The reality in many a port in India has not been able to keep pace with state promises for improvement. There are promising approaches propagated by private operators, such as Adani or Essar Ports, who are developing multimodal and international solutions.
The prospects for maritime trade in India are encouraging. There are estimates placing container demand in the country’s major ports in financial 2027 at 21 million teu, up from 4.1 million teu in financial 2016. India’s growing international trade simultaneously calls for private participation in the port infrastructure. A great discrepancy between authorities’ desires and the reality on the ground in the country’s twelve most important ports remains, however.
These twelve major ports, six of which are located on the east and six on the west coast, all fall under the jurisdiction of the government and are administered under the Major Port Trusts Act 1963 – except for Kamarajar Port (formerly Ennore Port) near Chennai, which has been operating since 1999 under the Companies Act of 1956.
Cargo traffic at India’s major ports totalled 348 million t in financial 2016. (The Indian financial year runs from April to March – ed.). Exponential growth is expected in this field too, with cargo traffic at the major ports expected to reach 943 million t within a few years.
Competition between individual ports is pronounced, but rather relative, in the light of clearly-defined geographic hinterlands as well as barriers to international investment. To promote domestic private investment the government has now reformed the organisational structure of the country’s maritime ports in accordance with international models.
The shift is away from a service model, with the port authority offering all of the services needed, towards a landlord port model, in which the hub’s authority acts as the regulator and landlord, but leaves operations to private firms. Some of the ports following this new model include major players such as JNPT (Nhava Sheva), Chennai, Visakhapatnam and Tuticorin.
New projects and markets
Adani Ports and Special Economic Zone (Apsez), the largest private Indian port operator, is strong on the west coast, and is now looking to strengthen its position on the east coast by winning the bid for a new container terminal at Kamarajar Port. Apsez is also developing the port of Dharma in the Gulf of Bengal, which it acquired in 2014, which will further drive its growth on the east coast. The South Korean investor Posco is planning to construct a steel plant worth around USD 12 billion in the vicinity of the gateway, amongst other projects.
Essar Ports, India’s second-largest private port operator, has also made a strategic move and increased its potential on the east coast by winning the contract to modernise three ports at Visakhapatnam.
Beyond the Subcontinent
But pushing for a pan-Indian presence is not the only strategy. Geographic diversification is an option, as with the Adani Group, which has acquired coal mines in Australia and Indonesia. India is the largest importer of thermal coal in the world, and will register growing demand, which is why Adani has set up a coal terminal in Australia to benefit from Indian coal imports. The company is now also venturing into providing allied services, such as dredging. Over and above this Adani has also branched out into the rail container haulage business, becoming the largest private link in the country.