#DPWorld's Ranjit Ray talks about the significance of the free trade zone in India and gives a tour of the #NhavaSheva facility.
Watch him in conversation with Vikas Shrivastav
For the latest news and updates, visit: ndtvprofit.com
Watch him in conversation with Vikas Shrivastav
For the latest news and updates, visit: ndtvprofit.com
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TVTranscript
00:00 [MUSIC PLAYING]
00:03 We are standing at the free trade zone of DP World
00:15 in Navasheva Special Economic Zone in Mumbai.
00:19 This is a facility which provides the importers
00:22 and exporters the facility to park their products over here
00:28 and avail deferment on the customs duty.
00:31 They can also do value additions on their products
00:33 before it is sold out to their customers.
00:36 We have with us Mr. Ranjit Ray, who
00:38 is the vice president economic zones for SCO and MENA region.
00:43 He will talk to us and take us through their facility
00:46 and explain the significance of this free trade zone in India.
00:50 Welcome to NDTV, Prof. Mr. Ray.
00:53 Good morning, Mr. Vikas.
00:54 Happy to have you here.
00:55 Welcome to our zones.
00:56 Happy to have you here and explain
00:58 the facilities and other significance
01:00 of this facility.
01:01 [MUSIC PLAYING]
01:04 This is the container yard where the cargo or the containers
01:22 from the port comes.
01:24 And they first store here for customs inspection
01:27 or for the waiting for the documents.
01:29 And then after clearance, they will go to the respective
01:32 warehouse or locations for storage, final storage.
01:34 So this is a temporary storage place for the containers.
01:38 See, you have a very global presence also.
01:40 I mean, you all started from Jebel Ali in UAE.
01:44 And the similar kind of model, I think,
01:47 you all are following in India also.
01:49 Can you give a briefly--
01:50 no, or if you can give a brief explanation
01:52 about your global model and what kind of model
01:55 you are following in India?
01:56 Yes, please.
01:57 Thank you for asking this.
01:59 See, Deep World is into economic zones or free zone business
02:03 for last three decades.
02:04 And our flagship free zones is in Jabza.
02:07 That's called Jebel Ali Free Zone in Dubai.
02:10 You can see the scale of Jabza.
02:11 It is spread over 60 square kilometers.
02:14 And today, the Jabza Free Zone is providing service
02:17 to more than 10,000 global customers from 140 countries.
02:21 So as to the Jabza Free Zone is also
02:24 contributing about 30% of GDP of Dubai as one single asset.
02:29 So this is the scale and size of this facility.
02:31 It is absolutely a flagship and a successful facility.
02:35 We as a company wants to take this success
02:37 to various countries across the globe, including India.
02:40 Today, we operate eight economic zones in the globe,
02:43 apart from Jabza.
02:44 And out of these eight, three are located in India.
02:47 So this success story, what we have done in Jabza,
02:49 we want to replicate across the country, across the globe.
02:52 So that is the way we have started this facility.
02:54 This is a flagship facility for us in India,
02:56 so far as Deep World is concerned.
02:58 And Mumbai facility we are standing,
03:00 this is one of the flagship for our subcontinent of Deep World
03:03 here.
03:04 So can we go to one of your warehouses here,
03:06 and you can show us across?
03:08 Yes, please.
03:08 What's happening here?
03:09 Please, I just want to take out the warehouse
03:10 and across the facilities and see some of the operations
03:13 of Swaraj.
03:14 Sure.
03:14 Please.
03:15 [MUSIC PLAYING]
03:18 [MUSIC PLAYING]
03:22 [MUSIC PLAYING]
03:25 [MUSIC PLAYING]
03:29 This is warehouse number two.
03:32 The size of this warehouse is 1,50,000 square feet,
03:36 the floor area.
03:38 And this warehouse is such a warehouse
03:39 where we have all types of storage facility available.
03:43 You are seeing this raking system, which is G plus 7.
03:47 From ground floor to seven stories high,
03:49 you can keep the cargo in each raking.
03:50 And also there is a ground storage facility.
03:52 This is where the cargo is stored in the ground.
03:56 Similarly, this side of the warehouses,
03:58 also same facility in the other side of the warehouses also.
