India has 12 major ports and about 200 non-major ports handling Export Import cargo, which are spread over approximately 7500 kilometers of coastline. Major ports are under the jurisdiction of the Government of India and are governed by New Major Ports Authorities Bill, 2016 replacing the Major Port Trust Act, 1963. The 12 major ports handle approximately 57% of total cargo traffic. According to the Ministry of Shipping, around 95% of India's trading by volume and 70% by value is done through maritime transport.
India has been re-elected to the Council of the International Maritime Organization [IMO] under Category “B” representing the States with the largest interest in international seaborne trade, for the biennium 2018-19, at the 30th session of the Assembly of the IMO, held at London on 1st December, 2017, by securing second highest votes in the said category.
Since ports handle almost 90% of trade volume and 70% by value in India, the rising trade has contributed significantly to the country’s cargo traffic.
Capacity and Traffic
The number of ships under Indian Flag as on 31st December 2017 were 1374 as compared to 1399 on 31st October 2018, an increase of 25 ships in the last 10 months.
The number of seafarers in India has seen an unprecedented growth of 42.3% due to various policy level changes brought in by the Government in the last four years. The number of seafarers in December’ 17 was 1,54,349 while the number of seafarers has now (December’ 18) increased to 1,79,599.
Ministry of Shipping, along with the State Governments are striving to increase the overall port capacity to 3500+ million metric tonnes per annum (MMTPA) to cater to the projected traffic of 2500 MMTPA by 2025. Towards achieving this goal, 249 port modernization projects have been identified. Out of these, 107 port capacity expansion projects (cost: Rs. 67,962 crores) were identified from the port master plans of 12 major ports and are expected to add 794 MMTPA to the major port capacity over the next 20 years. Over the years, the cargo handling capacity of the major ports has been growing steadily as under:
|2013 - 14||744.91|
|2014 - 15||800.52|
|2015 - 16||965.36|
|2016 - 17||1359.0|
|2017 - 18||1451.19|
*Re-rated – Ports capacity re-rated based on Berthing Policy as per International norms
Source: Ministry of shipping
Capacity at major Indian ports reached 1451.19 MTPA in FY2018 vis-à-vis 744.91 MTPA in FY14. According to Indian Port Association (IPA), during April-December 2018, the highest growth in traffic was witnessed by Kamarajar Port (18.38%), followed by Cochin (8.92%), Kolkata [including Haldia] (8.74%), Paradip (8.11%) and JNPT (7.39), corresponding to the same period in the previous year. Additionally, the average turnaround time of major ports reduced by 1/3rd over last four years from 3.84 days in FY14 to 2.7 days in FY18.
Foreign Direct Investments
|2013 - 14||555.5||2%|
|Source: Ministry of shipping|
Cargo traffic at major ports in India stood at 679.36 MMT in FY18, growing at a CAGR of 2.73% from FY 08-18. Container traffic saw growth of 8.35% y-o-y in FY19 (till October 2018). The Twenty Foot Equivalent Units (TEUs) reached 6,488 during the same period. The Maritime Agenda 2010-20 has a target of 3,130 MT of port capacity by 2020.
Cargo handled at ports during the period April’2017- January’2018: Petroleum, Oil and Lubricants (33.74%), followed by Container (19.70%), Thermal & Steam Coal (13.72%), Other Misc. Cargo (12.09%), Coking & Other Coal (7.60%), Iron Ore & Pellets (6.72%), Other Liquid (4.15%), Finished Fertilizer (1.17%). The traffic handled at non-major ports was registered at 485.213 million tonnes in 2016-17. The Average Output per Ship per Berthday increased from 15333 tonnes in 2017-18 to 16166 tonnes in 2018-19 (till October 2018).
Foreign Direct Investments
To attract investment for the growth of this sector, the Government has allowed 100% Foreign Direct Investment (FDI) in the shipping sector. 100% FDI is allowed under the automatic route for projects related to the construction and maintenance of ports and harbours.
The Fourth Container Terminal (FCT) of Jawaharlal Nehru Port Trust (Phase-I), India’s largest FDI Project in the port sector involving an investment of Rs. 7935 crores was recently inaugurated. With this, the container handling facility at JNPT will increase from 5.15 million TEUs to 7.55 million TEUs.
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 are estimated to be US$ 28.5 billion. Projected cargo traffic to be handled by Indian ports by 2021-22 is expected to be 1695 million metric tonnes, an increase of 643 million metric tonnes from 2014-15.
As per the report of the National Transport Development Policy Committee, total 2422 million metric tonnes of cargo handling capacity would be required in Indian Ports by 2021-22. To meet this capacity, additional cargo handling capacity of 901 million metric tonnes is required to be created at Indian Ports in the next 6 to 7 years. Ministry of Shipping has initiated National Maritime Development Policy (NMDP) with a planned outlay of US$ 15 billion. Port projects involving Investment of over US$ 10 billion have been identified to be awarded, for the upcoming five years.
India’s increasing integration into Global Value Chains requires a well-established port infrastructure. Increasing investments and cargo traffic point towards a healthy outlook for the Indian ports sector. The capacity addition at ports is expected to grow at a CAGR of 5-6% till 2022, thereby adding 275-325 MT of capacity. Under the Sagarmala Programme, the government has envisioned a total of 189 projects for modernization 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% of this capacity.
Select Government Incentives
The Annual Budget 2018-19 allocated US$ 289 million to the Ministry of Shipping.
