India's Maritime Growth Fueled by Foreign Companies

By Joseph R. Fonseca, Maritime Reporter & Engineering News
Thursday, January 09, 2014
Gateway Terminal of JNPT - 1.

Foreign players continue to dominate several segments of the Indian maritime industry: from salvage to dredging, chartering to ship management and ship manning, to name but a few. And the list of foreign firms setting up shop in India is growing as the country is hurriedly putting in place the required infrastructure to meet the huge demands of India’s growing international trade.


Globally, India is the 7th largest country in area, 2nd in population and 11th in GDP, with the expectation that it will ascend to the top five in GDB by 2020. The country is blessed with a 4,700 mile coastline, making it one of the longest in the world not forgetting the 14,500 km of navigable inland waterways, the 12 major ports and 187 minor ports well spread along the 4,700 mile coastline play a pivotal role in the maritime transport helping in international trade.


Major and Minor Ports (non-Major Ports) are defined not by size but by how they are administered. The “Major Ports” are administered by the Central Government whilst the non-major ports are controlled by the concerned State’s Government, either directly or through State Maritime Boards. Major ports (except Ennore) are trusts which fall under the Major Port Trust Act of 1963, whilst the minor ports are corporate entities, and can be private companies.


The largest private port is Mundra in the State of Gujarat and the largest Major Port is the Jawaharlal Nehru Port (JNPT) where there are a number of terminals being operated on lease. Tariffs for the Major Ports are currently set by TAMP (the Tariff Authority for Major Ports) but there is a move to allow the major ports to follow the practice of the non-major ports which set their own tariffs.


The Indian government is promoting public-private partnerships (PPPs) as an effective tool for bringing private-sector efficiencies for delivery of quality public services. India, in recent years, has emerged as one of the leading PPP markets in the world, because of several policies and institutional initiatives taken by the government. These include 100% FDI (foreign direct investment) being permitted under the automatic route for port development projects and 100% income tax exemption for a period of 10 years.


International PE funds like 3i, GIC, Eton Park, Jacob Ballas, Standard Chartered PE, Warbug Pincus have invested in several ports and terminals in India. DP World has developed 5 million TEUs of container handling facilities across 5 ports in India having terminals at JNPT, Chennai Port, Mundra Port, Vallarpadam & Vizag Port. PSA has generated 2.8 million TEUs container handling facilities across 4 ports in India. It has terminals at Chennai Port, Kandla Port, Tuticorin Port and Kolkata Port.  Whereas APMT developed around 2.5 million TEUs container handling facilities and 7 million tons of bulk and liquid handling facilities giving shape to Pipavav port in Gujarat and a container terminal at JNPT.


Port traffic has increased from 368 million tons in 2001 to 935 million tons in 2013. According to the ‘India Maritime Agenda’ port throughput is expected to increase to 2,500 million tons by 2020. The Port sector witnessed FDI equity inflow of USD 1.6 billion during April 2000 and June 2012 as per Department of Industrial Policy and Promotion (DIPP).


The Indian Government plans to bring a new orientation to encourage greater participation by the private sector in developing port activities and operations. This goal is planned to be achieved through numerous initiatives and policies. Many international port operators are invited to submit competitive bids for BOT terminals on a revenue share basis, which has attracted foreign players. 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 mainly through PPP.


In market share terms, major ports accounted for 58% of total throughput in FY 2013 compared with 61% in FY 2012, while the share of non major ports was up at 42% in FY 2013, increasing from 39% during the previous year. During the first three months of FY 2014, the cargo throughput decline in major ports will continue, with a 1.0% reduction in volume over that of the corresponding period of the previous year.


The cargo growth outlook for the Indian port sector continues to be strong over the medium to long term driven by the domestic requirements of coal, for power and other sectors; crude oil, for meeting domestic petroleum requirements; and containers, given the cost and logistical advantages associated with containerization. Some near term uncertainty may, however, be associated with particular cargo categories like imported coal, due to uncertainties plaguing the power sector and persistent delays in execution of green-field power projects; iron ore, due to unresolved policy issues; and containers, due to the weak global environment affecting EXIM trade.