04:01 So this can accommodate various types of cargo,
04:03 except hazardous and cold storage.
04:06 When we talk about the capacity of this warehouse,
04:08 a single warehouse, so how do you measure that capacity
04:11 and how much it is?
04:13 So it is by the measurement, by the chain.
04:17 So it is the design, and the layout
04:20 has been designed as 1.5 square feet as per the measurement.
04:23 And this is the floor height of this.
04:25 However, the cargo can be stored in much storage high,
04:27 so that we can store more and more cargo in the same space.
04:31 So that the utilization of the floor
04:33 is much more high when it is going for G plus 7.
04:36 So like this here, we have stored only one floor.
04:38 We may not store another cargo on top of it
04:39 because it could get damaged.
04:41 But we can store in G plus 7 floors.
04:43 On the racks.
04:43 On the racks.
04:44 That's why we have the racking system also,
04:46 and a ground floor also.
04:47 Depending on the customer requirement and cargo nature,
04:49 we store the cargo as per the requirement.
04:51 And the process is like this.
04:53 Once the cargo first, while coming from the port,
04:56 after custom clearance, come to this dock area,
04:59 where the trailers comes here, the cargo
05:01 get offloaded, and go to the racking system first.
05:04 After racking, they go out to this area
05:06 for any kind of elevated services.
05:09 What are the products that mostly come to this kind of--
05:12 This kind of product, various products.
05:14 For example, chemicals, non-hazard chemicals,
05:17 retails, FMCG, cosmetics, wines, metals.
05:22 So all types of cargo comes here,
05:24 which is required non-cold storage type of cargo storage.
05:28 One, we talk about the measurement
05:30 in terms of millions square feet.
05:31 Yes.
05:32 Square feet.
05:32 Yes.
05:33 The other is in terms of volume.
05:34 Yeah.
05:35 So if we talk about this G plus 7,
05:37 or if we talk about ground load,
05:38 so what is the total volume of products
05:40 that can be stored here?
05:41 Yes.
05:42 So total capacity of this particular warehouse,
05:45 the pallet position, we call it as pallet position.
05:47 It is 13,000 pallet positions.
05:49 13,000 pallet position.
05:50 Entire pallet position of this particular warehouse.
05:52 So like this, we have got three warehouses which is racked.
05:55 So 13 into 3, around 49,000 pallet positions
05:58 this facility is having, in case of racking.
06:01 In case of non-racking, every warehouse is 15,000 square feet.
06:04 So 15,000 into all four warehouses,
06:06 we call it 60,000 square feet non-plate.
06:08 And 13,000 pallet position in every warehouse.
06:11 So one pallet means one product.
06:12 One pallet means one product.
06:14 And this is supposed to be a particular dimension,
06:16 because it has to fit to that.
06:18 And the weight should be less than two ton.
06:20 Less than two ton.
06:21 Of one pallet.
06:22 One pallet.
06:22 To take the load of this.
06:23 So this, what we see, can you pan and show it?
06:26 Like this, what we see is one pallet.
06:28 This is one pallet.
06:29 You can see that the cargo is being stored.
06:31 This is one pallet.
06:32 Here we can see one.
06:33 We can see one top of it, depending on the size.
06:35 And weight of this pallet, because this is in ground.
06:37 If you store it top, then the weight
06:39 should not be more than two ton.
06:41 Because that is the carrying capacity of the truss.
06:45 You spoke about value-added services
06:47 that importers and exporters can derive out of this facility.
06:51 So do we have that value-added services being provided here
06:55 also in this warehouse?
06:56 Yes, yes, of course.
06:57 So just the value-added services,
06:58 what you're talking about, we provide a bouquet
07:01 of value-added services.
07:02 There are 66 value-added services
07:04 we are authorized to provide in our zones.
07:06 Various types of labeling, scaling, packing, quality
07:09 checks, and many.
07:12 As we speak today, we are also doing many value-added services
07:14 even going on today in our facility.
07:17 You were talking about this one single customer who
07:20 has this sorting facility also in this--
07:23 before your value-added services begins.
07:25 So can you explain to our viewers what this sorting does?
