Dubai Ports to make Rs 1500 cr investment in the first phase
DUBAI: The Government of Jammu and Kashmir on Saturday signed a memorandum of understanding (MoU) here with Dubai Ports World to establish multi-modal logistics park (MMLP) and transportation hub in the state through foreign direct investment (FDI).
The MoU was signed by Jammu and Kashmir Finance Minister, Haseeb A Drabu with Chairman & CEO, Dubai Ports, Sultan Ahmed Bin Sulayem in presence of Prime Minister of India, Narendra Modi and the Crown Prince of Abu Dhabi Mohammed bin Zayed Al Nahyan at Presidential Palace in Abu Dhabi, an official handout read.
The MoU would also facilitate, for the first time ever, FDI to the tune of Rs 5000 crore to Jammu and Kashmir, through joint venture (JV), over the next five years.
“In the first phase an investment of Rs 1500 crore would be made by the Dubai Ports World in the multi-modal logistics parks (dry port) which would swell upto Rs 5000 crore over the next 5 years,” Drabu said.
He said the proposed inland logistic parks to be established at Samba in Jammu and Ompora in Kashmir would include warehouses and specialised storage solutions including CA stores and cold storage chains for transportation of agriculture, horticulture and handicraft products and other tradeable goods from J&K directly to the markets worldwide bringing down the transportation costs substantially, the handout read.
Drabu said it would not only bring down the transportation costs of goods, but also increase their market accessibility and transform the abysmal scenario wherein logistics accounts for about 18% of the total product cost in the state, as against 8-12% in other countries including China.
“The logistic parks will help the local industry and businesses to shift from point-to-point freight movement to the hub-and-spoke model followed in developed economies,” he said.
The integrated transportation mechanism including air, road, rail and waterways would ‘immensely’ improve efficiency in freight movement bringing down the transportation costs by 20 to 25 percent and giving major flip to the local economy, Drabu added.
To hash-out the modalities for setting up inland logistics parks in Jammu and Srinagar and finalise the MoU in this regard, Sultan Ahmed Bin Sulayem along with a team of senior executives of Dubai Ports visited J&K week. The Dubai Ports delegation held detailed deliberations with the Chief Minister, Mehbooba Mufti, Finance Minister, Haseeb A Drabu, Industries Minister, Chander Parkash Ganga and other state government officials and also visited the proposed site for the logistics park at Samba in Jammu. The delegation will be again visiting the state during summers this year to finalise the site in Kashmir, preferably at Ompora near the Srinagar International Airport, the handout further read.
The visit of Dubai Ports World delegation followed the announcement made by the finance minister in his budget speech in the state legislature last month about government’s plan to attract foreign direct investment by setting up two dry ports in the state to boost local economy.
Drabu, in his budget speech, said that there were two basic reasons for the development deficit of J&K: Cost structure and the missing multiplier.
“Being geographically disadvantaged, the cost structure of our economy is high which impacts margins of all small businesses making them operate on wafer-thin margins. Any shock to the system renders them unprofitable and they fall into a debt trap and are unable to service their borrowings,” he had said adding the only way out was to create an integrated logistics network that will reduce the logistics costs from existing 30 percent to below 10 percent, it added.
Dry Port, also called an inland port or multimodal logistics centre, is an inland terminal connected to a seaport by rail or road. It serves as trans-shipment point in transport of export/import goods and is named so because it is very similar to a seaport in services it offers except that it is not near a sea.