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Old September 19th, 2007, 06:21 PM   #1
hkskyline
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Indian Ports Struggle to Cope With Economic Growth

Indian ports struggle to cope with economy's surge

MUMBAI, Sept 18 (Reuters) - A $12.4 billion plan to upgrade India's ports to keep pace with economic expansion promised much, but in three years there has been little progress beyond initial announcements and private firms are opting to build their own.

It takes India's state-run ports four times as long as rivals elsewhere in Asia to unload and reload container ships, and improvements are being held back by poor planning, red tape and bureaucracy.

Bids for an offshore container terminal for Mumbai Port, for example, were submitted in 2005 but the project only got the go-ahead in August. There is no completion date.

"If this is the pace of creating the infrastructure, then we are definitely going to face a situation where trade will have to suffer, or will suffer on account of non-availability of infrastructure," said Atul Kulkarni, senior manager at consulting firm Deloitte Touche Tohmatsu India.

India's ports are already at breaking point -- port officials say capacity needs to be increased by 130 percent to meet an expected doubling in shipments to 1.2 billion tonnes over the next five years -- and delays could put a brake on economic growth, which has averaged 8.6 percent over the past three years.

Citigroup estimates the volume of shipments at the 12 main ports, which handle about 75 percent of cargo shipments, has grown 9.5 percent a year over the past three years.

Those 12 government ports handled 464 million tonnes of cargo in the fiscal year to end-March -- the same as Singapore. Ships at the ports have to wait one day before berthing and it then takes 3.5 days to unload and load them, Citigroup says.

There are about 60 other active ports in India, which handled about 150 million tonnes of cargo in 2006/07.

Beyond the ports, road and rail systems are deficient. Poor links raise transport costs to 8-9 percent of total shipping costs, compared with 3-4 percent in developed countries.

Shallow port drafts, antiquated coastal regulation laws, the complex process of getting expansion approval plus overlapping federal and state government responsibilities add to the difficulties.

The average draft is 14.5 metres (48 ft) , but the biggest container port, Jawaharlal Nehru Port Trust on the edge of Mumbai, has an average 12.5 metre draft, which limits it to ships with a capacity of 4,500 containers.

That is much shallower than neighbouring rivals, such as Colombo's 18.5 metres, which can comfortably handle new-generation ships carrying well over 6,000 containers.

As a result, large container ships bound for India have to be routed via ports where they can be broken down into smaller cargoes, increasing transportation costs and travel time.

"We have a terribly congested transport network," said Ishwar Achanta, a member of Vishakhapatnam Port Trust, India's biggest port. "We need divine intervention."

INCOMPLETE VISION

The government knows it has a problem -- Finance Minister Palaniappan Chidambaram has said infrastructure spending needs to be raised sharply if economic growth of 9 percent is to be sustained.

A.K. Bal, deputy chairman of Mumbai Port Trust, said: "To achieve the projected growth rate, it is imperative on our part to ensure the planned capacity addition programmes are put in place."

The National Maritime Development Programme listed 276 port projects in 2004, including more berths, modern dredging facilities and road and rail connections, but work has started on only a few.

"None of the projects seem to be taking off," said a senior official at a shipping firm, who did not wish to be named.

The programme's $12.4 billion budget is just over 2.5 percent of the estimated $475 billion that a government panel has estimated India needs to upgrade its infrastructure.

To get round the delays, international and local firms are building their own port facilities -- sometimes adjacent to state-run ports, which could create even more problems if a number of ports compete for the same road and rail networks.

Danish shipping group A.P. Moeller-Maersk <MAERSKb.CO> operates two terminals at two ports. P&O Ports, a unit of Dubai World, the Dubai government's investment firm, has three terminals at three ports.

State-owned Singapore port operator PSA International [PSA.UL] also operates three terminals.

Local firms Tata Steel and Larsen & Toubro are jointly setting up a port. Others such as JSW group, Adani group and Reliance Industries are also setting up their own ports and road connections.

"This will not only end up costing the exchequer in terms of under-utilised capacity, but it also reflects a severe lack of holistic planning on the part of the regulators," said Deloitte's Kulkarni.
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Old July 18th, 2009, 07:24 AM   #2
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Taxes on ship building need to be reduced
18 July 2009
The Times of India

PUNE: The Indian Maritime Foundation (IMF) member Vice-Admiral (retd) Vinod Pasricha on Thursday stressed on the need to reduce taxes on the shipbuilding industry and build bigger ports as almost 90 to 94 per cent of all our trade comes in from the sea.

Addressing a news conference here, he added, "Indian warships are faring well in the international markets. In the last five years, the Indian shipyards have made impressive strides in building warships as well as commercial ships. There is a need for the government to make laws in such a way that the taxes for the shipbuilding industry are calculated in accordance to the gains that this sector is bringing into the country."

He also pointed out that even though the industry has been faring quite well, it still has a lot of scope for improvement and with proper guidance, can become one of the best in the world because of India's longest coastline. "We can be the best in the world. But we have to increase the speed of the building process. At times, it takes three to four years to build one ship. With a bit more guidance from the government, the condition can be improved manifolds," said Parischa.

Rajan Vir, Commodore, Indian Navy (Retd) and president of the IMF, also pointed to the booming shipbuilding industry and said there is a growing need to create awareness among citizens about this sector. "The 26/11 terror attacks revealed the vulnerability of the Indian coastal borders. We all know that there is a growing need for increasing security on that front. For this, we need better infrastructure to improve ports and build more ships," he said.

To raise awareness about this, managing directors of the four major ports of our country, the Mazagon Dock in Mumbai, the Cochin Shipyard in Kochi, the Garden Reach Shipbuilders in Kolkata and the Hindustan Shipyard in Vishakhapatnam, will participate in a seminar on the Indian shipbuilding industry, which will be organised by the IMF in Pune on July 22. "The aim of the seminar will be to enlighten people about the importance of this sector and also to discuss ways of improving it," said Pasricha.

The seminar will be held at the Southern Command auditorium and will try to highlight the scopes and capabilities of the shipyards and also talk about the challenges being faced by the industry.
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