07:28 This sorting is basically for his products, for his brand,
07:31 different brands.
07:32 He operates or distributes the wholesaler distributor
07:35 for certain global brands in this country, in India.
07:38 He imports those brands to the country, to the GNPT port.
07:42 From there, they come here.
07:43 And here, they do all types of value-added services
07:45 like packaging, labeling, country of origin
07:48 has to be refixed, and then packaging
07:51 to a particular mall or a particular destination
07:54 where this cargo is going to be finally sold.
07:57 So to do that in a mechanical way, in a speed manner,
08:00 with a flawless manner, these sorting machines helps.
08:04 So these sorting machines is going
08:05 to be particularly for one product, for one destination,
08:10 and packaging here.
08:11 And after this packaging here, it
08:12 will again go back to the racking system.
08:15 And from there, it went back to the final delivery.
08:18 So this sorting machine--
08:19 Packaging is also done--
08:20 Done as the sorting machine.
08:21 Segregation, packaging, labeling, everything done here.
08:25 So if you see, these sorting has been entirely done by ladies.
08:28 And the interesting part is these ladies
08:30 are from this community.
08:31 Because this community, we have got four villages
08:33 who are surrounding these facilities as a GNPTC.
08:37 So the villages are--
08:37 Yes.
08:38 Our intention is always to give much, much passage
08:40 to the ladies from the village.
08:42 All these ladies we are seeing here,
08:43 we deploy more than 200 ladies as of now.
08:46 But the demand keeps on increasing
08:47 as for the value-added services.
08:48 But these all are from the community.
08:50 What is your business model?
08:52 I mean, say if somebody is an importer or an exporter,
08:55 he wants to come up here and want
08:57 to park his goods here, what he needs to do?
09:00 What exactly a businessman needs to do
09:02 to come to this free trade zone?
09:04 Correct.
09:05 So this facility--
09:06 And what are the benefits that would
09:07 accrue to that importer or an exporter?
09:11 Right.
09:11 So this facility is an EXIM facility, export and import.
09:14 This is basically a trade enabler for the country
09:17 or for the region.
09:19 Any trade happens, both export and import,
09:21 it is preferable to have through a free zone.
09:24 Why so?
09:24 Because of various reasons.
09:25 For example, I'll give you one example, import.
09:28 The trade is three types-- import, export, or re-export.
09:31 So for example, import, any commodity of high value,
09:35 high duty value cargo is coming to India.
09:38 Instead of going directly to the facility
09:40 after paying upfront duty, that customer
09:42 can store his cargo here to avail the duty
09:44 department for a certain period.
09:45 And he can take the cargo as and when
09:47 he requires by paying duty for that particular amount
09:49 so that his duty amount upfront is now not blocked.
09:52 That is a major advantage.
09:53 But however, the other one is a little more.
09:55 For example, value-added services.
09:57 Whatever value-added services you are seeing here,
09:59 it is being done in a tax-free environment.
10:01 If this value-added service is done in a DTA environment,
10:04 all these products have to be taxed by the state government,
10:07 including the labor input tax also.
10:10 But here, everything is tax-free.
10:12 So that's why the duty department
10:13 is one for import and all kinds of value-added services.
10:16 After the final product done as per the end customer
10:19 requirement, from there, then it goes out.
10:21 That is for import.
10:22 For export, any cargo comes to this zone.
10:25 After entering to the zone gate, it's treated as dim export.
10:30 Even if it has not been exported physically,
10:32 it is treated as dim export.
10:33 So the benefit to the exporter is,
10:35 once the cargo coming inside, he got his money from his buyers.
10:39 Because cargo is already dim export.
10:41 So that is the benefit when cargo
10:42 entering to the free zone for export purpose.
10:44 For re-export purpose, if the cargo has come in
10:48 and the supplier found that there is no market for India,
10:53 and the cargo is inside the zone,
10:54 he has not paid the duty.
10:56 So he's free to take out the cargo from here,
10:58 re-export to any other country nearby
11:00 where the demand is there.
11:01 And he can take it back also?
11:02 He can take it back.
11:03 That's called re-export.
