Maritime Agenda 2020 for India

MARITIME AGENDA : 2010 – 2020 Government of India Ministry of Shipping January, 2011 Preface The Logistics Sector in India needs to develop rapidly to synchronize with the dynamic growth of the Indian Economy. The Ports infrastructure and Shipping have vital roles as parts of the logistics chain. The Ministry of Shipping has been continuously engaged in designing and implementing various projects for the development of the sector.

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Based on inputs received from various sources, it is felt that the pace of growth has to be increased, that the whole efficiency of the delivery system has to be substantially improved and that the concern for the environment has to be stronger. The Maritime Agenda 2010-20 is part of the effort to identify the areas for attention during the 10 year period from 2010-11 to 2019-20. This 10 year period covers the last two years of the Eleventh Five Year Plan, the full five years of the Twelfth Five Year Plan and the first three years of the Thirteenth Five Year Plan.

Obviously, 10 years is too long a period for identification of specific areas of action in a fast changing world. It is, therefore, imperative that the Maritime Agenda is not seen as a static document; it does need to be reviewed periodically. I must make it clear that the various observations and statements in the document do not always reflect the accepted official position of the Government. Many of the policies, programmes and projects listed have not been formally approved, nor have they gone through the normal process of decision – making in the Government.

This document basically presents an agenda for consideration. On each of the Agenda items, there has to be a separate scrutiny and decision making. In other words, this is more an Agenda for consideration and decision rather than an Agenda for action. At the same time, many of the listed activities are statements of obvious intentions and all concerned have to be working towards achieving these goals. Many of the agenda items fall in the domain of other Ministries of the Central Government, or in the omain of the State Governments; several items are for the Industry to act. Some of the identified activities may be taken up only during the later years of the decade, although the time frame has not been specified for some of the activities. This will be refined further. As part of the monitoring process, it would be useful to have an annual assessment of the action taken on the recommendations contained in Part IV and come out with a report card. It would be possible to decide on deletions, additions and modifications depending on the circumstances then prevailing.

This exercise has had the full involvement of several officers at various levels from the Ministry of Shipping as well as from the field organizations. It would not have been possible to develop such a document without the dynamic leadership of the Hon’ble Minister of Shipping, Shri G. K. Vasan. I believe this Maritime Agenda 2010-20 would serve as a key support document in our efforts to develop the Indian Maritime Sector. K. Mohandas Secretary to the Government of India Contents PART – I INTRODUCTION Chapter-1 Introduction 1-3 PART – II PORTS

Chapter-2 Chapter-3 Chapter-4 Chapter-5 Chapter-6 Chapter-7 Chapter-8 Chapter-9 Chapter-10 Chapter-11 Chapter-12 Global Overview of the Maritime Sector Emerging Scenario Overview of the Port Sector in India Existing Policy Framework Analysis of Traffic Projections made by various Agencies Traffic Projections and Capacity Estimation for Major Ports and maritime States upto 2020 Hinterland Connectivity Ports’ Efficiency – Quest to achieve International Standards Category-wise Projects and funding pattern for Major Ports and Maritime States upto 2020 Information and Communication Technology (ICT) Perspective in Indian Ports Future Policy Milestones and Way Forward 4-11 12-18 19-32 33-36 37-46 47-82 83-95 96-104 105-126 127-133 134-148 ANNEXURES TO PART – II Annexure No. I. II. III. IV. List of Annexure List of Major and Non-Major Ports Commodity-wise Traffic handled at Major Ports during 200910 & 2008-09 Commodity-wise Capacity available at Major Ports as on 31. 03. 2010 Commodity-wise Traffic handled at Non-Major Ports during 2009-10 & 2008-09 Page No. 149 – 152 153 154 155 I V. VI. VII. VIII. IX (i & ii) X.

List of Projects under Private Sector Participation Port wise & Commodity wise Traffic Projections for Major Ports from 2011-12 to 2019-20 Port wise & Commodity wise Capacity Estimation for Major Ports from 2011-12 to 2019-20 State wise & Commodity wise Traffic Projections for NonMajor Ports from 2011-12 to 2019-20 State wise Capacity Estimation for Non-Major Ports from 2011-12 to 2019-20 Summary of Commodity wise overall Traffic Indian Projection for Major Ports, Non-Major Ports and All Ports (Major + Non Major Ports) from 2011-12 to 2019-20 Summary of ongoing Projects and Projects to be under taken for Major Ports in Phases I, II & III and their funding pattern Summary of investments to be made at Maritime States for various development Projects in Phase I, Phase II & Phase III Port wise list of ongoing Projects and Projects to be under taken for Major Ports in Phases I, II & III and their funding pattern 56 – 158 159 – 166 167 – 171 172 – 176 177 – 180 181 – 183 XI. XII. XIII. 184 – 191 192 – 202 203 – 302 PART – III SHIPPING Chapter-13 Overview of the Shipping Sector Chapter-14 Shipping Chapter-15 Human Resources Development Chapter-16 Coastal Shipping Chapter-17 Aids to Navigation Chapter-18 Shipbuilding and Ship repair Chapter-19 Inland Waterways Chapter-20 Proposed Policy measures, Initiatives and Expected Outcome PART – IV AGENDA FOR THE DECADE Chapter-21 Agenda for the decade 432-441 II 303-305 306-329 330-356 357-362 363-382 383-411 412-424 425-431 PART – I INTRODUCTION CHAPTER -1 INTRODUCTION 1. 1 India is a major maritime nation by virtue of its long coast line of around 7517