Some key provisions for this sector in the Annual Budget 2018-19 are:
A 10-year tax holiday to enterprises engaged in the business of developing, maintaining, and operating ports, inland waterways and inland ports
Project UNNATI has been started by Government of India to identify the opportunity areas for improvement in the operations of major ports. Under the project, around 116 initiatives were identified across 12 major ports to unlock more than 100 MTPA capacity just through efficiency improvement. Out of which, 91 initiatives have been implemented to unlock around 80 MTPA capacity.
VOCPT - The lighting arrangement in the berth, the night navigation of shallow Water Berth for docking/un-docking was allowed from June, 2018 at the port.
Vishakhapatnam - Port projects worth Rs. 1062 crore were inaugurated and foundation stone for port connectivity projects worth Rs. 679 crores were laid at Visakhapatnam on 13th July, 2018. These included upgradation of iron ore handling facility at Outer Harbour of Vizagport, Construction of Grade Separator from H-7 area to Port Connectivity Road, by-passing convent junction, under Sagarmala and Development of 12.7 km road connectivity to VPT from Shreelanagar Junction to Anakapalli- Sabbavaram/ Pendurti- Anandapuram road (NH 16).
Sagarmala - More than 604 projects having a total cost of Rs. 8.8 lakh crore have been identified under Sagarmala for implementation, during 2015-2035, across the areas of port modernization & new port development, port connectivity enhancement, port-linked industrialization and coastal community development. As on 30-Sep-2018, a total of 522 projects (costing around Rs. 4.32 Lac Crore) were under various stages of implementation, development and completion. Of these, 89 projects worth Rs. 0.14 lakh crore are completed and 443 projects worth Rs. 4.32 lakh crore are under various stages of implementation and development. Sagarmala Programme aims to promote port-led development with a view to reducing logistics cost for EXIM and domestic trade.
Development of new ports - In addition to projects for capacity expansion of major ports, 6 new port locations, namely – Vadhavan (Maharashtra), Enayam (Tamil Nadu), Tajpur (West Bengal), Paradip Outer Harbour (Odisha), Sirkazhi (Tamil Nadu) and Belekeri (Karnataka) have been identified to increase overall cargo handling capacity.
Port Led Industrialization - 14 Coastal Economic Zones (CEZ) covering all the Maritime States and Union Territories have been identified. In addition, 38 potential port-linked industrial clusters across Energy, Materials, Discrete Manufacturing and Maritime sectors have been identified. Out of these industrial parks, one mega food processing park at Satara, Maharashtra (Rs. 139 crore) has been completed and 3 Power Clusters (Rs. 76547 crore) in Krishnapatnam (AP), Ennore (TN) and Tuticorin (TN), 8 Electronics Manufacturing Clusters (Rs. 1704 crore) in AP, Gujarat, Odisha, Kerala, West Bengal and 3 Food Processing Parks (Rs. 1,348 crore) in Andhra Pradesh and Kerala are under implementation. Also under development are: SEZ at JNPT (Rs. 12,624 Crore), Smart Industrial Port City (SIPC) at Paradip (Rs. 3,350 Crore) and Kandla (Rs. 11,147 Crore) and Coastal Employment Units (CEUs) at VOCPT and KPL.
Coastal Shipping - Cabotage relaxation: the minimum movement of fertilizer to the extent of 50% of the total cargo onboard a ship is applicable only for cargo loaded at any Indian port for coastal movement. 41 projects (Rs. 1,535cr) have been sanctioned under the Coastal Berth Scheme for financial assistance of Rs. 633 crores, out of which Rs. 334 crores have been released to Major Ports/State Maritime Boards/State Governments.
Skill development - Ministry of Shipping is part-funding select fishing harbor projects in convergence with Department of Animal Husbandry Dairying & Fisheries (DADF) to improve livelihood of fishermen community. For this purpose, Rs. 323 Cr has been sanctioned for 13 projects (cost: Rs. 1189 Cr). These projects are expected to benefit over 1.5 Lakh fishermen and would have capacity to handle more than 2.3 Lakh tonnes of fish.
A Centre of Excellence in Maritime & Shipbuilding (CEMS) has been setup at Vizag and Mumbai in coordination with IRS &Siemens at a cost of Rs. 766 cr. The objective of the centre is to meet the domestic skill requirement in ship design, manufacturing, operating and maintenance, repair and overhaul.
National Technology Centre for Ports, Waterways and Coasts (NTCPWC) - Ministry of Shipping has set up the National Technology Centre for Ports, Waterways and Coasts (NTCPWC), at IIT Madras in Chennai to provide innovative and research based engineering solutions to various issues related to ports, waterways and coasts in the country. NTCPWC will act as a technology arm of Ministry of Shipping for providing the needful technological support to Ports, Inland Waterways Authority of India (IWAI) and all other related institutions.
Jal Marg Vikas Project (JMVP) - The Cabinet Committee on Economic Affairs (CCEA) approved the implementation of the Jal Marg Vikas Project (JMVP) on 03.01.2018at an estimated cost of Rs. 5369 crores with technical and financial assistance of the World Bank. The objective of JMVP is to improve navigability of National Waterway-I (NW-1) for plying of vessels of up to 2000 Dead Weight Tonnage (DWT).
Cruise shipping - A Modernized International Cruise Terminal at Chennai Port was inaugurated on 12th October 2018. Additionally, Mumbai Goa cruise service was launched on 20th October 2018.
Select Export Market Regulations
EU - Innovation, changing business, economics and technology are highlighting the need to adapt EU's maritime and ports policy to ensure high standards for safety, security and environmental protection, an efficient internal market and global competitiveness. The EU has put in place probably the most extensive and successful legislative framework for safety, environmental protection and quality shipping, which covers the entire chain. For more information, refer to this link - https://ec.europa.eu/transport/modes/maritime/maritime-transport_en