11:04 From this port, and the cargo has not gone hinterland,
11:06 so reverse logistic cost is very less,
11:08 because the cargo is just away from the port,
11:10 because of the logistic advantage of this port.
11:12 This facility is only five kilometers.
11:14 So that is the re-export advantage.
11:15 I'm just giving three examples how
11:17 this benefits to the trade.
11:19 So this is a business model.
11:20 This is basically for the easy cross-border trade.
11:24 The facility is inside India, physically inside India,
11:30 but as per rule, it is not inside India.
11:33 It is a free zone.
11:34 It is still foreign territory.
11:36 So that is the advantage of this facility.
11:38 And what kind of tariff structure
11:40 that you have and work?
11:42 How would it be different from, say, special economic zone?
11:45 Yes.
11:45 First of all, special economic zone and a free zone,
11:48 the major difference is in a special economic zone,
11:51 you can do the manufacturing, big scale manufacturing,
11:53 where the HS code changes and a large scale manufacturing
11:56 happens.
11:56 In a free zone, it is a service provider facility.
11:59 It provides service to the special economic zone.
12:02 So except big scale manufacturing,
12:04 all sorts of storage and handling and valuable services
12:06 can be done in free zones.
12:07 That is a major difference.
12:08 However, upfront, government has also relaxed its rules.
12:11 So he has also given some relaxation
12:14 that a free zone, within certain conditions,
12:16 can get a special approval for the manufacturing also,
12:19 small scale manufacturing.
12:21 So that is now-- this barrier is going to change.
12:23 Very recently, that rules and regulation
12:25 is going to come in place, where there
12:27 is a flexibility of a free zone also
12:29 to conduct a small scale manufacturing.
12:32 That's what.
12:32 And what would that provide?
12:34 Like when we talk about manufacturing,
12:35 so would it just be an extension of a value added service?
12:39 Or would it be something different?
12:40 Like from scratch also, you can do manufacturing?
12:42 From scratch also, we can do.
12:44 But then, that depends.
12:46 As I said, for a large scale manufacturing facility,
12:48 you need bigger space.
12:50 So free zone is-- if you compare between the ACZ area
12:53 and free zone area, free zone is less than ACZ area.
12:55 So that's the reason we cannot have a larger-- for example,
12:57 automobile manufacturing, steel manufacturing,
12:59 you cannot have that because of the storage space is that less.
13:03 Small scale manufacturing can be done here,
13:05 like CKD, SKD, assembling, all these things can be done here.
13:09 And also, I think free trade zones
13:11 were meant to be a complementary to special economic zone.
13:14 Because the service--
13:15 So the entire purpose was to--
13:16 Correct.
13:17 The raw material can be stored here.
13:19 And as and when required by the manufacturing nearby,
13:21 in ACZ, it can go from there.
13:23 That is the purpose.
13:24 It is a service industry in that sense.
13:27 See, you have three free trade zones in India.
13:31 So apart from your global presence, in India,
13:34 you have three zones.
13:35 Can you talk a little bit in detail
13:37 about these free trade zones and their expansion plans?
13:40 Sure.
13:41 And when you expect them to be fully commissioned in?
13:44 Sure.
13:45 So we have three economic zones, or free trade zones, we say.
13:48 India and Mumbai is our flagship.
13:51 We started in, as I said, in April 23 here.
13:55 These facilities in two phases.
13:57 Total area is 85 acres.
13:59 Out of 85 acres, 43 acres we have already developed,
14:02 which we are standing now.
14:04 It is about 1 million plus square feet facilities
14:07 with container yards and whatnot.
14:09 We have seen everything.
14:10 That is fully operational.
14:11 And it is up and running, fully operational facilities
14:16 and welcoming cargo.
14:17 And it's now 120 plus customers are working.
14:19 So that is phase one.
14:21 Phase two, just adjacent to this,
14:23 we are in the stage of layout and design.
14:27 And we are planning to start the operation of phase one
14:32 or phase two by mid of 2025.
14:38 That is our target, so that we can start--
14:40 Calendar year 2025.
14:42 So by June, July is what you're--
14:43 By June, July 25, we are able to start the first phase
14:46 of business there.
14:47 For that, the layout and planning,
14:49 everything is under process.
