India has 13 major ports and about 200 non-major ports. Cargo traffic, which was 976 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 number of containers handled at major ports in India increased 8.32 percent year-over-year from April through November 2014, the first eight fiscal months, continuing an accelerating growth trend that leaves state-owned port authorities on track to meet annual throughput targets.
Container-handling in the eight-month period totalled 5.31 million 20-foot-equivalent units, up from 4.9 million TEUs a year earlier, according to preliminary figures available from major port authorities. Containerised cargo tonnage in the period was up 5.87 percent, at 80 million tons.
The Indian ports sector received FDI worth US$ 1,637.30 million in the period April 2000–November 2014, as per the Department of Industrial Policy and Promotion (DIPP). The ports sector was also awarded 30 projects in FY14, investing over Rs 20,000 crore (US$ 3.24 billion) which is a threefold increase over the preceding year.
In FY14, coal cargo traffic grew by 20.6 per cent to 104.5 million tonnes (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.
A massive investment into India’s ports and its road sector has been announced by Indian Minister for Shipping, Road Transport and Highways, Mr Nitin Gadkari, which is expected to help boost the country’s economy. According to the Economic Times, the Kolkata Port Trust along with the Indian government is to construct a port in the Sagar Islands at a cost of more than US$ 1.8 billion. Gadkari has also announced additional investments of more than US$ 520 million in the port sector for floating storages and a dry bulk cargo handling terminal.
The Indian government will develop 10 coastal economic regions as part of plans to revive the country’s Sagarmala (string of ports) project, according to the Daily Shipping Times. The zones will be manufacturing hubs supported by port modernization projects and could cover 300-500km of coastline. The government is also looking to develop the inland waterway sector as an alternative to road and rail transport for getting goods to the nation’s ports and is hoping to attract private investment into the sector.
The Minister of State for Shipping, Mr Pon. Radhakrishnan has informed that following steps have been taken by the Government for capacity expansion of ports:
The Ministry of Shipping has formulated a Perspective Plan for development of the Maritime Sector, namely, “The Maritime Agenda (2010-2020).” This Plan has estimated the traffic projections and capacity additions at the ports upto the year 2020. Based on the estimated growth, it has projected capacity of 3130 million tonnes by 2019-20.
In the Union Budget 2013–14, the government allocated Rs 11,635 crore (US$ 1.88 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$ 29.31 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$ 0.0162 as on January 21, 2015
References:Indian Ports Association, Ministry of Shipping, Media Reports, Press Releases.