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In FY20, major ports in India handled 704.82 million tonnes of cargo traffic, implying a CAGR of 2.74% during FY16-20.

Shipping Industry & Ports in India

    Last updated on Feb, 28 2021

Indian Ports Industry Report  (Size: 1.1 MB ) (November, 2020)

Introduction

According to the Ministry of Shipping, around 95% of India's trading by volume and 70% by value is done through maritime transport. In November 2020, the Prime Minister, Mr. Narendra Modi renamed the Ministry of Shipping as the Ministry of Ports, Shipping and Waterways.

India has 12 major and 205 notified minor and intermediate ports. Under the National Perspective Plan for Sagarmala, six new mega ports will be developed in the country. The Indian ports and shipping industry play a vital role in sustaining growth in the country’s trade and commerce. India is the sixteenth largest maritime country in the world with a coastline of about 7,517 kms. The Indian Government plays an important role in supporting the ports sector. It has allowed Foreign Direct Investment (FDI) of up to 100% under the automatic route for port and harbour construction and maintenance projects. It has also facilitated a 10-year tax holiday to enterprises that develop, maintain and operate ports, inland waterways and inland ports.

Market Size

In FY20, major ports in India handled 704.82 million tonnes (MT) of cargo traffic, implying a CAGR of 2.74% during FY16-FY20. Cargo traffic at non-major ports reached 447.21 MT in FY20 (till December 2019).

The major ports had a capacity of 1,514.09 MT per annum (MTPA) in FY19P. The Maritime Agenda 2010-20 has a 2020 target of 3,130 MT of port capacity.

The Government has taken several measures to improve operational efficiency through mechanisation, deepening the draft and speedy evacuations.

Investments/Developments

  • In November 2020, Mormugoa Port Trust (MPT), operator of the western Indian port of Mormugoa, extended concessions on iron ore imports and export freight traffic until June 2021 to help ease India's iron ore shipping trade amidst the COVID-19 pandemic.
  • In November 2020, JSW Infrastructure completed the acquisition of Chettinad Group’s port business for ~Rs 1,000 crore (US$ 135.50 million). This acquisition will enable JSW Infrastructure to gain ownership and operational control of a deep draft international coal terminal and a bulk terminal at Kamarajar Port Limited (KPL) as well as coal and bulk commodity terminal at New Mangalore Port Trust (NMPT).
  • In October 2020, Adani Ports and Special Economic Zone Limited (APSEZ) completed the acquisition of Krishnapatnam Port Company Ltd. (KPCL) for an enterprise value of Rs 12,000 crore (US$ 1.63 billion).
  • In July 2020, Adani Ports and Special Economic Zone (SEZ) Ltd, launched an offshore bond offering, raising ~US$ 750 million.
  • In November 2019, JSW Infrastructure commissioned a new iron ore terminal at the Paradip port in Odisha with a capacity to handle up to 18 million tonnes of cargo per annum.
  • In November 2019, first ever movement of container cargo on Brahmaputra (National Waterway -2), focused on improving the connectivity to North Eastern Region (NER).
  • In October 2019, Ease of Doing Business-Implementation of Radio Frequency Identification (RFID) based Port Access Control System (PACS) at Kolkata Dock System (KDS) was introduced.
  • JSW Infrastructure entered into built-operate-transfer agreement with Paradip Port Trust at an investment of Rs 750 crore (US$ 107.31 million) to operate Paradip port.
  • In August 2019, India became the first country in the world to issue Biometric Seafarer Identity Document (BSID), capturing the facial bio-metric data of seafarers.
  • Adani Port and Special Economic Zone (APSEZ) became the first Indian port operator to handle cargo movement of 200 million tonnes (MT) in 2018-19.
  • The Indian Minister for Shipping, Road Transport and Highways, Mr. Nitin Gadkari, announced a massive investment in India’s ports and roads sector, which is likely to boost country’s economy. The Indian Government plans to develop 10 coastal economic regions as part of plans to revive the country’s Sagarmala (string of ports) project.
  • The zones would be converted into manufacturing hubs, supported by port modernisation projects, and could span 300-500 kms of the coastline. The Government is also looking to develop the inland waterway sector as an alternative to road and rail routes to transport goods to the nation’s ports and hopes to attract private investment in the sector.
  • Ports sector in India has received a cumulative FDI worth US$ 1.63 billion between April 2000 and June 2020.
  • Indian ports and shipping sector witnessed nine M&A deals worth US$ 381 million in 2019.