14:50 First phase of the second phase.
14:51 Second.
14:51 First phase of the second parcel of land development.
14:54 This is for Bombay.
14:56 And in terms of investments, also,
14:57 if you can talk about your investments.
14:59 Sure.
15:00 Combinedly, as economic zones, India,
15:02 we have invested 1,700 crore.
15:05 That includes our land parcel and superstructure
15:07 and infrastructure.
15:08 Including just Mumbai or Chennai?
15:09 No, all three together.
15:10 All three, OK.
15:11 All three together, 1,700 crore.
15:13 And in Chennai, this also is 124 acres of land.
15:19 The total land parcel, 124 acres, the big size of land.
15:21 In that also, we have already developed the phase one.
15:24 Phase one is about 6,000,000 square feet,
15:26 like one million here.
15:27 And it is operational from October, last month October.
15:30 So it is now three months into operations.
15:32 And phase two, we are going to start in '26, calendar '26,
15:36 phase two.
15:37 And it will take 12 to 14 months to construct the phase two.
15:40 And accordingly, phase three, after two years of phase two.
15:42 So that is the plan of Chennai.
15:45 Cochin, the project is under completion.
15:48 It is almost completed.
15:49 We are just doing some formalities.
15:51 Our target is to start the business by March,
15:55 this year, March.
15:56 By mid-March, that will be operational.
16:00 So we have seen the cold storage.
16:02 What we see is cardamom.
16:04 But definitely, I'm sure there must be other sectors
16:07 also might be using this facility.
16:09 So which are those sectors that can be part of cold storage,
16:13 which can benefit?
16:15 And also, if we can talk a little bit about the value
16:17 added services that this cold storage can provide.
16:20 Right.
16:21 So as we speak today, this particular chamber
16:25 is having one commodity.
16:26 If you go to our other cold chamber,
16:28 you'll find different commodities there.
16:30 So far as the cargo segment is concerned,
16:33 we are majorly servicing today to the agro,
16:36 this type of spices, and then wines,
16:40 imported high-yellow wines.
16:41 We're also giving some storing hazardous chemical cargo,
16:46 which requires cold storage.
16:48 That is one segment which are getting more and more demand.
16:51 And then also, we are in discussion
16:53 with World Food Programme for storage their resin
16:57 and the certain kind of medicines for Africa.
17:03 So farmers--
17:04 Farmers, I have this.
17:05 That is another demand we are getting.
17:06 So basically, it is more into anything perishable.
17:09 For example, agro, like we are seeing today,
17:11 and chemicals, then pharma, then consumables
17:15 like chocolates and wines.
17:18 So those type of cargo.
17:19 And also, from the typical cargo, like electrical panels.
17:24 Some electrical panels of EV, electric vehicle,
17:27 also require cold storage.
17:29 So we are in discussion with the major importer
17:33 for those type of storage.
17:34 It's basically electronic storage in a cold store.
17:37 So that is also going to happen here.
17:39 For the Mumbai plant, for the Mumbai--
17:41 For India.
17:41 For India.
17:42 For India.
17:42 No, the cargo is coming to here, if we are getting
17:45 to an agreement with them.
17:47 And this is for their various manufacturing unit
17:49 at Karnataka and Telangana factory.
17:53 But it will be coming to the Mumbai--
17:55 Mumbai zone.
17:55 It will come to the Mumbai NPT port, store here.
17:58 And then as and when required to their plant,
18:00 they will take it from here.
18:01 So that is another requirement has come.
18:03 A bigger size requirement has come.
18:04 Especially in the high tech cold storage.
18:06 We can say that is high tech cold storage.
18:09 What would be the total contribution of each segment?
18:13 If you can talk about cold storage, standard facility.
18:16 OK.
18:16 OK.
18:17 In terms of-- if you look at future date,
18:20 what percentage would come from cold storage
18:23 and from standard facility?
18:24 Correct.
18:25 So if you see our entire facility configuration,
18:28 out of 1 million square feet of facility,
18:32 the cold storage, we have got 10,000 pallet positions.
18:35 OK.
18:35 Out of-- you see the scalability.
18:37 The total is how much?
18:38 Total square feet is 1 million.