With respect to new capacity additions, progress on the award of projects at major ports, including PPP projects, was better in FY 2013 compared with the previous year. A total of 32 projects could be finalized and awarded in FY 2013 compared with 3 projects in FY 2012, though this fell short of the planned target of 42 projects. Despite the uptick in project awards, actual implementation of these projects could see further delays, as was seen in the case of projects awarded during the previous years at major ports.
Making a cautious remark about the PPP model, Shashank S. Kulkarni, Secretary General of the Indian Private Port and Terminal Association says, “Though PPP in the port sector took off in a successful manner in 1998, the current trends do not portray a healthy picture. Like road development this segment too, seems to be struggling hard for survival, the reasons for which are well known. The Ministry of Shipping, government of India, has therefore very aptly constituted a high level group to undertake a systematic study of the port sector PPP initiatives.”
The progress with respect to capacity creation by way of green-field non major ports also continued to be slow with very few of these moving from proposal to implementation phase owing to a host of issues including problems in land acquisition; environmental and other statutory clearances; issues in financial closure, etc. Given that no near term resolution of these structural problems appears to be in sight, the capacity addition at Indian ports is likely to fall short of envisaged targets and demand requirements. As a fallout, the major ports, most of which are already operating at peak capacity, are likely to continue facing capacity and efficiency constraints while the incumbent non major ports, by virtue of their superior cargo handling infrastructure, investment in large capacity creation and high operating efficiency, would be well placed to wean traffic away from major ports as well as to garner a larger proportion of the incremental cargo generation. 


The Indian government has decided to create a minimum depth of 14 meters at all the 12 ports that it owns, where depths range from 9 -12 meters. The global average is 12-23 meters, enabling the latest generation containers, tankers and dry bulk ships to come calling. The dredging requirements of Indian ports are assessed at over 1,100 million cubic meters with plans to increase draft levels at major ports to at least 14 meters. Major ports alone are targeting an investment of over $1.5 billion in dredging.
All major dredging contracts are awarded to global giants and almost none to Indian operators because of their very limited capacity. When it comes to granting dredging contracts in India, Indian players are given a wide berth according to Hemant Rao of Meka Group. “It has become a policy to allow a global major to walk away with most of the dredging contracts in the country unlike what is practiced in the U.S. and other countries. In America dredging contracts are given solely to U.S. companies, and the bidder has also to ensure he deploys dredgers made in the U.S. and manned by Americans only. Indian companies are never given any such preferential treatment in their own country.”


Salvaging too pictures a similar scenario. “Salvage industry in India is still at a nascent stage,” said Capt. Sandeep Kalia, Executive Director, GOL Salvage Services Ltd, which is the only salvor in India to have acquired full membership of the International Salvage Union. “International Salvors had dominated this niche sector and entry of Indian companies was almost limited. It is the lack of support or encouragement from the government to promote national companies, the Indian Laws with respect to Salvage & Wreck Removal and the cut-throat competition that deters prospective Indian players from entering this business.”
The ports sector in India also needs to expand substantially to meet the growing demands in the country and the ambitions of the government. Bureaucracy hampers decision-making at both the Union and state government level and the gestation period for new projects can be lengthy. However, private sector projects are progressing especially in the more progressive states, and there are some very dynamic Indian companies as well as established international terminal operators who are progressing new projects; both green-field and within established operations.
Private companies interested in private port developments include Adani, Marg, Gammon, Essar, Tata and IVRCL. These companies are open to contracting with international businesses in specialist areas and some have already established contacts with overseas companies. Many of the established international terminal operators are also active in the country. Without a local partner or representative, it will be very difficult to succeed in business in India, and companies looking to do business in the sector are recommended to seek advice on the appropriate establishment prior to the commencement of operations.
Vizag Seaport Ltd.

(As published in the December 2013 edition of Maritime Reporter & Engineering News - www.marinelink.com)

Maritime Reporter May 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Shipbuilding

Dredge Yard, Neptune Shipyards Introduce New Dredger

Dredge Yard announced it has partnered with Netherlands-based Neptune Shipyards to develop the new cutter suction dredger, EURO DREDGER 450. Iulia Berchiu, Dredge Yard’s Marketing Manager,

GE Gas Turbine to Power USCG Cutter

GE LM2500 gas turbine to power United States Coast Guard‘s eighth National Security Cutter   GE Marine reports that its LM2500 gas turbine will power the United

LNG Vessel with Wartsila Integrated Solutions Delivered to Evergas

The first in a series of 27,500 cbm 'Dragon' class vessels ordered by Evergas, a world renowned owner and operator of seaborne petrochemical and liquid gas transport vessels,

Ship Repair & Conversion

Alewijnse Success at Damen Shiprepair Dunkerque

Electrical system integrator Alewijnse Marine Systems is celebrating the first anniversary of delivering electrical services and maintenance to vessels at Damen Shiprepair Dunkerque.

