participation in the global supply chain. The costs associated with moving cargo are some of the highest in the world at 11 percent of landed cost, compared with a global average of 6 percent,” according to London-based Drewry Shipping Consultants’ report, entitled “Connecting India: Transport Challenges and Opportunities.'
“India’s ability to attract foreign direct investment (FDI) for its manufacturing sector is highly dependent on a transport sector capable of getting a higher-value range of manufactures to global markets on-time and at an acceptable cost,” said Cedric Foo, NOL Group deputy president. He added that recent FDI inflows have been equivalent to just 1 percent of India’s GDP at $4 to 5 billion per annum, whereas China has been able to attract more than 10 times that amount.
The report projects a potential doubling of container capacity at Indian ports, from 6 million TEUs in 2004 to 15.2 million in 2012.
“Connecting India confirms the huge potential of India to carriers, investors, manufacturers and our customers. If improved coordination can prevail, India will prove to be a pivotal link in the global supply chain,” Foo said.