INDIA’S PORTS AND SHIPPING SECTOR OVERVIEW
India has thirteen major ports and two hundred and five minor and intermediate ports that have been notified. Six new mega ports will be built in Sagarmala as part of the National Perspective Plan for the country. The ports and shipping industry in India are critical to the country’s trade and commerce growth. With a coastline of around 7,517 kilometres, India is the sixteenth-largest maritime country in the world. Overall, India’s ports handle 95% of the country’s foreign trade by volume and 70% by value. The growth of the Domestic and international trade very much depends on the robustness of the Ports and Shipping sector. The Port infrastructure plays a significant part in boosting the country’s trade and serves as the critical entry point for EXIM trade. Sandeep Sharma takes a look at the Ports and Shipping sector in India.
FACTS AND FIGURES
During April-November 2021-22, cargo traffic at India’s twelve major ports climbed by 12.0% to 466.09 million tonnes, up from 416.30 million tonnes in April-November 2020-21. The overseas freight handled at major ports increased by 10% between April and November 2020-21 and April and November 2021-22, from 324.98 million tonnes to 357.33 million tonnes. The coastal cargo handled at Major ports increased by 19.1% from 91.32 million tonnes in April-November 2020-21 to 108.76 million tonnes in April-November 2021-22.
Kamarajar Port had the highest growth in traffic handled at Major Ports during April-November 2021-22, with a 70.9 percent increase, followed by JNPT (27.9%), Chennai Port (21.7%), Cochin Port (21.6%), Mumbai Port (16.7%), Deendayal Port (12.1%), VOC Port (9.3%), SMP Kolkata (8.6%), NMPT (7.4%), and Paradip Port (7.4%). (2.3 percent). During April-November, 2021-22, SMP Haldia Dock (3.4 percent), Mormugao Port (1.9 percent), and Vizag Port (0.6 percent) saw negative traffic growth compared to April-November, 2020-21. During April-November 2021-22, Deendayal Port handled the most cargo of 85.12 million tonnes, accounting for 18.3 percent of the total, followed by Paradip Port (15.9%), JNPT (10.5%), Vizag Port (9.7%), Mumbai Port (8.3%), Chennai Port (6.7%), SMP Haldia Dock (5.8%), Kamarajar Port (5.3 percent), NMPT (5.1%), VOC Port (5.0%), Cochin Port (4.7%), Mormug (2.1%).
GOVERNMENT INITIATIVES
EASE OF DOING BUSINESS
The Government aims to improve the Ease of Doing Business in Major Ports and Shipping Sector through: 1) Creating Smart Ports – Implementation of Port Community System 1x; Logistics Data Bank Service; RFID Solutions; Enterprise Business Systems; Direct Port Delivery (DPD); Direct Port Entry (DPE); scanners/ container scanners and simplifying procedures. 2) Digitization in Services – Director General of Shipping has introduced online training of seafarers, Biometric Seafarers Identity Document (BSID) as well as digitization of its services for issuance of certificates of ratings, etc. 3) Smooth Data Flow – A centralized, web-based Port Community System (PCS) has been commissioned across all major ports which enable smooth data flow between different stakeholders through a common interface. 4) Paperless – e-DO (Electronic Delivery Order) through PCS along with e-invoicing and e-payment has been made mandatory. 5) PCS – The Port Community System (PCS) has integrated the electronic flow of business related documents/information and functions as a centralized hub for secure exchange of electronic messages between all major ports of India and other stakeholders.
DRAFT INDIAN PORTS BILL 2021
On 02.07.2020, the draft Indian Ports Bill, 2020 was first issued for feedback from all stakeholders, including state governments, union territories, state maritime boards (SMBs), and major ports. On 10.12.2020, the Bill was sent a second time to all stakeholders for comments and to all central line Ministries for Inter-Ministerial Discussions (IMC), and it was also posted on this Ministry’s website for public consultations. The current draft Indian Ports Bill, 2021 was circulated for stakeholders’ comments on the 10th of June, 2021. The responses of certain state governments are still pending. The proposed legislation is currently in the stages of consultation.
The Draft Indian Ports Bill, 2021 proposes that the management and administration of major ports be delegated to the Board of Major Port Authority for each port, as established by the Major Ports Authorities Act, 2021, and that the management and administration of all non-major ports in each State/UT be delegated to State Maritime Boards. This is reflected in the clauses of the Draft Indian Ports Bill, 2021, which require every coastal state and union territory to establish a State Maritime Board if one does not already exist under state statutes, and to empower the said State Maritime Boards with uniform powers and functions, including planning, development, supervisory, administrative, and adjudicatory powers and functions.
