In order to develop infrastructure at its ports, India is likely to forge a tie-up with German Railways Deutsche Bahn (DB). The Indian Port Rail Corp. Ltd (IPRCL) is eyeing to set up a joint venture firm with DB for developing rail connectivity to ports.
The JV firm will develop projects around ports, including railway connectivity to ports worth US$15.51 billion.
The potential tie-up was discussed at a recent meeting between a German delegation led by transport minister Alexander Dobrindt and Indian road transport, highways and shipping minister Nitin Gadkari.
During the discussion, it was decided that the government will take forward the memorandum of understanding (MoU) signed at the Maritime India Summit for cooperation on modernization of rail-port connectivity and port-rail facilities at Indian ports.
Apart from this, India has envisaged billions of dollars of investment until 2035 under the Sagarmala programme, which involves the construction of new ports to harness the country’s 7,517 km coastline and the setting up of as many as 142 cargo terminals at major ports.
In the JV, both sides will have equal stakes; funds will be provided by the India side, whereas the German company will bring in the latest technology. The MoU foresees comprehensive cooperation for designing the connection projects, drawing up the operations plan and carrying out the engineering design and project management through to delivery to the port authority.
This is not Deutsche Bahn’s first project in India; the company is involved as a consultant in the new freight transport line between Sahnewal and Pilkhani, part of the Dedicated Freight Corridor Corporation of India’s eastern corridor.
The Indian Institute of Management Calcutta in Kolkata reports that India loses US$6.6 billion every year in transportation delays for freight, according to a study of survey data for the calendar years 2008-09, 2011-12 and 2014-15.
With a view towards finding an efficient way to move cargo from ports and to reduce logistics cost, last-mile rail connectivity to India’s ports holds a particular significance. The Indian government set up IPRCL to specifically work in this area.
The government has already proposed using IPRCL for the port connectivity projects identified under the Sagarmala programme; the corporation has been entrusted with carrying out the feasibility and implementation of 22 projects. Of the 22 projects, subject to their feasibility, 10 are likely to be completed during 2017-18 and seven during 2018-19. Five projects are at the survey/detailed project report/land acquisition stage, according to government reports.
Government officials believe that the JV will help bring foreign investment to India and cost-effective, environment-friendly, innovative technology for the port-rail connectivity projects.
Mumbai-based credit rating agency ICRA has in a report underlined that the government has also made a proposal to enhance coastal connectivity through construction of 2,000 km of roads. Such projects over the medium term would provide construction opportunities of over US$3.10 billion.
By Jagdish Kumar
India Correspondent | Mumbai
