Maritime Sector in India

 

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 200 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 plays 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
Cargo traffic handled by India’s major ports increased 4.97 per cent year-on-year to 616.62 million tonnes (MT) during April 2017-February 2018. The highest growth was witnessed by Cochin Port at 17.63 per cent, followed by Paradip at 15.56 per cent, Kolkata (including Haldia) at 14.29 per cent and Jawaharlal Nehru Port Trust at 6.37 per cent. Container traffic saw the highest growth during this period at 8.37 per cent year-on-year and reached 8,302 TEUs.

During 2016-17, major and non-major ports in India have accomplished a total cargo throughput of 1,133.09 million tonnes, an increase of 5.7 per cent previous year 2015-16. The growth in cargo handled at major and non-major ports in 2016-17, were 6.8 per cent and 4.2 per cent, respectively. The share of major ports in the total traffic handled by Indian ports increased from 56.5 per cent in 2015-16 to 57.2 per cent in 2016-17.

The country’s major ports handled a combined traffic volume of 647.76 million tonnes during 2016-17, registering an annual growth rate of 6.80 per cent. The major ports recorded the highest ever capacity addition of 100.37 MT in 2016-17, thereby raising the total capacity to 1065 MT per annum, as against a capacity of 965.36 MT per annum in 2015-16.

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

The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, reported that the Indian ports sector received FDI worth US$ 1.64 billion between April 2000 and September 2017.

Investments/Developments
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.

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

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.
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 86 initiatives have been implemented*.
The Ministry of Shipping, Government of India, released Rs 25 crore (US$ 3.86 million) as grants-in-aid to Jawaharlal Nehru Port Trust (JNPT) and Rs 50 crore (US$ 7.72 million) to the Government of Karnataka for Karwar port, for infrastructure development under the Coastal Berth Scheme of the Sagarmala programme.
Mr Rajnath Singh, Home Minister, Government of India, and Mr Nitin Gadkari, Minister for Shipping, Road Transport and Highways, inaugurated a new sea route to Baratang Island and initiated various shipping projects in the Andaman and Nicobar (A&N) Islands; along with announcement of addition of 14 new ships in the A&N Islands over the next three years.
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, as against 643 million in 2014-15, 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.

Exchange Rate Used: INR 1 = US$ 0.0155 as on March 04, 2018

TEUs- Twenty Foot Equivalent Units, *As of March 2018

 

Source – India Brand Equity Foundation

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