Indian port capacity in need of expansion – Assocham

India would need to undertake massive investments and upgrades at its seaports to handle future traffic, a study by Assocham found.


Growing at a compounded annual growth rate (CAGR) of over eight per cent, the seaborne trade in India may cross 830 million tonnes (mt) mark by 2016-17, apex industry body ASSOCHAM said today.

“This would require massive investment to the tune of over Rs 17,000 crore as there is a need to augment the port capacity by over 140 mt from the current level of about 690 mt,” according to a study titled ‘Shipping Industry: Today & Tomorrow,’ conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

“The private sector participation is imperative for such huge investments in the shipping sector,” said Mr D.S. Rawat, national secretary general of ASSOCHAM while releasing the chamber’s study at a press conference held here in Kochi.

“Lack of level playing field for the private operators, hinterland connectivity, especially lack of co-ordination between road, rail and port authorities and proper risk allocation are certain key issues affecting port development in India,” said Mr Rawat. “These issues must be addressed for enhancing and increasing port capacities and efficiency.”

The government needs to act as a facilitator to create opportunities for attracting fresh investments in the shipping sector, more so as about 41 per cent of India’s fleet of ships belong to the 20 plus age group indicating a slow rate of new fleet addition, highlighted the study prepared by ASSOCHAM Research Bureau.

“This augurs well for the Rs 7,300 crore worth India’s shipbuilding and ship-repair industry as 20 years plus older ships require more frequent and extensive repair and maintanenance,” said Mr Rawat. “However, this makes Indian fleet less competitive as mostly young vessels below 15 years old are often preferred in international trade.”

The drastic decline in share of Indian ships in carriage of overseas trade over the years is a significant concern, he added.

Indian shipping carriage dropped from about 36 per cent to just about eight per cent during the period from 1990-91 and 2009-10, highlighted the ASSOCHAM study.

“This is causing a drain on precious foreign exchange in terms of payment of freight charges and this could instead be used for other high priority imports and scaling up infrastructure facilities,” said Mr Rawat.

India can save upto a whopping Rs 26,000 crore by 2016-17 if we can increase the share of coastal shipping in total traffic carriage thereby reducing the burden on other modes of transport, pointed out the ASSOCHAM study.

There is a need to encourage coastal shipping as a viable mode of bulk freight transportation as it has just about three per cent of share in carrying regional traffic.

According to the ASSOCHAM study, there is a need to improve the ports’ connectivity as Indian ports find it difficult to handle additional traffic due to slow evacuation process.