'Ministry of Shipping has set a target capacity of over 3,130 MMT by 2020''

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Ajmal Fawad,
Deputy Manager Business Development,
VDMA India Services.[/vc_column_text][vc_empty_space css=".vc_custom_1582280357253{padding-top: 50px !important;}"][vc_empty_space css=".vc_custom_1582280357253{padding-top: 50px !important;}"][vc_empty_space css=".vc_custom_1582280357253{padding-top: 50px !important;}"][vc_column_text]Increasing investments and cargo traffic point towards a healthy outlook for the Indian ports sector.[/vc_column_text][vc_column_text]How do you look at the growth prospects of the port sector and what are the growth enablers?

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. India's cargo traffic handled by ports is expected to reach 1,695 million metric tonnes by 2021-22.          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.              

The government has also initiated National Maritime Development Programme (NMDP), an initiative to develop the maritime sector with a planned outlay of US$ 11.8 billion. The objective is to create a port capacity of around 3500 MT to handle the expected traffic of about 2500 MT by 2025 and to implement full mechanisation of cargo handling and movement at ports, thereby bringing Indian ports on par with the best international ports in terms of performance and capacity. Proposed investments in major ports by 2020 are expected to total US 18. 6 billion, while those in non major ports would be US 28. 5 billion.[/vc_column_text][vc_column_text]What was the cargo handled by 2019-20? What is the projected growth for
2020-21? 

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 348.44 million tonnes FY20 (up to Sep'19) 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. Capacity at major Indian ports reached 1,477 million tonnes by FY19P. Capacity at non-major ports is expected to reach 968 MMT in 2019 from 750 MMT in 2016. Given the positive outlook, proposed investments in major ports are expected to total US$ 18.6 billion by 2020, while those in non-major ports would be US$ 28.5 billion. The Maritime Agenda 2010-20 has a 2020 target of 3,130 MT of port capacity. Further, an action plan to increase in volume of coastal cargo from 120 MTPA to ~337 MTPA by 2025 has been developed in association with Asian Development Bank (ADB).            [/vc_column_text][vc_column_text]What are the major challenges the Port Sector is facing?

Equipment incapable of handling large volumes, deficient dredging capabilities, outdated navigational aids and IT systems, lack of proper logistics companies, lack of proper equipment handling training and technical expertise, are just some of the direct port-related problems that India faces. Although port maintenance is a major problem, it is surpassed by overall infrastructure issues.The Indian government has taken a handful of initiatives to improve the country's major and minor ports. In 2016, India passed the Central Port Authority (CPA) Act. The act grants more autonomy to the major ports. Also in 2016, it released the Revised Model Concession Agreement (MCA), which includes incentives for the private sector to get involved with the ports through updated tariff guidelines and discounted revenue shares. The government also provides a 10-year-tax holiday to companies that help maintain and operate ports. If these companies undertake a port development project, the government will help with up to 50% of the cost.    [/vc_column_text][vc_column_text]What is your take on the delay of Major Ports Authorities Bill?

The Major Ports Authorities Bill, a much-awaited plan to convert 11 of the 12 Central government-owned ports that are currently run as 'trusts' into 'authorities' through a new law is facing delays. The Bill is facing opposition from the port workers unions, arguing that the new law was aimed at converting the port trusts into corporate bodies under the guise of the 'authorities' set-up by invoking various clauses written in the Bill and pave the way for the privatisation of major ports.[/vc_column_text][vc_column_text]Globally, there has been a shift towards highly energy efficient container handling systems, automation of port activities etc? How does the scenario look like in India?

Indian container market is witnessing incremental double digit growth year-on-year with several policy reforms in place bolstering the container trade against the global slowdown. Improvement in trans-shipment numbers at Indian ports, direct port delivery (DPD), direct port entry (DPE), increase in authorized economic operators (AEOs), port community systems (PCS), digitization and automation of cargo movement through port gates, etc are some of the key areas of improvement notably aiding the market towards upward trend. Healthy competition among major and private ports is improving the container volume growth at each port year-over-year. The government has taken several measures to improve operational efficiency through mechanisation, deepening the draft and speedy evacuations. Government also has focus on terminals that deal with a particular type of cargo. This terminalisation is useful for handling specific cargo such as LNG that requires specific equipment and hence high capital costs. Thus, forming specialist terminals for such cargo will result in optimal use of resources and increased efficiencies.     

Ports are now also connected through a RFID tagging project to improve the entry and exit of trucks and in-port movement through gates by removing paperwork and enhancing security by recording the information.     

In FY 2018-19, total throughput of Indian container terminals registered was 16.99 million teus with year-on-year growth of 10.5 per cent. In the same year, total installed capacity available is 28.65 million teus, with capacity utilization of 60 per cent. West coast ports capture 66 per cent of overall Indian capacity by contributing 72 per cent of total Indian container volumes majorly supported by largest container terminals of JNPT and Mundra terminals. East coast ports handled 28 per cent of overall Indian container volume out of 34 per cent of total Indian container capacity.      [/vc_column_text][vc_column_text]How do you assess the scenario of palletization and containerization of cargo handling in Indian ports?

Ports handle around 90 per cent of EXIM Cargo by volume and 70 per cent by value. Solid cargo contributes the largest share to all traffic handled at major ports in India, followed by liquid cargo and containers. Cargo traffic during FY 19 for solid, liquid and container cargo was 292 MT, 262 MT and 145 MT, respectively. 

In order to meet the ever increasing trade requirements, expansion of port capacity has been accorded the highest priority with implementation of well-conceived infrastructure development projects like Sagarmala, project Unnati etc.              

Under Project Unnati, the global benchmarks were adopted to improve the efficiency and productivity KPIs for 12 major ports. Around 116 initiatives were identified across 12 major ports to unlock more than 100 MTPA capacity just through efficiency improvement. Out of which, 86 initiatives have been implemented to unlock around 80 MTPA capacity. The berth capacity will also be re-rated as per global standards. Capacity will be enhanced from 1066 MTPA to 1359 MTPA. Occupancy rates taken 70% for non-containerized and 80% for containerized cargo.[/vc_column_text][/vc_column][/vc_row]

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