SECTOR PROFILE

01 WHY INDIA?
02 CHAMPION SECTORS

03 PROFILE

04 INVESTMENT OPPORTUNITIES

05 BUSINESS & REGULATORY

ENVIRONMENT IN INDIA
01 WHY INDIA?
 Large and Demonstrated
growing domestic capability to deliver
consumer high-quality,
Focus on market cost-effective Large
infrastructure solutions competitively-
development priced skilled
talent pool
World’s largest
democracy with
1.3 billion Integrated tax
people structure

INDIA
Enabling
business
environment

ADVANTAGE
Expertise across
a spectrum of
services

Access to
technology
INDIA – A FAVORED INVESTMENT DESTINATION
GDP in current prices (US$ Trillion) GVA share of sectors in FY18

Agriculture
Fastest 4.7 17%
growing major India’s GDP is likely to touch
economy in the world
US$ 5 trillion by 2025
in 2018 and 2019 2.6
Services
61% Industry
22%
2017 2023
6th largest economy
in the world by
nominal GDP and Services Trade (US$ Billion) Category-wise Services Export Category-wise Services Import
3rd largest economy (2016-17, % share) (2016-17, % share)
globally by PPP
Exports 14%
Imports 163.1 17%
10%
1%
74% 1% 66% 15% Travel
1st rank 95.7
globally in inward 1% Transport
greenfield FDI inflows 1% Insurance
in 2016 43.2
27.8
G.n.i.e
2004-05 2016-17 G.n.i.e- Government not included elsewhere; Miscellaneous*
* includes software, business, financial and communication services

India ranks 8th

in global services Gross Foreign Inflows-FDI (US$ Billion) Sector-wise FDI inflows Top FDI source countries
exports accounting (% share in inflows-Apr ‘00 to Mar’17) (% share in inflows- Apr’00 to Mar’17)
for 3.4% of
world trade in 75 Others, Others,
60.1 Services, 22%
60
commercial 26%
57%
Mauritius, 34%
45
services 30
15 6.1 USA, 6%
Power, 4%
0
Chemicals, 4% Netherlands, 6%
2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

Pharma, 4%
UK, 7%
Automobile, 5% Singapore, 17%
Japan, 8%
Source: IMF, FDi intelligence report 2017, RBI, WTO
GROWTH ENABLERS
Growing domestic consumer base Large, young human capital base

Rising disposable income and urbanization More than 800 million people under the age of 34 years

Urban Population and Per-capita Income Size of the workforce (millions)*

32.0 70000 1400 2025 (Projected) 2050 (Projected)

2015
31.2

1145
60000 1200
31.0 61,855

1008
Urban population (% of total)

985
984
Per-capita Income (INR)
50000 1000

860
30.0

795
40000 800
29.0
30000 600

492
466
27.8

405
28.0
20000 400

235
217
213
27.0 10000 200
18,523

77
71
55
49
47
36
37
35
27
26.0 0 0
2001 2011
Korea Thailand Japan US Europe China India
Per capita income Urban population

Per-capita Income data pertains to 2001-02 and 2011-12 * Population aged 15-64 years
Source: Census 2011, MOSPI Source: United Nations population statistics
02 CHAMPION
SECTORS
 Construction
Healthcare Transport Accounting & Related
& Logistics & Finance Engineering
Services

((( (((

Tourism Environmental Communication Media &

& Hospitality Services Services Entertainment

Financial Legal Education

IT & ITeS Services Services
Services
TRANSPORT & LOGISTICS SECTOR: INVESTMENT ANNOUNCEMENTS

Flipkart Dubai Ports World

Flipkart logistics park near Bangalore to help create 20000 jobs Dubai Ports World to invest Rs 5000 Crores to establish
in next two years Multi Modal Logistics Park through a joint venture with
J&K Government

CONCOR Ascendas-Singbridge
CONCOR ready to open MMLP in Naya Raipur (Chhatisgarh) Ascendas-Singbridge to set up Rs 350 Crores in a joint
and MIHAN (Nagpur, Maharashtra) venture with Firstspace Reality near Chennai
03 PROFILE:
TRANSPORT
& LOGISTICS
SERVICES
SIGNIFICANT INFRASTRUCTURE INVESTMENTS
IN THE ENTIRE LOGISTICS VALUE CHAIN

