With ever-increasing size of ships, the draft requirements are also rising.

Varun Gogia, Assistant Vice President & Sector Head, ICRA

Indian ports have a long way to go in terms of better infrastructure to handle operations efficiently. What is your view on this?

Indian ports have made significant progress in the last decade in terms of providing better infrastructure facilities and improvement in several operational parameters. The cargo handled at Indian ports has risen at a CAGR of 4.4% over the last decade with container handling leading the way with a 6.5% CAGR over the same period. The improved infrastructure has resulted in lower turn-around time and dwell time for vessels at Indian ports. However, the same remain higher than some of the major logistics hub e.g. Singapore. Indian ports have been suffering from inadequate berthing facilities, length of ports for developing berthing facilities. The Indian port sector continues to invest in improving infrastructure and should witness improvement in its operational parameters as well. Currently, the draft available at Indian ports along with unloading capabilities remain inadequate to handle ultra large size vessels which are now increasingly being adopted globally. While the draft availability remains a concern due to limited dredging capabilities in the country as well as some geological limitations at certain ports. Currently, the lack of digitisation and automation of port infrastructure in India has led to lower productivity vis-à-vis other global shipping hubs. However, with several projects being implemented under the Sagarmala scheme along with Maritime India Vision 2030, the Indian ports should see improvement in port infrastructure in terms of cargo loading/unloading infrastructure, large vessel handling capabilities, port connectivity to hinterland.  

Indian ports have improved its position in the World Bank's Logistics Performance Index (LPI) with a lower turnaround time. How far this will attract more ships at Indian ports?

Improvement in India's ranking in the World Bank's Logistics Performance Index (LPI) augurs well for the ports sector. Since lower TAT keeps the ships for a lesser time at ports, the same translates into lower logistics cost as well for the industry. The current port dwell time of ~2.6 days as per WB report puts India in the top quartile of destinations with low dwell time. The improvement in the dwell times has resulted from the investments made in the sector over the past several years. ICRA expects the same to have a positive impact on more ships calling Indian ports and thus reducing the overall logistic costs for the economy.    

What are the major challenges that hinder the port infrastructure developments?

While there have been considerable developments on the infrastructure development at ports over the course of last decade, several impediments continue to remain. Some of the key impediments include delays witnessed in land acquisitions, policy uncertainties, delays in environmental clearance, activist protests, and past disputes making port players wary of further investments. Heightened competition in recent times has also resulted in inadequate returns to justify incremental investments in development of port infrastructure and may lead to sub-optimal port performance.

Indian needs deep draft ports in order to attract bigger ships. What are the steps taken by the authorities in this regard?

Currently, none of the ports in India have a draft in excess of 20 meters and with ever-increasing size of ships, the draft requirements are also rising, e.g., Ever Alot, the world's largest shipping container could not dock in JNPT due to inadequate draft. This results in large ships skipping Indian ports. However, a couple of deep draft ports are under development with the Vizinjam port expected to become operational by CY2024 and Vadhavan port which is expected to become operational by CY2028. Recently, a parliamentary committee has also highlighted the need for improvement of the draft at the ports and coordination of several stakeholders to ensure improvement of the draft.

How far did the recent policy measures help Indian ports perform better? What steps are needed for further enhancement of port operations?

Government of India (GoI) has been focusing on improving infrastructure at ports as well as reducing regulatory hurdles for port functioning supported by policy measures including Sagarmala project implementation, Major Port Authorities Act, 2021 (MPAA 2021) and several other initiatives as well. As a result, India's ranking in the World Bank's LPI has also witnessed improvement. Going forward, improvement in the funding availability, removal of hurdles for land acquisition, policy support for resolving disputes between port authorities and terminal operators, improvement of hinterland connectivity, timely execution of projects, e.g., Dedicated Freight Corridors etc, will enable an integrated logistics ecosystem and enable further improvement in the port performance. Government of India has also put in a dispute resolution framework for resolving disputes between port authorities and port operators. The same is expected to result in clearance of some of the disputes that have been pending for a long time although the results are yet to be seen. However, once the resolutions come through, the sector is expected to witness enhanced performance.

What is your vision on Indian ports @2030? What are the steps needed for Indian ports to become globally competitive?

Maritime India Vision 2030 envisages 1.7-2.0x growth in cargo volumes, major capacity expansions across ports, improving port infrastructure among others. Indian port players will have to make investments in enhancing port handling infrastructure, increase digitisation of processes and automation of handling equipment. With the ever-evolving applications of Artificial Intelligence (AI), Indian ports should focus on integrating new technologies for improving the productivity and their vessel handling capacity. Apart from the port authorities, GoI will have to focus on improving last mile connectivity with hinterland through efficient transportation systems. Dedicated freight corridors, improving rail connectivity to reduce overall logistics cost and development of multi-modal logistics parks will ensure development of a healthy logistics ecosystem and benefit the port traffic. Additionally, focus on development of green and sustainable ports is expected to increase the sustainability index for the Indian ports and may benefit the ports in terms of higher traffic and develop as a trans-shipment hub for the region. Additionally, India has a long coastline and currently coastal shipping remains an under-penetrated segment. With GoI focusing on the same, the same can enable higher traffic for the ports and also offer a cheaper and more environment friendly transportation alternative.

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