A SEA CHANGE

Indian ports are looking for a transformation after the government implementing a series of mega programmes to improve their operational efficiency. These initiatives are expected to bring in a sea change in the port operations and capabilities in the coming years. Construction Times takes a look at the trends.

Ports play a major role in the growth of exim trade of a country. Having a vast coastline of 7,500 km with 13 major ports and about 200 non-major ports situated along its east and west coasts, India has a vast potential to excel in its maritime trade globally. However, in spite of these advantages and being strategically placed in the international maritime map, India is still lagging behind globally in maritime trade.

Current market scenario

India's maritime sector plays a crucial role in its overall trade and growth, with 95% of the country's trade volume and 65% of the trade value being undertaken through maritime transport. The total installed capacity of the major and non-major ports during 2020-21 was 2,554.61 MTPA (1,560.61

MTPA major ports and 994.00 MTPA non-major ports). There has been an increase in the cargo handling capacity of major ports from 1560.61 MTPA in 2020-21 to 1597.59 MTPA in 2021-22. The capacity at non-major ports remains the same in the last two years, according to reports. The major ports handle over 95 per cent of the country's export-import (EXIM) cargo, with Jawaharlal Nehru Port (JNP) accounting for over half the cargo volumes. Cargo traffic at non-major ports during April-March 2021-22, increased by 4.1% to 598.63 million tonnes from 575.04 million tonnes handled during April-March 2020-21.

Modernisation of the overall port operation has helped in the performance growth of ports in the last few years. The improved infrastructure, which facilitates increased cargo, simplification of processes, and ease of doing business helped the port in better performance in operations. Studies have found that the time and cost advantage at JN Port is better than its private counterparts. This is not just because of the Port Authority, but the entire ecosystem including Customs, other stakeholders and the local people,” says Sanjay Sethi, IAS,  Chairman, Jawaharlal Nehru Port Authority (JNPA).

Sagarmala programme

Sagarmala is a National Programme aimed at accelerating economic development in the country by harnessing the potential of India's 7,500 km long coastline and 14,500 km of potentially navigable waterways. The vision of Sagarmala is to reduce logistics cost for both domestic and EXIM cargo with minimal infrastructure investment. Sagarmala programme includes projects from various categories such as modernisation of existing ports and terminals, development of new ports, terminals, RoRo & tourism jetties, enhancement of port connectivity, inland waterways, lighthouse tourism, industrialization around port, skill development, technology centres, etc.

Currently, there are 802 projects worth investment of Rs 5.48 lakh crores for implementation under the Sagarmala Programme by 2035. Out of which, 201 projects worth Rs 99,281 crores have been completed and 216 projects worth Rs 2.12 lakh crores are under implementation. Further, 384 projects worth Rs 2.3 lakh crore are under various stages of development. In addition to this, 735 projects with estimated investment of Rs 1 lakh crore have been identified for carrying out holistic development of coastal districts.

While focusing on capacity addition and modernization of ports in India, the government should also focus on increasing capacity utilization at the ports. “Considering the low-capacity utilisation of ~44% for major ports and 57% for non-major ports, there is adequate surplus capacity available at present and focus should also be on implementation of other projects which will improve port efficiency and drive cargo growth,” says Sai Krishna, VP & Sector Head, ICRA.

Connectivity a key factor

Connectivity is one of the critical enablers for ports as it is the end-to-end effectiveness of the logistics system that drives competitiveness for industry. Port connectivity challenges exist in India and even new ports that have world class equipment can see their turnaround times hamstrung because of poor connectivity. This poor connectivity constrains India's trade competitiveness and increases industrial production costs. “Seamless flow of cargo from port to corridor to hinterland could be achieved through integrated planning, with excellent road, rail and water hinterland connections in the port and its nearby areas. Therefore, it is essential to develop the transport corridors till the hinterland into multimodal hubs with appropriate warehouses and other services to meet the industry requirements,” says Rajiv Agarwal, Operating Partner (Infrastructure), Essar and Managing Director, Essar Ports.

India's hinterland connectivity is mainly based on road and rail networks. Railways are the mainstay for carrying long lead distance and bulk cargo. But the expansion of rail network has not been able to keep up with the growing demand. Hence, the implementation of road and rail connectivity projects attains importance for enhancing the country's overall freight efficiency.

The Sagarmala Programme has identified connectivity between ports and domestic production and consumption centres, through rail, road, pipeline, MMLP under the pillar of port connectivity. According to the Ministry of Shipping, Ports and Waterways (MoPSW), there are 90 port-rail connectivity projects worth Rs 76,713 crore have been taken up by the Ministry with Indian Railways, Major Ports, and Maritime Boards. Out of which, 35 projects Rs 9,964 crore have been completed and 55 projects are in various stages of development and implementation.

 There are 101 road connectivity projects identified for total estimated investment of Rs 51,340 crore. Implementation of these projects is being done by MoRTH, Major Ports, Maritime Boards and State Governments. Of these total projects, 19 projects worth Rs 4,993 crore have been completed and 82 projects are at various stages of development and implementation.

