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Ports
Please click here to view the draft National PPP Policy and to give comments and suggestions.

Ports

 
 

Size of the Initiatives


With 12 major ports and 187 minor ports, 7,517 km long Indian coastline plays a pivotal role in the maritime transport helping in the international trade. Traffic handled at major ports during April 2008 to January 2009 is recorded to be 436686 units. The ports in India offer tremendous scope for international maritime transport both for passenger and cargo handling.

Target


The Government of India targets to increasing the cargo handling capacity of major ports by two folds to reach 1.5 billion metric tonnes (MT) by the year 2012. This will be achieved at an investment of around USD 25 billion through public-private partnerships. A Crisil research on Indian ports and maritime transport estimates that ports will grow by 160 per cent over the 2011–12 period. Cargo handling at the major ports is projected to grow at 7.7% per annum (CAGR) till 2011-12 and the cargo traffic is estimated to reach 877 million tonnes by 2011-12, whereas the containerized cargo is expected to grow at 15.5% (CAGR) over a period of 7 years. The New Foreign Trade Policy envisages doubling of India’s share in global exports in next five years to Rs.675000 crores (USD 150 billion). A large portion of the foreign trade to be through the maritime route: 95% by volume and 70% by value

Approach


Indian Government plans to bring a new orientation to encourage the private sector to come forward in developing port activities and operations. The goal is planned to be achieved through numerous initiatives and policies. Many international port operators are invited to submit competitive bid for BOT terminals on a revenue share basis, which has attracted foreign players, such as Dubai Ports International (Cochin and Vishakhapatnam), Maersk (JNPT, Mumbai) and P & O Ports, (JNPT, Mumbai and Chennai), and PSA Singapore (Tuticorin). The National Maritime Development Plan (NMDP) has been set up by the Indian government to improve facilities at all the 12 major ports in India. At an investment of about US$ 12.4 billion, by November 2009, many projects are expected to be completed. This includes ambitious projects, such as the first phase of the international container transshipment terminal (ICTT) at Vallarpadam. Kochi port is being developed as a transshipment hub for India.

Policy


The government has established firm policies, such as 100% FDI under the automatic route is permitted for port development projects, 100% income tax exemption for a period of 10 years. A comprehensive National Maritime Policy is being formulated that will lay down the vision and strategy for development of the port sector in India till the year 2025. The ceiling for tariffs charged by Major ports/port operators will be regulated by Tariff Authority for Major Ports (TAMP).

Initiatives


Government Initiatives
The Government of India has undertaken the the expansion and modernization of ports on a priority basis as part of its initiatives in the up gradation of India’s infrastructure achieving the targeted growth rate. The government has initiated numerous plans, which includes;
  • Formulation of a National Maritime Development Policy to facilitate private investment, improve service quality and promote competitiveness, and US$ 11.33 billion has been allocated for the same.

  • An investment of more than US$ 9.07 billion will be made by 2015 for 111 Shipping Sector Projects.

  • In 2008–09, the Ministry of Shipping is going to launch 10 major expansion projects at an estimated investment of US$ 1.06 billion, 60% of which is allocated for the Chennai mega container terminal.

  • Permission for 100 per cent foreign direct investment (FDI) for port development projects under the automatic route.

  • 100 per cent income tax exemption is provided for a period of 10 years for port developmental projects.

  • Opened up of all the areas of port operation for private sector participation.

  • Increase in the rail connectivity of ports with the domestic market.

  • The experience of operating berths through PPPs at some of the major ports in India has been quite successful. It has, therefore, been decided to expand the programme and allocate new berths to be constructed through PPPs. A model concession agreement is being formulated for this purpose.

  • The Government has also decided to empower and enable the 12 major ports to attain world-class standards. To this end, each port is preparing a perspective plan for 20 years and an action plan for seven years.

  • A high level committee has finalized the plan for improving rail-road connectivity of major ports. The plan is to be implemented within a period of three years. Further, changes in customs procedures are being carried out with a view to reducing the dwell time and transaction costs. The government has also delegated powers to the respective Port Trusts for facilitating speedier decision-making and implementation. At the same time, several measures to simplify and streamline procedure related to security and customs are been initiated.

