India has 13 major ports and about 200 non-major ports. Cargo traffic, which was 911.5 million metric tonnes (MMT) in 2012 is expected to reach 1,758 MMT by 2017. The Indian ports and shipping industry plays a vital role in sustaining growth in the country’s trade and commerce. India currently ranks 16th among maritime countries, with a coastline of about 7,517 km. Around 95 per cent of India's trade by volume and 70 per cent by value takes place through maritime transport, according to the Ministry of Shipping.
The Indian government continues to support the ports sector. It has allowed foreign direct investment (FDI) of up to 100 per cent under the automatic route for projects regarding construction and maintenance of ports and harbours. It has also facilitated a 10-year tax holiday to enterprises engaged in developing, maintaining and operating ports, inland waterways and inland ports.
The Indian ports sector received FDI worth US$ 1,635.40 million in the period April 2000–May 2014, as per the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry.
The ports sector was also awarded 30 projects in FY14, investing over Rs 20,000 crore (US$ 3.26 billion) which is a threefold increase over the preceding year.
During April–May 2014, India's major ports handled 95.87 million tonnes (MT) of cargo as against the 91.48 MT handled during the corresponding period of 2013, an increase of 4.8 per cent, as per statistics released by the Indian Ports Association (IPA).
In FY14, coal cargo traffic grew by 20.6 per cent to 104.5 MT from 86.7 MT in FY13. With regard to commodities, there was a rise of 25 per cent in handling of fertilisers in April 2014 as against April 2013. Iron ore handling also grew by 16.8 per cent during that period.
The following are some of the major recent investments and developments in the Indian ports sector:
Prime Minister Mr Narendra Modi laid the foundation stones of the Rs 4,000 (US$ 653.19 million) crore port-based multi-product special economic zone (SEZ) and the Rs 1,900 crore (US$ 310.26 million) Port Connectivity Highway Project at the Jawaharlal Nehru Port Trust (JNPT) in Raigad district.
Bangladesh and India are expected to begin coastal shipping from October 2014, as per Mr Gautam Chatterjee, Director General of Shipping. The move is a part of the proposed agreement between the two countries to open sea routes so as to promote bilateral trade. With direct shipping arrangement missing hitherto, Bangladesh and India are heavily dependent on costly land routes for the US$ 6-billion bilateral trade.
Adani Ports & SEZ (APSEZ), India's biggest port operator, has received environment and coastal regulation zone clearance from the government for its SEZs at Mundra Port in Gujarat, as per the company in a regulatory filing.
Indian shipping companies will no longer need to visit the Directorate General of Shipping's office in Mumbai every year to renew their ship licences. The Ministry of Shipping has issued a new policy that has done away with annual procedure and replaced it will a simpler one-time licencing.
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 Dhamra Port Company Ltd (DPCL) for Rs 5,500 crore (US$ 898.14 million).
JNPT and the Port of Singapore Authority (PSA) have signed a concession agreement for the Port's fourth container terminal, worth Rs 8,000 crore (US$ 1.31 billion).
Paradip port plans to set up hybrid cargo terminals – captive-cum-common user facility – as part of its expansion plans, and will be the first government port to offer this facility.
L&T Shipbuilding Ltd is diversifying its cargo handling capacity at Katupalli Port to include automobiles and oil products in addition to container handling.
In the Union Budget 2013–14, the government allocated Rs 11,635 crore (US$ 1.89 billion) for the expansion of the VO Chidambaranar (VOC) Port in Tuticorin. Industry representatives, especially exporters, feel that the enhancement of berthing facilities there will increase exports and result in big savings in freight for manufacturers who have to send their products bound for the west through Colombo in Sri Lanka.
The Ministry of Shipping has finalised guidelines which allows Indian companies to register their ships under foreign flags. This follows the government’s decision to create a new category of fleet called ‘1 Indian controlled tonnage’. The guidelines will be announced shortly, as per an official.
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 better the operating efficiency and competitiveness of ports in the country.
The Minister for Road Transport, Highways and Shipping Mr 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 developing transport and tourism along the river Ganga.
Increasing investments and cargo traffic point to a healthy outlook for India’s ports sector. Services benefiting from these investments include operation and maintenance (O&M), pilotage, and harbouring and provision of marine assets like barges and dredgers.
The Planning Commission of India in its 12th Five Year Plan projects a total investment of Rs 180,626 crore (US$ 29.49 billion) for this industry. Also, through its Maritime Agenda 2010–2020, the Ministry of Shipping has set a target capacity of over 3,130 MT by 2020, driven by private sector participation. Over 50 per cent of this capacity is anticipated to be generated at non-major ports.
Exchange Rate: INR 1 = US$ 0.0163 as on October 28, 2014
References: Indian Ports Association, Ministry of Shipping, Media Reports, Press Releases.