MARITIME INDIA VISION (MIV) 2030
Maritime India Vision 2030 was formulated by the Ministry of Ports, Shipping and Waterways with the objective of propelling India to the forefront of the Global Maritime Sector in the next decade.Detailed discussions involving 350+ stakeholders from all parts of the maritime sector viz. ports, shipyards, inland waterways, trade bodies & associations, ministries, legal experts, national and international industry experts were undertaken. Substantial deliberations and ideations running over More than 250 different brainstorming sessions, study of 100+ global benchmarks & best-in-class examples, and analysis of 50+ Acts and Laws (including state & environmental) have led to development of MIV 2030. Over 150 initiatives covering 515 key activities across 10 themes encompassing all the facets of the maritime sector have been identified to form the building blocks for the future of the Indian Maritime sector.
MIV 2030 envisions an overall investment of ₹3,00,000 – ₹3,50,000 Cr across ports, shipping, and inland waterways categories. This Investment amount excludes projects already under implementation stage as part of Sagarmala project. This vision roadmap is estimated to help unlock ₹20,000+ Cr worth of potential annual revenue for Indian Ports. Further, it is expected to create an additional 20 lakh jobs (direct and non-direct) in the Indian maritime sector.
MODEL CONCESSION AGREEMENT 2021
The government has issued a revised model concession agreement (MCA) to be followed by the Centre-owned major ports while implementing new cargo handling projects with private funds. A concession agreement sets out the terms and conditions of a port contract and puts the project in motion. The revised MCA allows private terminal operators to set rates based on market forces without the approval of a regulator in line with the new law that governs major ports. The new MCA will be applicable to all the future PPP projects at major ports, as well as projects which are already approved by the Government but are still under bidding stage.
Under the new MCA, provision has been made for providing flexibility to the concessionaires to fix their tariff based on market conditions which will allow level playing field for the private terminals at Major Ports to compete with private ports for cargo. Further, to reduce risk to the lenders and make the project more bankable, provision of compensation for Concessionaire’s event of default before Commercial Operations Date (COD) has been added. Another provision which lays out a process for extension of concession period on the basis of performance and mutual agreement has been introduced.
As of November 2021, there are more than 80 PPP/landlord projects in the sector with investment of over ₹56,000 crore at various stages. Of these, 53 projects of ₹40,000 crore are under operation, whereas 27 projects of more than ₹16,000 crore are at implementation stage. It is estimated that 31 projects of over ₹14,600 crore will be awarded till 2024-25.
PM GATI SHAKTI – NATIONAL MASTER PLAN
PM Gati Shakti – National Master Plan for Multi-modal Connectivity, essentially a digital platform aims to bring 16 Ministries including Railways and Roadways together for integrated planning and coordinated implementation of infrastructure connectivity projects.The multi-modal connectivity will provide integrated and seamless connectivity for movement of people, goods and services from one mode of transport to another. It will facilitate the last mile connectivity of infrastructure and also reduce travel time for people. PM Gati Shakti will incorporate the infrastructure schemes of various Ministries and State Governments like Bharatmala, Sagarmala, inland waterways, dry/land ports, UDAN etc. Economic Zones like textile clusters, pharmaceutical clusters, defence corridors, electronic parks, industrial corridors, fishing clusters, agri zones will be covered to improve connectivity & make Indian businesses more competitive. It will also leverage technology extensively including spatial planning tools with ISRO (Indian Space Research Organisation) imagery developed by BiSAG-N (Bhaskaracharya National Institute for Space Applications and Geoinformatics).
SAGARMALA PROGRAMME
On March 25, 2015, the Union Cabinet accepted the concept of Sagarmala. On April 14, 2016, Prime Minister Narendra Modi unveiled the National Perspective Plan (NPP) for the comprehensive development of India’s coastline and maritime sector. The Ministry of Ports, Shipping and Waterways’ flagship programme, Sagarmala, aims to encourage port-led development in India by leveraging the country’s 7,500 km of coastline, 14,500 km of potentially navigable waterways, and strategic placement on important maritime trade routes. The Sagarmala Programme now includes 802 projects costing ₹5.53 lakh crore. 172 projects costing ₹88,235 crore have been completed, with 235 projects totaling INR . 2.17 lakh crore still in the works.
