Home / ANALYSIS / Business / Anchored for growth

Private players are gradually taking a centre stage in India’s port building and operating exercise

Supplemented by growing manufacturing and trading activities, India’s economy is expected to remain strong and robust. To sustain trade and growing economy, India needs to enhance its infrastructure drastically. This involves – amongst other things – a stronger marine infrastructure, which is much better than the existing one. With India’s seaports in dire need of expansion, it has thrown open new opportunities for private sector. However, it is neither as simple nor as easy as that. There are several challenges. We try to analyse the opportunities in the light of these challenges.

India’s seaports sector offers huge opportunities as it has a long coastline of about 7517 km including the western and eastern shores of the mainland as well as along the islands situated in the Bay of Bengal, the Arabian Sea and the Indian Ocean. The country has only 13 major ports (Port Blair has recently become India’s 13th major port) and just about 200 non-major ports.

Most of the minor ports hardly add any great value to the economy in their current state of affairs. With country’s port traffic expected to cross one billion MT mark by end of 11th Plan (2007-2012), existing ports need to augment their capacity radically. The projected traffic of major ports during 2011-12 is 615.70 MT, and a capacity of about 800 MT is required to meet this traffic.

The traffic handling capacity of major ports has gone up by about 48% in the last five years. It has increased from 389.5 MT in 2003-04 to 574.77 MT in 2008-09. A three-fold increase is projected in traffic handling capacity of major ports by 2025-26 by augmenting the capacity to 1595.07 MT. The major ports handled 72% of the total port traffic while 28% of the port traffic was handled by 66 non-major ports.

The Indian tonnage, in the shipping sector, for the first time this year crossed the 10 million Gross Tonnage (GT) mark. As on September 1, 2010, a total of 1029 ships with 10.10 million GT are registered under the Indian flag. Out of this, 693 ships of about 1 million GT are engaged in Coastal trade and remaining 336 vessels are plying in the overseas trade.

Major and non-major ports in India accomplished a total cargo throughput of 844.9 MT during 2009-10, reflecting an increase of 13.6% over 2008-09.

Story continues below

Advertisement

COMMENT Comment on this article

Private Participation

Traditionally been a government-invested sector, seaport today is one of the most underserved sectors in India to be tapped by private players. The government has started to take up projects under the Public Private Partnership (PPP) through its National Maritime Development Programme (NMDP). There are about 25 private/captive port projects which are in operation at the moment. These projects include ports like JNPT, Mormugao, Kandla, Visakhapatnam, Paradip, Chennai, Ennore, Kolkata and Cochin.

The government has been encouraging private sector participation including 100% foreign direct investment in port development. The major areas which have been thrown open for private investment, mainly on Build, Operate and Transfer (BOT) basis, include construction of cargo handling berths, container terminals and warehousing facilities, installation of cargo handling equipment, construction of dry-docks and ship-repair facilities, etc.

The government has realised that it has resource constrain, and it requires active private partnership for the port building exercise. It has indentified 276 projects to take up under NMDP for implementation between 2005 and 2012, involving an investment of around Rs55,804 crore. However, it has managed to complete only 50 projects so far at the cost of Rs5717.28 crore. A total of 74 projects worth of Rs16502.68 crore are under implementation at the moment. There are 16 projects worth of Rs3100.33 crore that have received approval but yet to be awarded. The government has also firmed up 29 projects but awaiting approval, costing Rs11561.39 crore. There are 82 projects worth of Rs19878.20 crore which are under preliminary planning stage whereas it has dropped 25 projects worth Rs 5961.41 crore due to their non-viability.

On completion of NMDP, the government envisaged a capacity addition of 402.91 MT by 2011-12, and the overall capacity of major ports is expected to reach 800.41 MT. With Rs55,804 crore envisaged for the ports, the government has decided to spend Rs3609 crore through its budgetary support and Rs13771.54 crore through the port’s internal resources. It expects Rs34505.34 crore to come from private sector and Rs3917.85 crore from other sources including investments by Ministry of Railways, NHAI, etc.

The government has fixed a target of taking up 21 PPP projects for the major ports for the financial year 2010-11. It has awarded two projects so far at Tuticorin Port and Ennore Port. The private investment through these projects is expected to be around Rs14,000 crore during the current financial year.

There are a number of PPP port projects which are either successfully executed or in the process of commencing operation soon. This includes Mundra Port, Pipavav Port, Krishnapatnam port, Gangavaram port, Karaikal port, Jaigarh port, Dhamra port, Adani (Petronet) Dahej port, Dighi port and Gopalpur port besides others.