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Port Development in India

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Port Development in India MEMBERS' REFERENCE SERVICE LARRDIS LOK SABHA SECRETARIAT, NEW DELHI REFERENCE NOTE No.22/RN/Ref./July/2017 1 For the use of Members of Parliament NOT FOR PUBLICATION PORT DEVELOPMENT IN INDIA Prepared by Shri Naushad Alam, Additional Director (23034299) and Smt. Shalima Sharma, R.O. of Lok Sabha Secretariat under the supervision of Shri Atul Kaushik, Additional Secretary, Smt. Kalpana Sharma, Joint Secretary and Smt. Anita Khanna, Director. The Reference Note is for personal use of the Members in the discharge of their Parliamentary duties, and is not for publication. This Service is not to be quoted as the source of information as it is based on the sources indicated at the end/in the text. PORT DEVELOPMENT IN INDIA Introduction India has a 7,500 km long coastline and 14,500 km of potentially Navigable Waterways. 12 Major and 200 Non-Major Ports located along the Western and Eastern coastlines have so far been responsible for 90% of India’s trade by volume. Over 1 billion tonnes of cargo was handled across Indian ports in Financial Year 2015-16. Projected cargo volume by 2025 is estimated to be over 2.5 billion tonnes and this massive increase calls for substantial capacity augmentation of the existing ports and building of new ports in the next 10 years. Major Achievements of the Ports Sector (2016-17) The top position in cargo handling was retained by the Kandla Port that handled 105.44 Million Tonnes (MT) of cargo, registering a growth of 5.39% over the last year. Iron-ore traffic attained the highest growth rate of 163.67%. For the first time ever, the Jawaharlal Nehru Port Trust (JNPT) raised Foreign Denominated Loan of US $400 million . The Major Ports have also recorded the highest ever capacity addition of 100.37 Million Tonnes (MT).. 56 projects have been awarded with a capacity of 103.52 Million Tonnes Per Annum (MTPA) against a target of 102 MTPA with an investment of Rs. 9490.51 crores. Major Ports have been benchmarked to international standards. 70 initiatives have been implemented so far. Asia’s largest passenger ship ‘Genting Dream’ with a capacity of 3,400 guests anchored at Mumbai Port on 29 October, 2016. A total number of 158 cruise vessels anchored at 5 Major Ports, registering an increase of 23 % over 2015-16. Growth Trends The twelve Major Ports, namely, Kolkata Port, Paradip Port, Visakhapatnam Port, Kamarajar Port, Chennai Port, V.O. Chidambaranar Port, Cochin Port, New Mangalore Port, Mormugao Port, Mumbai Port, Jawaharlal Nehru Port Trust 2 (JNPT) and Kandla Port, are showing rising trends of growth and development which can be seen from the following points: Capacity of Major Ports: As a result of the initiatives, aggregate cargo handling capacity in Major Ports has expanded from 696.53 MTPA at the beginning of the Twelve Plan Period to 965.36 MTPA on 31 March 2016. 94 Million Tonnes Per Annum (MTPA) of capacity was added in the Ports during 2015-16 which is the highest ever in a single year. The capacity likely to be created in Major Ports by 2018-19 will be about 1257 MTPA. Capacity of Major Ports in India during the last five years, port-wise, is given at Annexure-I. Commodity-wise Cargo Traffic at Major Ports: During 2016-17 (upto December 2016), 12 Major Ports handled 481.20 MT of traffic as against 447.43 MT over the corresponding period of previous year. The composition of the cargo is given at Annexure-II. Cargo Traffic at Indian Ports: The Major Ports handled a record 647.63 Million Tonnes (MT) of traffic in 2016-17, registering an annual growth rate of 6.79 percent. The details of the cargo handled at Major Ports for the years 2015-16 and 2016-17 are given at Annexure-III. Financial performance of Major Ports: In terms of Operating Surplus, the Major Ports have shown highest ever achievement in 2016-17. The Jawaharlal Nehru Port Trust (JNPT) net surplus has crossed Rs. 1300 crore as against Rs. 1091 crore of 2015-16. The Kandla Port posted its highest ever net surplus of Rs. 651 crore during 2016-17, an increase of 54.4% over last year’s profit of Rs 422 crore. The details of the Financial Performance of Major Ports are given at Annexure-IV. 3 Profitability Trends at Major Ports: Profitability Trends at Major Ports are also rising. Increase in profit for the financial year 2008 and from the year 2014 to 2017 are given at the Annexure-V. Port Efficiency: Efficiency at ports has an important bearing on the transaction cost of the shipping lines. The efficiency indicators in major ports are also improving steadily. During 2016-17, total turn-around time came down to 3.44 days as against 3.64 days during last year. Similarly, Average Output Per Ship Berthday has gone up to 14583 tonnes as against 13748 tonnes during last year. The details of Average Turnaround Time (TRT) and the Average Output Per-Ship- BerthDay are given at Annexure VI. Expansion and Modernisation of Major Ports Expansion and modernisation of Major Ports in the country is an on-going process to keep the ports abreast with new technologies and also to meet trade (traffic) requirements. The process primarily involves: Construction of new berths and terminals, Mechanisation of existing berths and terminals, Capital dredging for deepening of drafts for attracting large of vessels in port channels, Installation of the Vessel Traffic Management System (VTMS), Implementation of the Web Based Port Community System, Installation of scanners at all container terminals, Implementation of initiatives to reduce time and cost of operations in ports to benchmark their performance to international standards, and Green Port initiatives like creation of Solar Power Projects, E-Governance etc. Maritime Agenda 2010-20 In the Maritime Agenda 2010-20, a target of 3,130 MT port capacity has been set for the year 2020. More than 50 per cent of this capacity is to be created in the Non-Major Ports as the traffic handling by these ports is expected to increase to 1,280 MT. The objective of the Maritime Agenda is not only creating more 4 capacity but augmenting port performance. This enlarged scale of operation is expected to reduce transaction costs considerably and make Indian ports globally competitive. The proposed investment in major and Non-Major Ports by 2020 is expected to be around Rs. 277380 crore. Private-sector Participation Maritime Agenda 2010-20 has estimated that investment required in new projects of Major Ports will be Rs. 1,09,449.40 crore of which Rs. 72,878.20 crore is expected to come through private sector participation and the balance Rs. 36,571.20 crore to be funded through internal and extra budgetary support. The private sector is envisaged to fund most of the projects through PPP basis viz. Design Build Finance Operate and Transfer (DBFOT basis) or Build Operate Own and Transfer (BOOT basis) etc. Major Port Trust Authorities Bill, 2016 The Major Ports Authorities Bill, 2016 which repeals the Major Port Trust Act, 1963, was introduced in Lok Sabha on 16 December, 2016. The Bill seeks to provide greater autonomy and flexibility to major ports. The proposed bill aims at decentralizing decision making and to infuse professional approach in governance of ports. This will help in bringing transparency in operations of Major Ports. Recent Policy Reforms and Initiatives The Ministry of Shipping has initiated several Policy Reforms to improve the efficiency and productivity of Major Ports. The New Captive Policy guidelines were issued in July, 2016 to ensure uniformity and transparency in the procedure for awarding captive facilities in the ports. This will allow 5 concessionaire to handle non captive cargo upto 30% of the designed capacity of the berth. The New Berthing Policy came into effect from August, 2016. This policy provides standardized framework for calculation of norms, specific to the commodity handled and infrastructure available on the berth. This will improve the efficiency at ports and productivity norms across ports. The New Stevedoring Policy has been implemented since July, 2016. This will improve productivity, efficiency and safety in the ports. The existing Model Concession Agreement of 2008 is under process of revision which will address the concerns of PPP projects and prevent them from getting stressed. Under Sagarmala Programme, 415 projects, at an estimated investment of approximately Rs.8 Lac Crore, have been identified across port modernization & new port development, port connectivity enhancement, port-linked industrialization and coastal community development for phase wise implementation over the period 2015 to 2035. As per the approved implementation plan of Sagarmala Programme, these projects are to be taken up by the relevant Central Ministries/Agencies and State Governments preferably through private/PPP mode. ‘Project Green Ports’ focuses on sustained growth from an environmental perspective. It aims to install 160.64 megawatts of Solar and Wind based power systems at all the Major Ports across the country. 6 The Government has also signed several agreements with countries such as Korea and Egypt for cooperation in development of ports, sharing of technology, manpower training and stimulating steady growth of maritime traffic. Conclusion: Increased investments together with the ‘Make in India’ impetus can increase the Port sector’s contribution to GDP and trade volumes. The increasing public-private partnership in response to the initiatives adds to the vibrancy of the sector and is a clear sign of resurged interest in its potential. Bibliography: 1. Developing Ports: Sagarmala Project (http://www.makeinindia.com/article/- /v/developing-ports-sagarmala-project) 2.
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