18:40 And in the pallet, it is about 55,000 pallet position.
18:43 Out of 55, only 10,000 pallet position is for cold storage.
18:47 This is depending on the market demand today.
18:49 However, we have a scalability plan.
18:51 This particular warehouse we are standing,
18:53 this warehouse, part of it is cold storage.
18:56 Then if there is a demand, we can expand it.
18:58 So the whole warehouse has been meant
19:00 as a cold storage specification warehouse for future expansion.
19:03 But as we speak today--
19:05 So this 10,000 can be expanded to how much?
19:06 Another 10,000.
19:07 Another 10,000.
19:08 Yeah.
19:08 This whole warehouse is one warehouse.
19:09 We have a partition there.
19:10 OK.
19:10 So it can be expanded.
19:11 So that is one thing.
19:12 So that we can-- we get a demand,
19:14 we can easily expand it within less period of time.
19:17 That is one.
19:18 But if we speak that how is the contribution
19:19 to the facility in terms of cold storage,
19:21 I should say that about 80% of our business
19:24 is coming from non-cold storage and 20% from the cold storage.
19:28 Because cold storage and non-cold storage,
19:30 the tariffs are different.
19:31 And the mode of operation are different.
19:32 And even in the 80% which segment contributes--
19:35 Yeah.
19:35 80% I should say the most segment
19:37 is contributing today, the business dynamic change.
19:40 But today I should say 35% is chemicals.
19:43 We are getting a lot of chemical import demands here.
19:46 So 35% is chemicals.
19:48 Another 15% to 20% is pharma, wine,
19:52 and consumables put together.
19:55 Another 10% towards retail kind of thing
19:59 that we are getting, like cosmetic retails,
20:01 which is sold to other warehouse.
20:02 And all others are miscellaneous from any industries.
20:06 That way.
20:07 We have seen this facility of a global standard,
20:10 where you are getting importers, exporters from abroad.
20:13 And you are also maintaining the standard at that level.
20:16 So what also becomes important for you, a player like you,
20:22 is to maintain sustainability, especially when everyone
20:24 is talking about green, going green.
20:27 So what are the measures that you
20:28 have taken to make it more sustainable for your free trade?
20:32 Yeah, yeah.
20:32 It is absolutely very right question, sir.
20:34 Thank you.
20:35 See, sustainability is such a subject for us
20:37 is close to our heart.
20:39 As a group, our each and every assets across the globe
20:43 and services move around the sustainability.
20:45 We take it due importance to sustainability
20:47 across our supply chain.
20:49 Particularly this facility, we have taken a lot of steps
20:52 towards sustainability.
20:53 To name a few, the whole facility
20:55 is now supplied by solar power of 1.5 megawatt.
20:59 This 1.5 megawatt solar supply is
21:01 taking care of 80% of our electric consumption.
21:04 So that is one major step we have taken.
21:06 Second is our rainwater harvesting.
21:08 We have a capacity of one million liters
21:10 of rainwater harvesting capacity,
21:11 which takes care of 40% of our water requirement.
21:14 Second, all our MHEs or equipments,
21:17 which is running today, is battery operated.
21:20 You will not find a single diesel operator
21:21 or any other power supply, but 100% battery operated
21:24 machineries and equipments we are using it.
21:29 Apart from this, our IT platforms
21:31 also is a part and parcel of our sustainability.
21:35 We have invested a huge amount of capex
21:37 towards our IT platform.
21:39 We are WMS, TMS, Oracle Fusion,
21:41 everything's working hand in hand,
21:44 not only for us, but also for our customer
21:46 by integrating to each other.
21:48 So sustainability is always close to our heart as a group
21:50 and each and every asset reflects that.
21:53 So these assets, as I said, you,
21:54 the solar power, rainwater harvesting,
21:58 and battery operated MHEs and equipments.
22:00 They are the three major initiatives we have taken so far
22:02 for the sustainability part of it
22:03 and the green energy part of it.
22:05 - Thank you very much for talking to NDTV Profit.
22:07 - Thank you so much.
22:08 - Thank you so much.
22:08 (upbeat music)
22:11 (upbeat music)
22:14 you