Strengthening infrastructure

Years back, the Rakesh Mohan Committee's India Transport Report (2013) had projected a total port capacity requirement of 4,000 MT by 2031-32. There is a long way to go from the 2020-21 figure of 2,554.61 MT to achieve this target.

According to the 327th Report of Parliamentary Standing Committee on Transport, Tourism and Culture, with an aim to achieve approximately 5% share in world exports, India's exports need to grow aggressively in the next 5-10 years. It is also imperative for Indian ports to strengthen maritime capabilities in view of the increase in port connectivity to handle heavier cargo volumes and bigger size of container vessels, in near future.

To develop global standard ports in India, Maritime India Vision (MIV) 2030 has identified initiatives such as developing world-class mega ports, transshipment hubs and infrastructure modernization of ports. MIV 2030 estimates investments to the tune of Rs 1,00,000 – 1,25,000 crores for capacity augmentation and development of world-class infrastructure at Indian ports.

Infrastructure development and capacity augmentation of major ports is a continuous process. It involves construction of new berths and terminals, mechanization of existing berths and terminals, capital dredging for deepening of drafts for attracting larger vessels, development of road and rail connectivity etc. A number of projects have been awarded in the last five years on upgradation and capacity enhancement of the major ports.

Non-major ports are also keen on expanding their operational capacities to grab a larger share of cargo movement. As Arun Maheshwari, Joint MD & CEO, JSW Infrastructure, says, “JSW Infrastructure is targeting 200 MTPA cargo handling capacity by FY24 through greenfield and brownfield expansion/acquisition. Our focus will be on container and liquid cargo along with group cargo requirement. India is a growing market and definitely our expansions shall be in line with the business scenarios in the region/segment of business.”

 According to Sunil Kalra, Managing Director, Liebherr India, government has also launched a very important scheme called ‘Project Unnati', wherein various projects are identified for efficiency improvements as well as upgradation of existing port. “This is mainly by replacing old equipment with the latest technology and by upgrading existing equipment. Such projects have been offering very good opportunities for equipment suppliers like Liebherr,” he adds.

Importance of transshipment hub

Currently, nearly 75% of India's transshipment cargo is handled at ports outside India. The ports of Colombo, Singapore, and Klang handle more than 85% of this cargo. Developing a port into transshipment hub will accrue significant benefits such as forex savings, foreign direct investment, increased economic activity at other Indian ports, development of related logistics infrastructure, employment generation, improve operation/logistics efficiencies and increase in revenue share. Several other allied businesses viz. ship chandlery-ship supplies, ship repair, crew change facility, logistics value added services, warehousing and bunkering also come up at the transshipment port.

The Shipping Ministry has received suggestions from stakeholders to make Visakhapatnam as transshipment hub. Presently, however, the proposals namely developing Galathea Bay at Great Nicobar Islands and development of Cochin Port into transshipment facility have been taken up by the Government of India. This apart, the Kerala Government in association with private investor and partial financial support from the Ministry of Finance (Government of India) is also developing a transshipment project at Vizhinjam in Kerala.

Private investment in maritime infrastructure

Currently, there are 46 Public Private Partnership (PPP) projects at an estimated investment of Rs 36,765.58 crore at the major ports. Under Sagarmala Programme, there are 123 PPP projects at an estimated investment of Rs 2.63 lakh crores. Out of these, 29 PPP projects with investment of Rs 44,961 crores have been completed and additional 31 PPP projects worth Rs 50,942 crores are currently under implementation, according to the government figures. Remaining projects are at various stages of development.

Promotion of Inland Water Transport

The cargo traffic movement through operational national waterways was recorded as 83.61 million metric tonne (MMT) during FY2020-21. A quantity of 96.31 MMT cargo traffic movement has been recorded till February 28, 2022 during FY-2021-22. As per Maritime India Vision (MIV) 2030 document, cargo movement on National Waterways is targeted as 200 MMT by 2030.

The way forward

The government and the port operators are working continuously on the ways and means to improve efficiency at Indian ports. In the three-day Chintan Baithak of Ministry of Ports, Shipping and Waterways held in this June chaired by Sarbananda  Sonowal, Union Minister for Ports, Shipping and Waterways, the minister asked all ports to prepare master plan in order to become Mega Ports by 2047. The Chintan Baithak witnessed deliberation on various innovative projects undertaken by them such as Buffer Parking Yard for Container Trailers, Smart Vessel Traffic Management System, 5G Network Pilot Project, Supervisory Control and Data Acquisition (SCADA) System for Oil Pipeline Operations, Automated Vehicle Scanning, RFID Scanning of Personnel, Drone Surveillance, Green Warehousing System, Rejuvenation of Waterbodies, etc.

“While ICRA expects the cargo growth of 6-8% per annum in the near term, to sustain cargo growth at healthy levels in the medium to long term, other related projects like sufficient dredging, digitalisation of operations, improved connectivity and port-led industrialisation with specific cargo- based clusters are to be implemented in a timely manner. Further, funding support from the Central and the State Governments, either through the proposed MDF or through budgetary allocations, would be a necessity,” Krishna concludes.