Bharatmala Dedicated Freight Multi modal Sagarmala and

Pariyojana Corridors (DFC) logistics parks Inland waterways

• Govt. to build > 80,000 • DFC is India's largest
Km of roads, highways, infrastructure project
greenfield expressways, worth US$12.6 Bn and
bridges with an spread across 3,317 km
investment of ~US$107
Bn. • ~70% of freight is
expected to shift to DFC,
• Will improve road freeing up capacity on
connectivity & speed of Indian Railways
road transport
• DFC would aid in
• 1st phase involves decongestion of
construction of ~35,000 highways, as one freight
Km highways by 2022 train would be able to
carry load equivalent to
1,300 trucks
• ~US$31 Bn investment • Sagarmala is a flagship
planned by govt. to build programme to promote Port
34 MMLPs led development, harnessing
India’s 7,500 KM coastline.
• Parks would lease space
to private companies to • 508 projects with estimated
run central operations & investment of more than 8
save on warehousing cost lakh Crore have been
identified
• Will act as freight
• 111 inland waterway
aggregation & distribution
channels have been declared
hubs & will enable long
as National Waterways,
haul freight movement to
reduce transport costs • Waterways can carry 4x
amount of cargo on a liter of
fuel & are ~50% cheaper
compared to roads

Source: Press announcements, expert interviews

RECENT POLICY & REGULATORY CHANGES TO
SUPPORT GROWTH OF THE LOGISTICS SECTOR
1 2
Logistics given
infra status
• Will enable the logistics
sector to access infra
lending at easier terms
• Will allow for enhanced
limits, larger funding as
ECBs, longer tenor funds
from insurance
companies
• Making logistics sector
eligible to borrow from
IIFCL
Source: Expert discussions, press search
3 4
BBIN Motor Vehicle Creation of a Logistics Foreign Trade
Agreement (MVA) Division at DoC Policy 2015-20
• India, Bangladesh, • Creation of an integrated • Lays down measures for
Bhutan, Nepal signed the action plan for infrastructure development
MVA in 2015 for seamless development of the
movement of goods logistics sector • Identify measures for overall
across borders enhancement of trade
• Aims to bring down ecosystem
• Does away with trans- logistics cost from 14.4%
• "Trade Infrastructure for
shipment of cargo, saving to 10% of GDP by 2022
Exports Scheme" launched
on time and cost
to assess gaps in logistics
• Bringing logistics sector
infra
• Will provide faster to global level in terms of
connectivity to North East cost & efficiency
India
GLOBAL SCENARIO

Global transport and logistics sector (T&L) sector is expected to reach to

US$15.5 Trillion by 2024 at a CAGR of 7.5%

Size (US$ Trillion)

15.5
:7 .5%
GR
CA
8.2
Asia-Pacific region
accounts for nearly
47% of the global 2015 2024

T&L industry, at an Volume (Billion Tonnes)

estimated size of
.0% 92.1
R:6
US$3.8 Trillion in 54.7
CA
G

2015.

2015 2024

Global transport and logistics sector (T&L) markets in terms of volume was valued at
54.7 Billion tons in 2015 and is expected to reach 92.10 Billion tons by 2024

Source: Transparency Market Research

INDIAN SCENARIO

India jumped 19 places to 35 in 2016 from 54 in 2014 in the ‘World Bank

Logistics Performance Index (LPI)’

LPI Rank: India Logistics Sector: Size

(US$ Billion)

6%
GR:1
CA
35 215

39
160

46
47

54

2007 2010 2012 2014 2016 2018 2020

Source: World Bank Source: NITI Aayog, Economic Survey

India’s logistics sector currently employs nearly 22 million people and is

expected to grow at a rate of 16% over the next two years.
SECTOR CONTRIBUTION TO INDIAN ECONOMY

Logistics sector as a whole contributes nearly 5% to the economy

Share of logistics sector in Gross Value Added

(2016-17)

Railways, 0.77%

Service Incidental
to Transport, 0.75%

Road Transport,
3.14%

Air Transport, 0.15%

Water Transport, 0.05%
Storage, 0.05%

Source: MOSPI
RAILWAYS
Dedicated Freight Corridors (DFC)
Desired investment in the next 5 years
US$
130.7Bn

Sanctioned for Mumbai-Ahmedabad high speed Ambala

US$ 15 rail (Bullet Train) project

Delhi
Bn Agra Allahabad
Ajmer
Jhansi Varanasi
Kota Dhanbad
Mughal Sarai
Ratlam
Stations to be fed with solar power in medium term Ahmedabad Bhopal Bilaspur Adra
Kolkata
700 Vadodara
Nagpur Kharagpur
Bhusawal Raipur
Mumbai