The Sagarmala program’s main goal is to minimise the cost of logistics for EXIM (Export-Import) and domestic trade with the least amount of infrastructure expenditure possible. The Sagarmala Programme aims to achieve this by: 1) Optimising the modal mix to reduce the cost of conveying domestic freight. 2) Lowering bulk commodity logistics costs by putting future industrial capacity near the coast. 3) Developing port-proximate discrete manufacturing clusters to improve export competitiveness, and 4) EXIM container movement time/cost optimization
OUTCOME OF SAGARMALA INITIATIVES
The current cargo handling capacity of Indian ports is 1,500 Million Metric Tonnes per Annum (MMTPA). A roadmap has been prepared to increase the Indian port capacity to 3,300 + MMTPA by 2025 to meet the growing traffic. Under Project Unnati, global benchmarks were adopted to improve the Key Performance Index (KPI) of efficiency and productivity for 12 major ports. Around 116 initiatives were identified across 12 major ports to unlock more than 100 MMTA capacities through efficiency improvement. An amount of about ₹40,000 crore will be saved annually by the industries. The GDP is expected to grow by 2%. More than one crore employment opportunities will be created.
PORT SECTOR PROJECTS
OPTIMIZING OF INNER HARBOUR FACILITIES OF WESTERN DOCK AT PARADIP PORT
Deepening and Optimizing Inner Harbour Facilities of Western Dock at Paradip Port, a PPP project with a total estimated cost of ₹3004.63 crore, was approved by the Cabinet. Western Dock berths, capital dredging in the channel and in front of the berths, and all other auxiliary equipment and facilities are all included in the scope. The planned project calls for the building of Western Dock Basin in two phases, each with a capacity of 12.50 MTPA, to handle cape size vessels with a maximum capacity of 25 MTPA. The project will meet the demand for imported coal and limestone, as well as granulated slag and completed steel products.
PORT PROJECTS IN ASSAM
An integrated plan called the PM GatiShakti – National Master Plan is being developed to speed up cargo flow on the Brahmaputra River. The building of the National Waterways-2 (Brahmaputra) and 16 (Barak) is helping businesses in leveraging connectivity with Bangladesh and reaching global markets. In several parts of Assam, the government is establishing MMLPs and developing river ports. The Centre is taking necessary steps to make Dibrugarh a major river port of the country. The projects under development include Cargo Terminal, Tourist Jetty and River Front Development projects near Bogibeel Bridge in Dibrugarh, Assam. At Pandu Port, the Assam Chief Minister has recently flagged off four steel catamaran vessels. This will help to boost river transport. These vessels are part of a World Bank-funded effort to integrate high-quality passenger and car ferries into the state’s larger transportation network. Two of the four vessels will ply over river Brahmaputra at Majuli, while one will ferry between Guwahati and North Guwahati and Uzanbazar and Umananda ferry ghats. The longest bridge with a length of 19km over the Brahmaputra river is coming up at a cost of ₹4,997 crore between Phulbari in Meghalaya to Dhubri in Assam. The construction of a bridge connecting Majuli with mainland Assam is coming at a cost of ₹925 crore. The other projects include the construction of 4 tourist jetties at Jogighopa, Pandu, Biswanathghat and Neamati; and the construction of IWT terminal at Jogighopa. Through a waterway, the Jogighopa IWT Terminal will strengthen an alternate route connecting Assam with Haldia Port and Kolkata. Cargoes from Bhutan and Bangladesh arriving at this terminal, as well as goods from the Jogighopa Multimodal Logistics Park, will be able to travel to various locations along the Brahmaputra.
RAMAYAPATNAM PORT PROJECT
In lieu of the construction of Duggirajupatnam Port, the Government of Andhra Pradesh had requested financial help for the building of Ramayapatnam Port under the Andhra Pradesh Reorganisation Act, 2014. However, on February 20, 2020, the State Government designated Ramayapatnam’s port limits as a Non-Major Port, which is now under review by the respective State Maritime Boards and State Governments.
GREENFIELD PORT AT TAJPUR
The West Bengal Government plans to develop a greenfield private deep sea port at Tajpur in East Medinipur district. The West Bengal Industrial Development Corporation (WBIDC), a state nodal agency in port development, had called bids in October 2021. Adani Group has evinced interest in developing the Tajpur port project.
GREENFIELD PORT AT NARGOL
Gujarat Maritime Board (GMB) plans to develop the greenfield port of Nargol at an an initial investment of ₹3,800 crore. The bids deadline is extended till February 4, 2022 from December 21, 2021. The decision has been taken after there were requests from prospective bidders that they need more time to collect reliable data from the site to come up with firm proposals. The interested companies include Adani Ports and Special Economic Zone (APSEZ), DP World, JSW Steel and Essar group.
