India in the spotlight
By International Adviser, 11 Nov 15
Samir Mehta, manager of JO Hambro’s Asia ex-Japan Fund, gives his observations from a recent research trip to India, a market which is a large overweight in his portfolio.
Progress on infrastructure is notoriously slow in India. The Dedicated Freight Corridor (DFC), a much-needed plan to build parallel railway tracks dedicated to carrying freight traffic along eastern and western corridors, is a case in point.
India’s rail tracks currently carry both passenger and freight traffic. Passenger trains get priority to the detriment of freight; average speeds for freight trains are abysmal, resulting in long delays and inefficient logistics.
Over the decades, railways have lost share to road transport, which is more expensive and more polluting than rail.
But once the DFC is up and running, with double-stacking of wagons and a doubling of average speeds, it should transform logistics costs and efficiencies for Indian manufacturing and trade.
Inevitably, though, construction is running behind schedule, and the project’s original 2017 estimated completion date has slipped.
The DFC project is run by the Indian Railways and is symptomatic of the way a government organisation functions.