Wärtsilä Bags BWM Systems Order from Jinhai Shipyard

Wärtsilä Corporation, has received an order for ballast water management systems (BWMS) for three new container ships being built for a major European shipping

Roxtec Sees Rise in Cruise Ship Repair Work

Manchester cable safety seal manufacturer Roxtec has reported increased demand for its cruise ship cable and pipe seals.   The firm has seen a 67 percent rise

Ports

Israeli Port Workers Defy Court Order to Continue Strike

Striking Israeli dockworkers defied a court order on Thursday and shut down the country's two main seaports for a second day in protest at the creation of two new foreign-run ports.

Aramco Offers Rare 1.5 pct Gasoil Cargo

Aramco Trading, the trading arm of oil producer Saudi Aramco, has offered a rare gasoil cargo with a 1.5 percent sulphur content for June lifting from Rabigh, traders said on Thursday.

BMT, Endeavour Energy Win Africa’s LNG Import Terminal Contract

BMT Asia Pacific (BMT), a subsidiary of BMT Group Ltd, has been appointed Owners Engineer and lead design consultant by Endeavour Energy for the development

Salvage

US Orders Owner to Clean Up Ruptured Pipeline

Federal order ensures continued action on Santa Barbara County oil spill   The U.S. Environmental Protection Agency and the U.S. Coast Guard issued a joint federal

Busan: Tugboat Sinks, Two Dead

Two crew members died after their tugboat sank in waters off the southeastern port city of Busan in Korea, Yonhap reports quoting the authorities.   The accident took place around 12:30 p.

Second Sea Lion Rescued from California Oil Spill Dies at SeaWorld

A second sea lion rescued from along California's oil-fouled coastline near Santa Barbara has died at SeaWorld San Diego, where veterinarians are still caring for

Dredging

Dredge Yard, Neptune Shipyards Introduce New Dredger

Dredge Yard announced it has partnered with Netherlands-based Neptune Shipyards to develop the new cutter suction dredger, EURO DREDGER 450. Iulia Berchiu, Dredge Yard’s Marketing Manager,

Snarled in Traffic, Intermodal Answers Include the Water

It was just last month that the (challenged) Keefe family packed up the SUV and set out for a little bit of spring break fun, mixed in with a college visit for my son,

US Senators Want a Stop to Arctic Drilling

Eighteen U. S. senators have urged the Obama’s administration to halt Shell’s Arctic drilling plans saying that it is an unacceptable and irresponsible decision, says a report in Reuters.

Government Update

US Orders Owner to Clean Up Ruptured Pipeline

Federal order ensures continued action on Santa Barbara County oil spill   The U.S. Environmental Protection Agency and the U.S. Coast Guard issued a joint federal

Israeli Port Workers Defy Court Order to Continue Strike

Striking Israeli dockworkers defied a court order on Thursday and shut down the country's two main seaports for a second day in protest at the creation of two new foreign-run ports.

Maritime Disputes Test China's Peaceful Rise

The South China Sea has become the most important testing ground for the changing economic, political and military relationship between China and the United States.

Logistics

U.S.: Stronger Response in South China Sea Needed

By releasing video of Beijing's island reclamation work and considering more assertive maritime actions, the United States is signaling a tougher stance over the

Aramco Offers Rare 1.5 pct Gasoil Cargo

Aramco Trading, the trading arm of oil producer Saudi Aramco, has offered a rare gasoil cargo with a 1.5 percent sulphur content for June lifting from Rabigh, traders said on Thursday.

Golden Ocean: Worst Bulk Market Since 1980s

Dry bulk shipping firm Golden Ocean reported first-quarter earnings below forecasts on Thursday and said its market had gone from "bad to worse" with market conditions not seen in three decades.

 
 
Maritime Contracts Maritime Security Naval Architecture Offshore Oil Pipelines Pod Propulsion Ship Electronics Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.3010 sec (3 req/sec)