The Indian ports and shipping industry plays a crucial role in sustaining growth in the countrys trade and commerce.
India currently ranks 16th among the maritime countries, witha long coastline of about 7,517 kilometres (km) with 13 major ports (12 government and one corporate) and about 200 non-major ports currently operating on the western and eastern coasts of the country. According to the Ministry of Shipping, around 95 per cent of Indias trade by volume and 70 per cent by value happens through maritime transport. Driven by new manufacturing and power projects and higher cargo traffic at ports, the sector is poised for significant development. During 2013-14, Indias major ports handled 555.50 million tonnes (MT) of cargo as compared to 545.83 MT handled in 2012-13, registering a growth of 1.8 per cent.
The State governments have realised the strong growth potential and the increasing need for robust port infrastructure, and have consequently provided sops and a favourable investment climate which are attracting investments from private players into the sector.
Cargo traffic at Indian ports stood at 911.5 MT in FY 12 and is expected to touch 1,758 MT by FY 17. During April and May 2014, Indias major ports handled 95.87 mt of cargo as against 91.48 mt handled during the corresponding period last year, an increase of 4.8 per cent, according to statistics released by the Indian Ports Association (IPA).
Of the major ports, Mormugao Port posted highest growth in traffic (24.48 per cent) during April and May 2014, followed by Mumbai Port (14.35 per cent), Kamarajar Port (13.90 per cent), V.O. Chidambaranar Port (13.67 per cent) and Kolkata Dock System (12.36 per cent) as compared to the same period last year. In terms of volume, Kandla port led the pack with 15.31 MT of traffic handled followed by Paradip port at 11.73 MT during the same period.
In 2013-14, coal cargo traffic (thermal coal and coking coal) volumes rose by 20.6 per cent to 104.5 MT from 86.7 MT a year ago.Among commodities, there was an increase of 25 per cent in handling of fertilisers in April 2014 in comparison to April 2013. Iron ore handling has also shown an increase of 16.8 per cent during the month.
The Indian ports sector received foreign direct investment (FDI) worth US$ 1,635.40 million between April 2000 and May 2014, according to the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry. The ports sector in India awarded 30 projects in 2013-14 entailing an investment of over Rs 20,000 crore (US$ 3.32 billion), marking a threefold increase over the preceding year.
The following are some of the major investments and developments in the Indian ports sector:
- Adani Ports & Special Economic Zone (APSEZ) has executed a definitive agreement with L&T Infrastructure Development Projects Ltd and Tata Steel to acquire 100 per cent stake in the Dhamra Port Company Ltd (DPCL) for Rs 5,500 crore (US$ 915.17 million).
- The Jawaharlal Nehru Port Trust (JNPT) and the Port of Singapore Authority (PSA) have signed a concession agreement for the Ports fourth container terminal worth Rs 8,000 crore (US$ 1.33 billion). It currently operates container terminals in Kolkata, Tuticorin and Chennai ports, with a total capacity of 2 million twenty-foot equivalent units (TEUs). The fourth container terminal would have a capacity of 4.8 million TEUs.
- Paradip port plans to set up hybrid cargo terminals - captive-cum-common user facility - as part of its expansion plans. Paradip will be the first government port to offer this facility and will provide private investors the flexibility to ensure optimum unitisation of the port capacity.
- L&T Shipbuilding Ltd is diversifying its cargo handling capacity at Katupalli Port to include automobiles and oil products in addition to container handling.Originally, the Katupalli port planned to handle a total of 25 MT of cargo, of which 24 MT was containerised cargo and the rest steel and project cargo.
As in many other countries, probably the most important transport/logistics challenge facing India is its infrastructure. While considerable private sector investment is now being directed into the development, expansion and modernisation of Indian ports, the country´s road, rail and inland waterway systems have suffered from years of neglect and under-investment.
The average cost of freight is relatively high and India´s inadequate transport infrastructure is holding back economic growth. The system of distribution containers and containerised cargoes is highly concentrated with most containers for Delhi and north India being routed through the Mumbai/JNPT port complex. This route is already one of the busiest domestic freight arteries in the country. With new container terminal developments in Gujarat and with decent rail connections to and from the ports of Mundra and Pipapav this situation is changing gradually.
