Govt for PPP mode to enhance port investment

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Namrata Kath Hazarika | 08 Feb, 2012
The government has called for huge investment in port infrastructure from the private sector as it is difficult for government alone to infuse huge funds, induct latest technology, improve management practices, and above all add maximum capacity to bring in efficiency in operations.

“While the Government has been paying utmost attention to developing the infrastructure with much higher investments in the past few years, it is clear that the massive investment requirements in this sector cannot be met by the Government alone. The private sector has to play a greater role in developing the infrastructure in the country in the coming years through Public Private Partnerships,” said the Union Minister of Shipping, G.K Vasan during a CII conference on “Port Investment Opportunities in India”, in New Delhi on Tuesday.

He added, “The government of India is encouraging PPP in the ports sector to infuse funds, to induct latest technology and improved management practices, and above all for addition of capacity.”

“100 percent Foreign Direct investment under the automatic route is permitted for port development projects. 100 percent income tax exemption is also available for a period of ten years,” Vasan said.

He further added that developing and improving the infrastructure to world-class standards requires massive investments in this sector. This investment has to come from both the public and the private sectors.

As per the Maritime Agenda 2020 prepared by the Shipping Ministry, the traffic at major ports is likely to grow at a Compounded Annual Growth Rate (CAGR) of about 8% from 561 million tonnes in 2009-10 to 1,215 million tonnes by 2019-20, whereas the traffic at non-major ports is expected to grow at a growth rate of 16% from the present level of 289 million tonnes to 1270 million tonnes. Thus, the anticipated traffic at Indian ports would be 2485 million tonnes by 2019-20 from the present level of 850 million tonnes at a growth rate of more than 11%.

The minister also stated, “To meet this anticipated traffic, the major and non-major Ports have formulated plans for development of new terminals, upgrading existing berths and modernising operations by inducting state of the art cargo handling equipment.”

“Considering the objective of 70% capacity utilization, it is necessary to increase the overall capacity of Indian Ports to 3230 million tonnes by 2020 which is more than 3 times the present level of 963 million tonnes,” he said.

“The Shipping Ministry is very keen on taking forward the reform process and to ensure higher private sector participation in Port development. We are fully aware of the challenges and we are determined to resolve and address them,” Vasan added further.

Also, dwelling his views during the conference, Shipping Secretary K Mohandas said that the capacity of Indian ports have reached 1.17 billion tonne on January 31 showing a growth of 17 percent in last one year.

Further, to promote trans-shipment at ports, the government is set to relax Cabotage rule in order to permit foreign vessels to carry cargo to Indian ports. “Very shortly, may be this month, we are going to send a note on Cabotage to the Cabinet. We have examined a proposal that coastal leg of the movement of Exim containers should not be treated as coastal trade,” Mohandas added.