The problem of high turnaround time at Indian ports plaguing the country?s foreign trade is set to worsen in coming months, with a surge in imports of commodities like coal and the likely rise in grain exports.
The steep rise in demand for port services comes at a time when the government?s efforts to augment capacity in the sector through the public-private partnership (PPP) route have met with limited success. The slow pace of capacity creation is due to procedural hurdles that delay PPP project clearances and implementation. Lack of enough investor interest due to the stifling regulation in the sector, including an absence of freedom for port operators to fix tariffs, has also slowed capacity creation.
While world trade growth has slowed in recent years, India?s exports and imports are growing at a relatively higher pace. Exports grew 21% to $303.7 billion in 2011-12 and imports grew even faster at 32% to $489 billion. The official target is to cross exports of $500 billion in 2013-14.
As for individual commodities, coal and grain are going to add substantially to bulk cargo volume. India?s coal imports are expected to cross 140 million tonnes (mt) during 2012-13 against around 114 mt in 2011-12. As per Planning Commission?s projection, coal imports will cross the 200-mt mark by 2017. Coal India, the country?s the largest coal miner, is on record saying it plans to import about 30 mt of coal, an all-time high, this year. And given the curbs on iron ore mining, import of this key raw material for the steel industry is also expected to rise.
India is aiming to add 2,300 mt to its existing port capacity of about 1,100 mt by 2020, and most of these additional facility would come up at non-major ports (read private). Investments to the tune of R2.87 lakh crore will be required to create this additional capacity, the bulk of which will come from the private sector or through the PPP route.
India has exported more than 4 mt of rice and around 1 mt of wheat since September after lifting a more than three-year-old ban on the shipment of these commodities. It has also lifted quantitative restrictions on exports of sugar as well as cotton for more than a month now.
As the country is grappling with storage problems to accommodate record fresh grain crops of 252.56 mt, it is looking to export surplus commodities, especially wheat, as much as it can. On the other hand, the country is the world’s biggest buyer of pulses and edible oil. It meets more than half its annual edible oil requirements of around 16 mt and one-fifth of pulses requirements of 19 mt through imports.
Prime Minister Manmohan Singh, in his recent meeting on infrastructure with ministerial colleagues, asked the shipping ministry to award 42 port projects worth Rs 14,500 crore during 2012-13 entailing capacity addition of 244 mt. This looks an uphill task given that the shipping ministry could complete only three out of 23 projects that were supposed to be awarded last fiscal. Also, out of the 226.4 mt capacity addition target, it could only manage 79.3 mt; and of the total investment of Rs16,585 crore earmarked for 2011-12, the port sector could manage to bring in only Rs7,977 crore.
?The problem with the port sector is that there is no centralised authority like that in aviation or road transport. For PPP projects, though the government has been talking about it for a long time, there are huge delays in the implementation of the projects,? said Vishwas Udgirkar, partner and senior director at Deloitte.
?The main problem is the procedural delay. If the project is over Rs 250 crore, it has to get approval at various levels including the finance ministry, which takes a lot of time,? K Mohandas, former shipping secretary, said.