The Consultants have presented many problems and projects related to hinterland connectivity, most of them related to the direct vicinity of the port concerned.
Although the Port Trusts are obviously very well aware of the hinterland connectivity problem within and directly outside the port, it is the impression of the Advisor that relatively little effort is made to promote and lobby for an integrated transport system on a national scale. This is clearly a responsibility of the national Government. It is recommended that the Major Ports would take a more pro-active approach to safeguard the smooth flow of cargo to the hinterland.
Apart from a few Major Ports, the financial position of the Major Ports is very good. The following observations can be made:
Funds available for investments by ports: Over Rs 20,000 crore in 2014; Huge borrowing capacity over Rs 40,000 crore in 2014;
- Future pressure on tariffs due to competition: port tariffs are high due to the monopolistic situation of the po rts. Tariffs will go down when competition is getting stronger;
- Pressure on revenue sharing in BOT contracts will take place due to competition.Revenue shares are high due to monopolistic situation of the ports.
- Revenue shares will go down
- when competition is getting stronger;
- Substantial investments in connectivity are needed and have an enormous positive effect on the economic development of India. Ports can participate in these connectivity projects, f.i. in the backbone concept;
- TAMP-regulation is not stimulating efficiency;
- Ports can also participate in other (private) ports when there is limited room for own expansion;
- Especially city-ports can think about expansion outside the city and development of real estate
The government has allowed FDI of up to 100 per cent under the automatic route for projects related to the construction and maintenance of ports and harbours. A 10-year tax holiday has been given to enterprises engaged in the business of developing, maintaining and operating ports, inland waterways and inland ports.
The Minister for Road Transport, Highways and Shipping Nitin Gadkari said that his ministry will coordinate with other ministries of Environment & Forests, Tourism, Power and Water Resources, River Development and Ganga Rejuvenation for development of transport and tourism along the river Ganga. The Cochin Steamer Agents Association (CSAA) will take the lead to improve the cargo throughput by organising marketing initiatives in the hinterland in association with the port management, terminal operator and various other stakeholders. The Association has plans to improve the business through Kochi by attracting more cargo via business interactive meetings. A 20 per cent growth target in container volume has been fixed for 2014-15.
The National Maritime Agenda 2010-2020 is an initiative of the Ministry of Shipping to outline the framework for the development of the port sector. The agenda also suggests policy-related initiatives to improve the operating efficiency and competitiveness of Indian ports.
Increasing investments and cargo traffic point to a healthy outlook for port support services. These include operation and maintenance (O&M) services such as pilotage, harbouring and provision of marine assets like barges and dredgers. The Planning Commission of India in its 12th Five Year Plan expects a total investment of Rs 180,626 crore (US$ 30.05 billion) in the ports sector.
Through its Maritime Agenda 2010-2020, the Ministry of Shipping has set a target capacity of over 3,130 MT by 2020, largely through private sector participation. More than 50 per cent of this capacity is expected to be created at non-major ports.
Visakhapatnam port looks forward to a bright year in 2014-15, as several development projects are on the verge of completion, and the port expects to handle not less than 65 MT of cargo during the year, according to GVL Satya Kumar, Deputy Chairman, Visakhapatnam Port Trust.
A general SWOT for the Major Ports was prepared by the advisor and is presented below:
- High growth
- High market share
- Financial means available
- Most ports located at strategic locations
- Old infrastructure
- Limited water depth
- Old and inefficient cargo handling systems
- Poor hinterland connections
- Rigid institutional framework
- High tariffs
- Poor quality of services / business attitude
- Lack of capacity
- Lack of extension possibilities
- Introduce competition
- Huge Indian market, and landlocked countries in the North
- Improve organisation: training, IT, downsizing
- Port reform -û more autonomy
- PPP other than BOT
- Invest in infrastructure, lower costs for port users
- Invest in total transport chain
- Private ports
- Minor ports