Government Initiatives

Some of the major initiatives taken by the government to promote the ports sector in India are as follows:

  • In October 2020, the Ministry of Shipping launched an indigenous software solution for vessel traffic services (VTS) and vessels traffic monitoring systems (VTMS).
  • In line with the ‘Make in India’ policy of the Government of India and to boost shipbuilding, the Ministry of Shipping reviewed the ROFR (Right of First Refusal) licensing conditions on October 22, 2020 for chartering vessels/ships through the tender process for all types of requirements. To promote the demand for ships built in India, priority for chartering of vessels is given to vessels built in India, flagged in India and owned by Indians as per amendments in the guidelines of ROFR (Right of First Refusal).
  • In October 2020, Union Minister Mr. Mansukh Mandaviya inaugurated the ‘Direct Port Entry Facility’ at the V.O. Chidambaranar port. This facility will enable direct movement of containers from factories, without intermediate handling at any CFS (Container Freight Station), facilitating shippers to get their exports directly to the container terminal (24x7), thereby increasing efficiency and ease of doing business.
  • In October 2020, the Ministry of Shipping announced plans to develop a National Logistics Portal (Marine) with end-to-end logistics solutions to help exporters, importers and service providers.
  • In September 2020, the Shipping Ministry launched a dispute redressal portal, ‘SAROD-Ports’ (Society for Affordable Redressal of Disputes - Ports) to help develop confidence in the private sector, as ports are shifting to landlord models.
  • As of November 2019, projects worth Rs 13,308.41 crore (US$ 1.90 billion) were awarded in the last three years on upgradation of the major ports. 
  • As per Union Budget 2020-21, the total allocation for the Ministry of Shipping stands at Rs 1,800 crore (US$ 257.22 million).
  • Major Port Authorities Bill 2020 was introduced in the Loksabha, which intends to provide regulation, operation and planning of major ports in India and to vest the administration, control and management of such ports upon the Boards of Major Port Authorities and for matters connected therewith or incidental thereto.
  • Net profit at major ports increased from Rs 1,150 crore (US$ 178.4 million) in FY13 to Rs 3,413 crore (US$ 529.6 million) in FY18, while operating margin increased from 23% to 44%.
  • In May 2018, Ministry of Shipping allowed foreign flagged ships to carry containers for transhipment.
  • In March 2018, a revised Model Concession Agreement (MCA) was approved to make port projects more investor-friendly and make investment climate in the sector more attractive.

Achievements

Following are the achievements of the government in the past four years:

  • Turnaround time at major ports stood at 64.69 hours in FY20 (till September 2019).
  • Project UNNATI was started by the Government of India to identify opportunity areas to improve operations of key ports. Under the project, 116 initiatives were identified, out of which, 98 initiatives have been implemented, as of September 2020.

Road Ahead

Increasing investment and cargo traffic point towards a healthy outlook for the Indian ports sector. Providers of services such as operation and maintenance (O&M), pilotage and harbouring and marine assets such as barges and dredgers are benefiting from these investments.

The capacity addition at ports is expected to grow at a CAGR of 5-6% till 2022, thereby adding 275-325 MT of capacity.

Under the Sagarmala Programme, As of 30 September 2019, a total of 121 projects worth Rs. 30,228 crore (US$ 4.33 billion) have been completed and 201 projects worth Rs. 309,048 crore (US$ 44.22 billion) are being implemented.

Ministry of Shipping has set a target capacity of over 3,130 MMT by 2020, which would be driven by participation from the private sector. Non-major ports are expected to generate over 50% of this capacity.

India’s cargo traffic handled by ports is expected to reach 1,695 million metric tonnes by 2021-22 according to a report by the National Transport Development Policy Committee.

Within the ports sector, projects worth investment of US$ 10 billion have been identified and will be awarded in the coming five years.

Note: Conversion rate used in December 2020, Rs. 1 = US$ 0.01357

References: Indian Ports Associations, Consolidated FDI Policy, Press Information Bureau (PIB), Media Reports.

TEUs- Twenty Foot Equivalent Units, MMT-million metric tonnes

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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