1. Port Sector Overview
By Bhaskar Bardhan (Jan 2014)

2. Current Scenario
• Currently ports are dynamic nodes in the Supply chain involving complex international production /
distribution network.
• Ports have become integrated transport centers and logistics platforms for international trade, and
thus stimulate trade and regional development.
• Ports handle around 95% of India’s total trade in terms of volume and 70 %in terms of value.
• With a coastline of 7567km, India have 13 major ports and 187 minor ports.
• Anticipated increase in trade would boost in demand for containers, increase in infra development
to increase the demand of iron and steel, increase in power demand to boost coal imports.
Sl No.
FY 12 figures
Expected in FY 17
1
Cargo capacity
1247.5 million tonnes
2301.6 million tonnes
2
Cargo traffic (major ports)
560.1 million tonnes
943.1 million tonnes
3
Cargo traffic (non major ports)
351 million tonnes
815 million tonnes
4
Container demand
5
Iron ore import
6
Coal Import
6.5 million TEUs
21 million TEUs
97 million tonnes
228 million tonnes
157 million tonnes
476 million tonnes

3. Notable trends in Port sector
• Increasing private sector participation: Strong growth potential, favorable investment climate and
sops provided by state government have encouraged domestic and foreign private players to
enter Indian port sector.
• Focus on draft depth: All the greenfield ports are being developed at shores with natural deep
drafts and existing one are investing to improve draft depth to accommodate large sized vessel to
tap on cost and time advantage esp in coal transportation.
• Setting up of port based SEZs: SEZ are being developed in close proximity to several ports, thus
providing strategic advantage to industries with these zones. E.g Mundra, Krishnapatnam, etc.
• Specialist terminal based ports: This is specially required for handling specific cargo such as LNG.
Specialist terminal for such cargo results in optimal resource use and increased efficiencies.
• Catching up of Land lord port model: Port authority acts as a regulator and landlord whereas port
operations are carried out by private companies e.g. JNPT, Chennai, Vizag, Tuticorin.
• Rising traffic at non major ports: With advent of increased private participation in establishing
minor ports , the cargo traffic of minor ports are outpacing the traffic at major ports.
• Private Equity interest in ports: PE interest in Indian ports has remained healthy. Foreign investors
have been encouraged by growth potential in the port sector as well as the favorable policies.

4. Key constraints and key drivers
Notable constraints for Port development:
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•
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Environmental clearance
Land Acquisition.
Commercial Viability
Hinterland connectivity –By Rail and Road.
Non achievement of financial closure.
Various Litigations.
Key drivers for Port development:
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Ship Turnaround time
Berthing Time.
Improved port connectivity and infrastructure.
Storage space.

5. Public Private Partnership in Port Sector
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.
PROJECTS DEVELOPED THROUGH PPP
• Significant investment on BOT basis by foreign players includingMaersk (JNPT, Mumbai) and P & O
Ports (JNPT, Mumbai and Chennai), Dubai Ports International (Cochin and Vishakhapatnam) and
PSA Singapore (Tuticorin).
• Minor ports are 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), Gangavaram under
construction byConsortium lead by DSV Raju

6. Opportunities
• EXIM Trade poised to increase: Given the critical importance of exports to slash the trade deficit, the
government hopes to increase this to 5% by 2020 hence states with coastlines have initiated measures to
develop ports.
• Dedicated freight corridor to improve port connectivity: I believe that DFCs would be game changers for
the entire transportation sector, and enhance throughput of various ports. Trailer loads can increase from
~4,000 to ~15,000 tons, carrying capacity from 90 containers to 400 (double stacking). Maximum speed for
trains is expected to increase from 75 kmph to 100 kmph.
• Rapidly changing cargo-mix driving volumes: Containerized trade volumes have rapidly risen—from 35.2m
tons to 135.9m (a 13.1% CAGR) with its share in overall cargo traffic rising to 15%, far lower than the global
standard of ~80%. Imports of coal have increased from 57.7m tons to 157.1m tons, a 9.5% CAGR. Most of
the increase in coal consumption has been due to the sharp increase in the number of thermal power
projects in the country.
• Increased volumes at minor ports : This is due to involvement of private companies developing world class
infrastructure at minor ports with less turn around time improving efficiencies. Container volumes are
expected to increase at a 38.3% CAGR for non-major ports due to greater operational efficiencies.
• Operating leverage to kick in: In initial stages ports require significant investment in infrastructure. Once
utilisation levels hit a certain threshold, operational efficiencies start kicking in. Any further volumes above
the threshold would result in significant expansion in operating margins, along with cash flows and
profitability. Also, with higher utilisation levels port companies’ return ratios improve

7. Way Ahead
• Capacity saturation at major ports will lead to container traffic being diverted to non
major ports.
• With strong infra capabilities, deeper draft can accommodate some of the largest
container ships calling at Indian ports.
• With breaking of monopoly of major ports,
• The port of Chabahar, which India is partly financing will also be another gateway to Iran
itself for Indian commerce.
• Need more containerisation on both sides of the coastline to provide support to our
exports.
• Future promising economic enviorment may result in proper untilisation of existing
capacity and demand for new capacity may lead to award of new port projects.
• Mechanization of existing facilities , deepening of berths & channels , improvements in
IT and other infrastructure.