  • The National Maritime Development Programme is expected to bring a total investment of over Rs.50,000 crore in the port infrastructure. Such improvement in the scale and quality of Indian port infrastructure will significantly improve India’s competitive advantage in an increasingly globalized world.
Private Participation
  • A leading private shipyard, ABG Shipyard has decided to set up a greenfield shipyard in south Gujarat with an investment of USD 255.58 million. The new shipyard will be set up over 300 acres.

  • Gujarat-based Adani group is setting up a ship building and repair yard at about USD 212.98 million.

  • Larsen and Toubro Ltd has chosen Kattupalli port, in Thiruvallur district, near Chennai, as the location to build the over USD 425.97 million mega- shipbuilding yard.

  • Major shipping companies, such as Shipping Corporation of India (SCI), Great Eastern (GE) and Essar have placed orders worth USD 3.3 billion for 58 ships in Korea and China.

  • SCI has placed orders for 32 ships worth USD 1.87 billion and will be further welcoming bids for its USD 3 billion order of 40 ships. GE has placed an order worth US$ 780 million for 14 ships, while Essar has ordered 12 ships worth US$ 630 million. The ships are to be delivered during 2009–12.

Structure

  • Government of India dominated maritime activity in the past. Policy direction is now oriented to encouraging the private sector to take the lead in port development activities and operations
     
  • Many Major ports now operate largely as landlord ports - International port operators have been invited to submit competitive bid for BOT terminals on a revenue share basis
     
  • Significant investment on BOT basis by foreign players including Maersk (JNPT, Mumbai) and P & O Ports (JNPT, Mumbai and Chennai), Dubai Ports International (Cochin and Vishakhapatnam) and PSA Singapore (Tuticorin)
     
  • Minor ports are already being developed by domestic and international private investors: Pipavav Port by Maersk and Mundra Port by Adani Group (with a terminal operated by P & O)

Policy

  • 100% FDI under the automatic route is permitted for port development projects
     
  • 100% income tax exemption is available for a period of 10 years
     
  • Tariff Authority for Major Ports (TAMP) regulates the ceiling for tariffs charged by Major ports/port operators (not applicable to minor ports)
     
  • A comprehensive National Maritime Policy is being formulated to lay down the vision and strategy for development of the sector till 2025.

Cargo handled by Major Ports in India
 

Major Port
Trade
(04-05, MMT)
Container Traffic
(04-05)(million TEU*)
Chennai

44

0.62

Cochin 14 0.19
Ennore 9.5
Haldia 36 0.13
JNPT 33 2.37
Kandla 42 0.18
Kolkata Dock System 10 0.16
Mormagao 31 0.01
Mumbai 35 0.22
New Mangalore 34 0.01
Paradip 30
Tuticorin 16 0.31
Vizag 50 0.05

Source: Indian Ports Association
* Twenty foot equivalent unit

Opportunity


The JNPT port where the capacity will be
over 3 million TEU by 2006


The port sector has seen significant investment
by major global port operators

Outlook

  • Cargo handling at the major ports is projected to grow at 7.7% p.a. (CAGR) till 2011-12
    • Traffic estimated to reach 877 million tonnes by 2011-12
    • Containerised cargo is expected to grow at 15.5% (CAGR) over the next 7 years
       
  • The New Foreign Trade Policy envisages doubling of India’s share in global exports in next five years to $150 billion (Rs.675000 crores)
    • A large portion of the foreign trade to be through the maritime route: 95% by volume and 70% by value

Potential

  • Growth in merchandise exports projected at over 13% p.a. underlines the need for large investments in port infrastructure
     
  • Investment need of $13.5 billion (Rs.60,750 crores) in the major ports under National Maritime Development Program (NMDP) to boost infrastructure at these ports in the next 7 years
    • Under NMDP, 276 projects have been identified for the development of Major ports
    • Public–Private partnership is seen by the Government as the key to improve Major and Minor ports
    • * 64% of the proposed investment in major ports envisaged from private players
       
  • The plan proposes an additional port handling capacity of 530 MMTA in Major Ports through:
    • Projects related to port development (construction of jetties, berths etc.)
    • Procurement, replacement and/or up-gradation of port equipment
    • Deepening of channels to improve draft
    • Projects related to port connectivity
       
  • Investment need of $4.5 billion (Rs.20,250 crores) for improving minor ports

For additional information: Department of Shipping, Ministry of Shipping, Road Transport & Highways (http://shipping.nic.in)

Exchange rate used: 1 USD = 48.2835 INR
Content Source: www.infrastructure.gov.in, www.ibef.org

 
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