Business | Shipping
Indian ports to get Dh44b uplift
India's port sector is expected to receive investments of over Rs550 billion (Dh43.73 billion) as per the NDLP, a document which details the projects that major ports will implement over the next seven years, helping the industry achieve its throughput target of 20 million TEUs (Twenty-foot Equivalent Units).
- By Chinmay Chaudhuri, Staff Reporter
- Published: 00:00 July 16, 2006
Dubai: India's port sector is expected to receive investments of over Rs550 billion (Dh43.73 billion) as per the NDLP, a document which details the projects that major ports will implement over the next seven years, helping the industry achieve its throughput target of 20 million TEUs (Twenty-foot Equivalent Units).
It is estimated that to achieve a throughput of 20 million TEUs, India would need 20km of berth length. This meant a total of 90 berths, against 27 now. Hence heavy investment into the sector is a precondition to achieve the target.
A. Balasubramanian, Senior Vice-President, Infrastructure Development Finance Corporation, said at the Centrum 2006 seminar organised by the Confederation of Indian Industry last week in New Delhi that public investment of Rs160 billion (Dh12.72 billion) into the sector will attract up to 40 times in private investment.
The investment, he said, should be directed towards improving the connectivity of ports and increasing channel depth by dredging. That would qualify as facilitative investment that would attract many times its value in private investment, he added.
According to Balasubramanian, there is an imminent need to unbundle infrastructure and service delivery in India. At the moment, the landlord also provides services, which does not make for a level playing field.
The government's focus on the ports sector is an added incentive for DP World to increase its presence in India, where it already has signed an agreement with the Cochin Port Trust to construct, develop and operate an international container transshipment terminal at Vallarpadam, Kochi.
It is the largest single operator container terminal currently planned in India and the first in the country to operate in a special economic zone.
Mohammad Sharaf, Chief Executive Officer of DP World, told Gulf News, "India is one of our key focus areas. We are keenly looking forward to India for expansion of our business."
Michael Pinto, former secretary in India's Ministry of Shipping, said achieving a throughput of 20 million TEUs requires adequate infrastructure development.
"More than $2 billion had been invested in the port sector in the past, 50 per cent of it has gone into containers. The point to consider is whether we have concentrated too much on containers to the exclusion of other aspects and is there something that can be done for bulk, liquids etc."
He said there is also an urgent need to improve the connectivity of Indian ports. Delays, security and a lack of rail and road capacity connecting ports with the hinterland had constrained growth.
Improved connectivity is a precondition to achieving a 20-million TEU throughput which is 4.6 million TEUs now. Pinto said the rail freight corridor envisaged by the Ministry of Railways must be expedited. When implemented, it would increase train speed to 100km/h from 25 now.
S. S. Rangnekar, Director, Shipping Corporation of India, also stressed the need for better connectivity. "The availability is less than half of what is needed at the moment and the demand-supply gap will grow." He said the cost of shipping needed to be brought down.
It was 10 per cent of the total cost of trade now, but should be 4-5 per cent. Railway transport costs were also high, at seven cents per kilometre whereas it could be reduced substantially. Port costs were twice as high in India as compared to other ports in the region.
Rangnekar said India could look at feeder ships as a business opportunity in future. New types of ships were likely to be introduced.
The first rung would comprise of super ships and the second would have large cargo ships. However, the feeder ships sector would grow at a rapid rate.
He said the container fleet sector would grow by 12.23 per cent to 2009.
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