Stations to be redeveloped in 2017-18

Panaji Vijaywada Approved Freight Corridors
48 Proposed Freight Corridors
Hubli
Mumbai Rajdhani Line
Chennai
Broad Gauge
Narrow Gauge
Kilometers of railway lines to be commissioned in
Major Stations
2017-18
3500

• 3rd Largest railway system globally

• Employs 1.4 million people
Kilometers of dedicated freight corridors by 2019
• 4th Largest rail freight carrier
3360

Source: Invest India, Ministry of Railways

AIR TRANSPORT

Air Transport: GVA

Strong growth in domestic passenger traffic (Rs’000 Crores)
as well as freight volume in air transport.
%
:14.5
GR
CA
7.18

Air Transport

4.18
CAGR:
14.3%

637.8

2013 2017
Source: MOSPI
373.1
CAGR:
15.7%

103.7 Air Transport recorded a GVA growth of

57.9 14.5% between 2013 and 2017.

Passengers (Million) Cargo ('000 Tons)

2012-13 2016-17

Source: DGCA
ROAD TRANSPORT

Bharatmala Pariyojana
National Highways constructed at record
average of about 27KM/day at a cost of over
US$18 Billion. Target of constructing
highways at 40KM/Day in FY19.

Highway Construction
(KM/Day)

40.0

Economic Corridors
26.9 Inter Corridors
22.6 Golden Quadrilateral
Feeder Routes
NS- EW Routes
16.6
Source: Invest India
11.7 12.1

• US$82 bn to be invested for 34,800 km of

highways by 2022 under Bharatmala.
FY14 FY15 FY16 FY17 FY18 FY19* • 100% FDI allowed through automatic route

Source: MORTH, *Targeted

SHIPPING AND PORTS

Coastal Economic Zones (CEZs)

The freight capacity (GRT) by Indian fleet
increased at a healthy rate of 6.2% per year Major Port
between 2014 and 2017. Non-major Port
Proposed CEZ
Greenfield Port

Kandla
Mundra Kolkata
Shipping: Indian Fleet Capacity Sikka Dahej Sagar Island
(GRT1) Hazira
Pipavan Dhamra
Vadhavan Paradip
Mumbai Gopalpur
JNPT Vizag
Gangavaram
12352 Dighi
Jaigarh Kakainada

Mormuguo
11425 Krishnapatnam
NMPT Katupalli
Belikeri Chennai Ennore
Cuddalore/Sirkazhi
10508
10308 Cochin Karaikal
Enayam
Tuticorin

• Cargo traffic handled by Indian ports increased from 649

2014 2015 2016 2017 Million Tonnes in FY07 to 1134 Million Tonnes in FY17
Source: Ministry of Shipping
1:Gross Registered Tonnage
Source: Invest India
LOGISTICS
Development of 35 Multi Modal Logistics Park (MMLP)

North Punjab
Jalandhar Delhi - NCR
Jammu
Amritsar
Gurudaspur Delhi
Faridabad
Gurgaon
South Punjab Ambala Ghaziabad
Ludhiana
Sangrur
Patiala
Jaipur
North Gujarat Guwahati
Kota
Ahmedabad
Vadodara

Kolkata
Valsad Nagpur
South Gujarat Jagatsinghpur
Surat Hyderbad
Pune
Bharuch
Mumbai Visakhapatnam

Mumbai Vijaywada
Mumbai Suburbs
Jnpt
Mumbai Port
Bangalore
Thana Salience of Each Node
Raigad dist. 1-10
Chennai
Coimbatore 11-20
21-35
Cochin

Source: Invest India

WAREHOUSING INDUSTRY IN INDIA EXPECTED
TO GROW AT 10.6% CAGR TILL FY20

Expected increase in
INR Bn 10.6% 57% demand for warehousing
1,523 from 2014 to 2019(e)
1,382
1,251
1,125
1,004 CAGR of material handling,
893 20% currently valued at ~INR
50,000 Mn

