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The government's got to make it easier to do business: FedEx

Richard Smith is the Managing Director of FedEx Express's Life Sciences and Specialty Services division, one of the company's fast-growing verticals. Smith, son of FedEx founder Fred Smith, was in the country recently and spoke about the company's India plans and its strategy for the pharmaceuticals sector with Geetanjali Shukla.

Geetanjali Shukla        Last Updated: February 29, 2012  | 18:56 IST

Richard Smith is the Managing Director of FedEx Express's Life Sciences and Specialty Services division, one of the company's fast-growing verticals. Smith, son of FedEx founder Fred Smith, was in the country recently and spoke about the company's India plans and its strategy for the pharmaceuticals sector with Geetanjali Shukla.

On how big a market India is for FedEx
India is an extremely important market for FedEx and we believe it is the place to be in. Today, it is among the top four economies globally and the World Bank predicts that it will be among the top three by 2020. Trade, GDP and the air cargo industry of any country are interdependent and interlinked. India's domestic and international express market is valued at $3.5 billion. Its air cargo market has been evolving rapidly and has expanded at nearly 19 per cent in the last three years, as against 10.3 per cent for ocean freight and 9.2 per cent for railways. With the Indian government raising the limit of Foreign Direct Investment in cargo airlines from 49 per cent to 74 per cent, the growth rate of the aviation sector in the next 10 years is expected to be approximately 25 percent.
 
On India plans
We are bullish on India not just as an export market but also as a consumption market. India is already a huge export market and we are hoping to see the import and intra-India business starting to grow soon. We believe that there are opportunities in several key sectors such as e-commerce, pharmaceuticals and health care as well as gems and jewellery, which we think can propel the growth of the express logistics industry in India.

We would love to grow (US) exports. Right now there is a trade imbalance with India and China. We would like our purple-tail flights to go back and forth very, very full. So we would love to see exports to India grow. To do that the (Indian) government has got to make it easier to do business from a regulatory and tax standpoint.

On not moving fast enough in India
India has always been part of our growth strategy. But there has been a little more hesitation, to see which way the country was going. The investment opportunity had to be right - it had to be the right company, and the right cultural fit for FedEx, and so we may have taken our time getting here. But we hope to make up for lost time.

On why FedEx makes sense for pharma companies doing business in India
We have a flight network that is unparalleled globally. So we can connect manufacturing hubs , which have shifted to emerging markets like India and Eastern Europe, to any part of the world in one or two business days. This is a huge advantage for pharma because pharma is perishable, high value, and is often shipped in large quantities. We continue to add more points in India and around the world, especially as we take possession of our new Boeing 777s, which can fly farther, with bigger payloads. Last year, we acquired AFL, adding significant logistics and warehousing capabilities. We will gear that towards healthcare and high-tech, both high-value industries that are a good fit for express transportation. We are also offering targeted services that health care customers need. This includes prevention of theft, which is possible if we have custodial control. It also allows us to do things like protect temperature, useful in climates like India's.

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