While cargo transportation along India’s coastline has significantly increased following the government announcement in the Union Budget to promote coastal shipping, the pace of growth has been uneven for state-owned and private ports, according to the latest data from the ministry of ports, shipping, and waterways. There is a noticeable disparity between coastal shipping from government-run and private ports, with the latter taking the lead after the government’s push for increased coastal usage.
Between April and August of this year, coastal cargo handled at state-owned ports grew by a meagre 1.3%, while in contrast, coastal cargo at private ports surged by nearly 21% during the same period. State-owned ports, even with some of the largest coastal hubs, witnessed a year-on-year decline in coastal traffic. Major ports saw an increase of less than 1 million tonne (mt) in the last five months, while private ports managed to handle an additional 10 mt during the same period.
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State-owned vs private ports for coastal cargo
There are several factors contributing to the growth of coastal shipping for private ports. This includes weak demand at major ports, a shift in supply chains towards private ports, and increased production and capacity at companies with captive ports. Additionally, there is a widening gap between coastal cargo volumes at major and non-major ports. India boasts 12 major ports and over 200 notified minor and intermediate ports.
Despite these divergent growth patterns, major ports continue to maintain a significant lead in terms of total cargo volumes. In the ongoing financial year 2023-24, major ports handled 75 mt of coastal cargo, compared to 55 mt at non-major ports. Among the ports managed by the government, a significant decline was witnessed at the Visakhapatnam (Vizag) Port, which is owned by the Union government. Vizag Port has experienced a decline in cargo traffic.
According to transport and logistics analysts, this decline can be attributed to the Tamil Nadu electricity board’s shift of its thermal coal handling operations to Adani Ports and Special Economic Zone’s Gangavaram Port. This shift has resulted in a loss of over 15% of coastal cargo to Vizag Port for this financial year, translating into a loss of well over a million tonnes.
Major ports have experienced muted growth this financial year, despite the government’s efforts to promote the rail-sea-rail (RSR) route for the transport of thermal coal from mines to thermal power plants. For instance, coastal cargo at Paradip Port in Odisha, pivotal to the Centre’s thermal coal RSR strategy, declined by almost 3% this financial year. Paradip Port accounts for 31% of all coastal volumes. Similarly, volumes at Kamarajar Port have dropped by 4%.
On the other hand, coastal cargo handled by the Andhra Pradesh Maritime Board, which includes Gangavaram among others, has surged remarkably by 55% in FY24, totalling approximately 5 mt. The coastal traffic managed by the Maharashtra Maritime Board has also increased by 29% in the current fiscal.
The Indian shipping industry serves as a backbone to Indian trade, as around 95% of India’s trading by volume and 70% by value is undertaken via maritime transport, according to the Ministry of Shipping. India’s extensive 7500 km coastline has been a focus for port-led development under its ambitious Sagarmala Project. Under the National Perspective Plan for Sagarmala, six new mega ports will be developed in the country.
India, with its vast coastline, is the sixteenth-largest maritime country in the world. The government has allowed Foreign Direct Investment (FDI) of up to 100% under the automatic route for port and harbour construction and maintenance projects. In the Union Budget 2023-24, the total allocation for the Ministry of Shipping stood at $1,813.16 million.
India’s major ports had a capacity of 646.10 million tonnes per annum (MTPA) during April-January 2023, according to IBEF. As India looks to bolster its shipping sector, the country seeks investments across various key areas, such as port infrastructure development. The country presents a vast canvas of opportunities for global investment in its maritime sector.
India’s major ports require significant expansion and modernisation to handle larger vessels and increasing cargo volumes. Attracting foreign investments remains a prime concern for the government as it can enhance efficiency, reduce turnaround times, and ultimately contribute to smoother international trade operations.
Other avenues for the government to explore include the development of inland waterways, an area ripe for global investment. Additionally, investments in shipbuilding technology, such as eco-friendly vessels and digital solutions, can help the country become a global hub for green shipbuilding and maritime innovation.