SRINAGAR: Sultan Ahmed bin Sulayem, the Group Chairman of Dubai based DP World, that operates more than 77 marine and inland terminals across 40 countries, has finally arrived for a meeting with the J&K government authorities for setting up a dry port. He is accompanied by five other officials who flew from Hyderabad to help their boss in the basic spadework on the project which may entail by a few hundred crore investment.
Sulayem and his team also drove to the Bari Brahmana for a site visit in the afternoon before flying back home. They will have a detailed luncheon meeting with the Chief Minister where the idea exchange will take place. A formal agreement on implementation of the project will take place later this month and one option is to make it a sidelight of Prime Minister Narendra Modi’s Dubai visit later this week. This, however, will be decided by the outcome of the day-long visit by DP World honchos.
The visiting delegation had a detailed discussion with the state’s finance and industries departments in the civil secretariat that was attended by Finance Minister Dr Haseeb Drabu and Industries Minister Chandra Prakash Ganga. They were joined by their administrative secretaries and other top officials.
The meeting was the outcome of a protracted process of inviting some major player in setting up the facility that has remained a key deficit for trade and industry. Though the state government has not got the idea of DP World investment cleared from the central government – especially the Railway Ministry and the Industry Ministry, sources said, it will be taken up once the two parties – the DP World and the J&K government, agree for a joint venture logistics arms in the state.
Explaining the crisis in his budget speech early January, Dr Haseeb Drabu, the man behind the idea, said that the there were two basic reasons for the development deficit of the state: 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,” Drabu said, adding the only way-out was to create a logistics network that will reduce the logistics costs from existing 30 percent to below 10 percent.
“A well-developed logistic sector will not only increase our trade activity across all sectors but will also enhance the competitiveness of our businesses. I propose to change the relationship between the level of economic development (as measured in terms of GDP per capita), the composition of the state economy and logistics costs by proposing one dry port in Jammu and another one in Kashmir.
Drabu announced in his budget that the state government has moved forward on this and have an in principle understanding with the Government of Dubai. “The government of J&K and the logistics arm of the Government of Dubai, DP World, will get into a joint venture partnership for construction of a logistics hub, including an integrated dry port in the state,” he said.
Insiders told Kashmir Life that the brief meeting between the two sides in civil secretariat was basically an idea exchange. “The DP World conveyed that they have enough of resource to deploy but it all depends on the land and the connectivity,” an informed source said. The state government is offering a 100 acres land that can be increased once the volume of the business improves. The piece of land is inches away from the highway and the railway ministry has in principle agreed to invest in taking the tracks inside the proposed logistics space.
“In principle , e have agreed many things but these will become formal only after the investor gets a fair idea of what it intends to do,” one official said. “There is a possibility that the MoU can be signed during the Prime Minister’s visit but there is nothing final so far.”
Dry Port has been a key demand of the industry and trade for last many years. The absence of a logistics arm is adding to the cost of the business and reducing the margins thus making the business unprofitable. DP World is keen to invest in managing part of the horticulture exports from Kashmir. The Dry Port will have huge cold storage facilities that will help the highly fragile strawberry, apple, pears and flowers to get a better access to reach bigger markets fast.