Warehouses planning to
70% expand their level of
automation by 2018

FY15 FY16 FY17e FY18e FY19e FY20e

Source: Market research, analyst report on Booming warehousing sector in India

RECENT INVESTMENTS IN THE WAREHOUSING SPACE

Promoter Facility type Cost (USD Mn.) Location

Origo Commodities India Warehouses 39 Multi States

Container Corporation of India Warehouses 32 Chhattisgarh

Indian Oil Corporation Petroleum storage depot 31 Assam

Mahindra & Mahindra Distribution centre 23 West Bengal

Kesar Multimodal Logistics Composite logistics hub 21 Madhya Pradesh

M P Warehousing & Logistics

Corporation Composite logistics hub 19 Madhya Pradesh

Rajasthan State Warehousing

Corporation Warehouse 19 Rajasthan

Essar Oil Petroleum storage depot 14 Maharashtra

Musaddilal Properties Warehouse 11 Madhya Pradesh

Shiva Gases Cold storage 9 Uttar Pradesh

Container Corporation of India Inland container depot 8 Himachal Pradesh

KLG Imports & Exports Cold storage 8 Himachal Pradesh

Gujarat State Seeds Corporation Godown 7 Gujarat

Source: Expert discussions, press search

MULTIPLE MARKET DRIVERS SUGGEST A
POSITIVE FUTURE FOR WAREHOUSING
Consumption-led
demand
• The e-commerce market
in India was estimated at
US$28.4 Bn in 2016, and
is expected to grow at a
CAGR of 31% to touch
US$83 Bn by 2020. 25%
of this is from e-commerce
retail which is ~US$ 7 Bn
• The logistics sector
specific to e-commerce
retailing in India was
valued at US$0.5 Bn in
2016 and is projected to
witness a CAGR of ~48%
to reach US$2.3 Bn by
2020
Source: Expert discussions, press search
Agriculture based Manufacturing-led EXIM based
demand demand demand
• Because of the lack of • The manufacturing sector • EXIM cargo is expected to
infrastructure and broken drives the warehousing increase to 2,800 MMT by
cold chain, more than space which is growing at 2020
30% of agro-produce is a CAGR of 8% - where
lost in fields post annual additional space • The average containers
harvesting required during 2016-20 handled per ship hour in
is 42 Mn sqft India is 18, as compared to
• There is a shortage of 28 internationally. Improved
more than 10 Mn tonnes • This is because of efficiency in container
of cold storage for agro- growing consumer handling would directly result
produce in India demand and the in increased warehousing
respective requirement for demand
• This implies the untapped storage facilities for
potential in the market meeting present and
which the players can future demand
capitalize upon
COLD CHAIN INDUSTRY IN INDIA IS
EXPECTED TO GROW AT A CAGR OF 15%

Cold Chain industry

Temperature Controlled Temperature Controlled

Warehouses US$3.67B Vehicles US$0.28B
Lower penetration and high wastage
provides huge opportunities for
development of post-harvest logistics,
storage marketing infrastructure and
innovate technology in cold chain
US$ US$
12% infrastructure
3.95 B 7.92 B

Size of Cold-Chain CAGR growth Expected

industry in FY17 of Cold-Chain market size
industry from by FY22
FY12-17

Source: Analyst report, Phillip Capital

LARGE INVESTMENT OPPORTUNITIES IN THE
COLD-CHAIN STORAGE INDUSTRY

Packing House Reefer Vehicles Cold Storage Ripening Chamber

Shortfall- 69.8 K MT Shortfall- 52.8 K MT Shortfall- 11.7 Mn MT Shortfall- 8.32 K MT
Investment Reqd.- Investment Reqd.- Investment Reqd.- Investment Reqd.-
US$10.58B US$10.12B US$1.8B US$12.8M

Source: NCCD
3PL MARKET WHILE CURRENTLY SMALL, GROWING STEADILY
3PL currently accounts for only 9% of total 3PL expected to grow by 20%+ CAGR
outsourced logistics revenue to US$ 10.4 Bn

9% 3PL revenue
Outsourced
logistics rev. share
22%
share
3PL Market in India ( US$ Billion)

10.4

8.52
Non
outsourced 7
logistics Non-3PL 5.78
revenue 91% revenue share 4.8
share 4.0
78%

2013 2014 2015 2016 2017 2018

Source: Technavio report on 3PL Market in India

LOGISTICS SECTOR EMPLOYING OVER ~22MN PEOPLE

Employment Generated
46

40
34
30
22 26

2017 2018 2019 2020 2021 2022

Axis Title

Incentivise training/hiring • Simplifying requirements for incentives (skilling institutes)

of trained manpower
Improve certification
quality and licensing
regulations
• Providing incentives to logistic players to hire/train talent
• Provide incentives to employees to get trained
• Tailor all certification programs around identified job roles
• Standardize certifications across industries to ensure acceptability and drive systemic employment

Promote skilling as an • Dept. of Logistics to work with NSDC and LSC to develop competence plan for major Govt. projects
enabler for Govt. logistics • Skilling can be embedded as a part of a logistics SEZ or MMLP as a critical enabler
projects
GROWTH DRIVERS
Favourable Demographics

• India accounts for approximately 17.5% of global population and is set to be world’s most populous country by 2028.
• A large and growing domestic market with 40% of its population below the age of 20

Increasing disposable income

• Consumer class households are likely to reach 137 million in 2025 with a collective disposable income of US$ 1.5 trillion
which would increase the demand for the sector.

