India Promotes Port Development as Cargo Traffic Increases
DELHI – India’s 12 major ports are expected to double their annual cargo handling capacity to 1,600 million tonnes (MT) within the next five years, according to Union Shipping Minister Nitin Gadkari. Initial projects to increase capacity by 350 MT will commence during this financial year.
India’s 12 major ports – Chennai, Cochin, Ennore, JNPT, Kandla, Kolkata (including Haldia), Marmugao, Mumbai, New Mangalore, Paradip, V O Chidamnarmar and Visakhapatnam – handled a combined cargo of 555.50 MT during the 2013-14 fiscal year, a slight increase of 1.78 percent from the 545.79 MT handled in 2012-13. This figure represents approximately two-thirds of the country’s total cargo traffic.
Given the importance of the country’s ports to national economic growth – approximately 95 percent of India’s trade by volume is transported by sea – it comes as no surprise that the government is endeavoring to boost the ports’ performances to world-class levels. However, Indian ports currently compare unfavorably with many of their Asian counterparts and, as such, there is still plenty of progress to be made.
“While the turnaround time taken is only 0.6 days in Singapore, it takes considerably more time in India, which has affected the international image of our ports,” said Gadkari at a review meeting last week with the heads of India’s 12 major ports, whom he urged to speed up decision-making processes and make tentative steps towards decentralization.
Going forward, the role of the Tariff Authority for Major Ports (TAMP) will continue to be reviewed in order to remove hurdles to investment. Previously, the tariff regulator capped the maximum rates that a major port was able to impose; Gadkari’s predecessor G K Vasan removed TAMP’s control over new projects at major ports in a bid to facilitate growth, but the status of existing projects still needs to be resolved. Other developments to the sector include improving port connectivity, and in particular rail connectivity, in order to improve port efficiency and reduce traffic congestion around the ports.
“Ports and roads play a key role in development. The country’s GDP can be boosted by two percent if these key infrastructure sectors are developed to their potential,” said Gadkari.
The ports sector is on the verge of a period of significant development. The government allows FDI of up to 100 percent for projects involving the construction, maintenance and management of ports and harbors, as well as a 10 year tax holiday to the enterprises involved. Between April 2000 and May 2014, the sector received a cumulative total of US$1,635.40 million of foreign direct investment (FDI).
Realizing the importance of the sector and its potential for growth, the Indian government has pledged large amounts of public funding to the sector in addition to creating a more favorable investment climate for both domestic and foreign investors. During the 2013-14 fiscal year, the government gave US$3.32 billion to 30 projects within the ports sector, more than triple the amount that was given the previous year.
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