Trade Analytics
Ports
Total investment in Indian ports by 2020 is expected to reach US$ 43.03 billion.

Shipping Industry & Ports in India

Latest update: October, 2019

Growth

 

Last Updated: October, 2019

Indian Ports Industry Report  (Size: 1.26 MB ) (October, 2019)

Introduction

According to the Ministry of Shipping, around 95 per cent of India's trading by volume and 70 per cent by value is done through maritime transport

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 km. The Indian Government plays an important role in supporting the ports sector. It has allowed Foreign Direct Investment (FDI) of up to 100 per cent 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

During FY19, cargo traffic at major ports in the country was reported at 699.05 million tonnes (MT). Cargo traffic handled stood at 463.07 million tonnes in 2019 (till November 2019). Cargo traffic at non-major ports was estimated at 529.6 million tonnes FY18 and grew at 10 per cent CAGR between FY07-18 and reached 281.0 million tonnes in FY19P (up to Sep 18).

The major ports had a capacity of 1,514.09 million tonnes per annum by 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 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 enter into built, operate and 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.
  • Essar Ports will invest US$ 70 million in Hazira port by 2020.
  • 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 help boost the 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 km 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 of US$ 1.64 billion between April 2000 and March 2019.
  • Indian ports and shipping sector witnessed three M&A deals worth US$ 29 million in 2017.

Government Initiatives

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

  • As of November 2019, a number of projects with total project cost of Rs 13,308.41 crore (US$ 1.90 billion) have been awarded in the last three years on upgradation of the major ports.
  • As of Union Budget 2019-20, the total allocation for the Ministry of Shipping is Rs 1,902.56 crore (US$272.22 million).
  • Net profit at major ports has increased from Rs 1,150 crore (US$ 178.4 million) in FY13 to Rs 3,413 crore (US$ 529.6 million) in FY18 while operating margin increased from 23 per cent to 44 per cent.
  • In May 2018, Ministry of Shipping allowed foreign flagged ships to carry containers for transshipment.
  • 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 in India has decreased at a rapid pace from 82.32 hours in FY17 to 59.51 hours in FY19.
  • Five times more growth in major ports’ traffic between 2014-18, compared to 2010-14.
  • Increased efficiency has led three times increase in net profits of major ports between FY14-18.
  • Turnaround time at major ports reduced to 64 hours in FY18 from 94 hours in FY14.
  • Project UNNATI has been started by Government of India to identify the opportunity areas for improvement in the operations of major ports. Under the project, 116 initiatives were identified out of which 91 initiatives have been implemented as of November 2018.

Road Ahead

Increasing investments 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 per cent till 2022, thereby adding 275-325 MT of capacity.

Under the Sagarmala Programme, the government has envisioned a total of 189 projects for modernisation of ports involving an investment of Rs 1.42 trillion (US$ 22 billion) by the year 2035.

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 per cent 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 of the National Transport Development Policy Committee.

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

Note: Conversion rate used as on September 2019, Re 1 = US$ 0.014019

TEUs- Twenty Foot Equivalent Units

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

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