MAJOR PORT AT VADHAVAN
The Government of India has given its approval in principle for the establishment of a major port at Vadhavan in Maharashtra by a Special Purpose Vehicle constituted under the Companies Act, 2013, with Jawaharlal Nehru Port Trust as the primary partner. Concerned State Governments/Maritime Boards are in charge of Non-Major Ports. The Vadhavan port will be developed on the Landlord Model. The overall projected project cost, which includes GST, preliminary pre-operative expenses, contingencies, working capital, and Interest During Construction (IDC), is ₹65,544.54 crores.
JETTY AT MUNDRA PORT TO HANDLE OIL SUPERTANKERS
At its flagship Mundra port in Gujarat, Adani Ports and Special Economic Zone Ltd (APSEZ) has erected India’s first jetty capable of accommodating very large crude carriers, or so-called oil super tankers, for crude imported by HPCL. The fully laden VLCCs for HPCL Rajasthan Refinery Ltd’s upcoming 9 million tonne (mt) refinery at Barmer will be handled by this first-of-its-kind facility.
MUMBAI PORT TRUST LAUNCHES NUMBER OF INFRA PROJECTS
The Mumbai Port Trust has recently started a number of initiatives, including an International Cruise Terminal (ICT), a Port Waterfront, Ro-Pax services, and an eight-kilometer-long ropeway connecting Sewri and Elephanta caves, which is the world’s longest. At a cost of ₹500 crore, the Port is building an ICT at the Ballard Pier extension berth. The terminal will not only berth cruise ships from across the world, but it will also have retail stores, restaurants, recreational areas, and other amenities. The port is also building a 1km long Mumbai Port waterfront at Prince’s and Victoria Dock Wall as an integrated water transport hub with all of Mumbai’s modern needs for pleasure and commuting. A Ro-Pax port, as well as beach restaurants, an amphitheatre, domestic cruise terminal, marina, floating restaurants, harbour tours, and water taxis, will be available at the upcoming facility. It would provide Ro-Pax services for commuters and tourists between Mumbai and Mandwa. This will be extended to connect to upcoming Navi Mumbai airport.
VIZHINJAM PORT PROJECT UPDATE
Vizhinjam international seaport project is moving at a snail pace owing to number of reasons. The operator was required to commission Phase I of the port by December 2019 under the terms of a contract signed between the state government and Adani Vizhinjam Ports Ltd (AVPL). In mid-November 2021, Kerala Ports Minister Ahammad Devarkovil stated that development on the Vizhinjam international seaport project is progressing, with the first mainline vessel expected to dock on May 23, 2023. He further added that the project required roughly 80 lakh tonnes of rocks for the breakwater construction, of which 30 lakh tonne have already been received. The port operator, Adani Vizhinjam Ports Limited (AVPL), has stated that the project’s commissioning would be delayed because to a lack of rocks, Ockhi cyclone, and back-to-back floods.
FUTURE OUTLOOK
India has recently begun to investigate the vast possibilities for transporting people and products using waterways. Domestic and international trade is likely to boom post Covid-19 pandemic, and the Ports and Shipping sector has a lot of room to grow. The port industry is showing signs of increased growth, capacity expansion, efficiency benefits, and ease of doing business as a result of the implementation of the Sagarmala initiative.The Indian government is actively supporting the development of the ports, shipping, and waterways sector. It has opened up the automated route to 100 percent FDI for port and harbour building and maintenance projects. It has also made it easier for businesses that create, maintain, and operate ports, inland waterways, and inland ports to take advantage of a 10-year tax break. According to ICRA report, the Container volumes witnessed a steep recovery of 22% on a YoY basis in 8M FY 2022 despite the second wave of the pandemic in the initial few months of the current fiscal and due to the low base effect. The recovery is expected to be sustained, and the container volumes are expected to grow by 12-15% on a YoY basis in FY2022. However, the impact of any subsequent wave of the pandemic and the related containment measures remain a sensitivity factor.
*Image used in this article is for illustration only
Note: The above-mentioned article on Ports and Shipping sector overview is taken from ProjectX India | 1st January 2022 edition. Each issue of ProjectX contains information on new projects, ongoing projects, contract award, commissioned projects, and e-procurement opportunities. Buy our latest or archival issues by clicking here…
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