Technological Efficiency

• Adoption of latest technology and innovation is expected to reduce the transportation cost by bringing in efficiency and
assist in consolidation of an otherwise fragmented market.

Infrastructure Upgradation

• Across spectrum infrastructure upgradation, e.g. logistics park, freight corridors, Bharatmala and Sagarmala projects
etc. likely to provide a major fillip to the sector

Government policy support

• Infrastructure status to Transport sector

• GST regime will expedite to faster formalization of the logistics sector.
• Target to reduce the logistics cost from present 14% of GDP to less than 10% by 2022
04 INVESTMENT
OPPORTUNITIES
BUSINESS FRIENDLY INVESTMENT ENVIRONMENT

• Economic corridors
• To serve 50% of freight • Inter corridors and feeder
movements routes
• Enable 10% reduction in • National corridor efficiency
transportation cost Bharatmala
improvement
Development of
• 12% cut in CO2 emissions Multi Modal Pariyojana’ focuses • Coastal and Port connectivity
Logistics Parks on efficient freight
and passenger • Greenfield expressways
(MMLP)
movement

DFCCIL* setup to
improve rail fright Increasing port
infrastructure in joint efficiency via
• Create additional capacity venture with ‘Sagarmala’
foreign/private players Project • US$61.6 Billion infrastructure
• Set up MMLPs across DFCs investment mobilization
to provide complete
• US$5.3-6.1 Billion logistics
transport solution
cost saving per annum
• Efficient, reliable, safe and
• US$110 Billion boost to
cheaper mobility option
exports

Source: MORTH, Invest India, DFCCIL ( *Dedicated Freight Corridor Corporation of India Limited)
INVESTMENT OPPORTUNITIES ACROSS THE VALUE CHAIN

MMLP
{ • The concept is relatively new in India and hence untapped. Opportunities exist in management and operation
of dry ports, warehouses, cargo terminals, cold chain, banking & office spaces and supply chain to transport
commodities.

Roadways
{ • Fleet exchanges to bring together transport customers and vendors like the stock exchange model.
Electronic Toll Collection (ETC) would amount to estimated fuel savings of INR 86,000 Crores per annum.

Railways
{ • Re-development of railway stations, Freight terminal operations

Ports & Shipping

{ • Port Development, Port support services e.g pilotage, dredging, harboring and provision of marine assets
such as barges and dredgers
05 BUSINESS &
REGULATORY
ENVIRONMENT
IN INDIA
REFORMS FOCUS

Job creation
and inclusive
growth

Services
push

Enabling
Ecosystem
Fiscal Integrated
prudence and tax
accountability regime
REGULATORY ENVIRONMENT – INDIA
Foreign Investment Framework

Foreign Direct Investment

(FDI) in India

• Governed by Foreign Exchange • Automatic route (No prior

Management Act, 1999 approval requirement) such as
• Progressive liberalization in the railway and road infrastructure
policies • Approval route (Prior
government approval required
before setup) such as multi
brand retail trading

Evolution of foreign
investment regulations
FDI INVESTMENT ROUTE

Under Automatic Route Prior Approval Route

No requirement of any prior regulatory approval Required approval from Govt. of India – Considered by
respective Administrative Ministry/Department.

Filing an intimation with RBI in prescribed format within 30 Filing an intimation with RBI in prescribed format within 30
days of investment days of investment

Filing particulars of issue of shares within 30 days of issue Filing particulars of issue of shares within 30 days of issue
of shares to foreign investors of shares to foreign investors
BUSINESS PRESENCE IN INDIA – FORM OF ENTITIES

Foreign Company

Operates as a Establishes local

foreign company presence

Liaison Office Project Office Branch Office Joint Ventures Limited Liability Wholly Owned
Partnership Subsidiary

Key considerations
for choosing
investment vehicles

{ • Commercial considerations
• Regulatory framework (prior approval
requirements for Chinese companies)
• Tax considerations
• Cost of operations
This Report has been prepared by CII.