Kms on the western and eastern shelves of the mainland and also along the islands, bejewelled with 13 major and 176 non-major ports, strategically located on the world’s shipping routes, its long tradition of seafaring with a large pool of trained maritime personnel, and its dynamic and rapidly globalizing economy with a vast potential to expand its participation in trade and development. 1. 2 India has been an emerging and vibrant economy with a huge market, a billion plus population and strong GDP growth rates of over 9% for three consecutive years up to 2008-09. However, due to the global melt-down and recession, the GDP growth slowed down to 6. 7% in 2008-09.

But, with global recovery under way and backed by strong decisive policy responses, the economy performed better in 2009-10 and achieved growth rate of 7. 1% , it is likely to grow at 9. 2% during 2010-11. As forecast made by many global institutions, India along with China will lead Asia’s economic expansion from 2010 onwards. 1. 3 Ports play a vital role in the overall economic development of the country. About 90% by volume and 70% by Value of the country’s international trade is carried on through maritime transport. Development of India’s ports and trade related infrastructure will continue to be critical to sustain the success of accelerated growth in the Indian economy.

Despite record growth rates, the merchandise trade intensity of India’s GDP is still below 30 per cent. This indicates that there is still a lot of untapped potential for trade growth, and consequently the demands on the country’s ports and trade infrastructure will continue to mount as trade diversifies and grows. Hence, there is a need to expand the Country’s ports in a timely and efficient manner. 1. 4 India’s ports comprise of 13 major ports including Port Blair Port Trust which was declared as a Major Port on 1-06-2010 and around 176 non-major ports along the coast and islands. The Major Ports are under the Union List (Schedule VII) while the NonMajor Ports are under the Concurrent List (Schedule VII) of the Constitution of India. 1

The 13 major ports are administered by the Central Government under Ministry of Shipping. The remaining ports which are referred to as Non-major ports are administered by the nine maritime States and three Union territories within their respective coastlines. A list indicating Major Ports, Non-Major Ports and Ports under Union Territories in India is given as Annexure I. 1. 5 The total volume of traffic handled by all the Indian Ports during 2009-10 was 849. 9 million tonnes. Non-major ports account for around one-third of the total seaborne trade. The growth in cargo handled at Major and Non-major Ports in 2009-10 was 5. 8% and 35. 4% respectively as compared to 2. 2% and 3. 3% achieved in 2008-09. 1. In order to achieve the coveted goal of transforming Indian Ports into world class facilities suited to the requirements of the future economy of India, the Ministry of Shipping, Government of India has initiated many path-breaking measures which will facilitate enhanced private investment, improve the service quality and promote competitiveness, apart from achieving the expansion of capacities in the country. Such measures include formulation of Maritime Policy, revision of various operational policies, preparation of Perspective Plans for the major ports, commissioning of two more major ports one each on the East Coast & the West Coast, introduction of Port Community System (PCS), paperless regime, etc. 1. Although a Maritime Policy was attempted at the national level sometime in 2004 and a draft hosted on the web-site of the Ministry of Shipping, it could not be finalised due to various reasons. A comprehensive policy is necessary as a foundation for an ambitious development plan; it provides the right frame-work for the development of the sector. Keeping in view the above perspective, Policy framework and Policy issues are formulated and provided in the subsequent chapters. Of course, each State Government is also having a maritime policy of its own and an endeavour has been made to assimilate the spirit of such policies also into this document while preparing the Maritime Agenda, 2010 – 2020.

Similarly, future policy milestones which are foreseeable priority deliverables have also been identified and incorporated. 1. 8 Some time ago, as decided in the meeting of Committee of Infrastructure headed by the Honb’le Prime Minister, the major ports had been asked to prepare a long2 perspective Business plan of each port with the help of international consultants. Accordingly, each major port has got its Business Plans prepared. All those plans have been co-ordinated at Central level by the Indian Ports Association, New Delhi by engaging the Port of Rotterdam Authority and a consolidated business plan, combining the projections of traffic and development plans was prepared. 1. But, such consolidated plan is only for the major ports and does not take into consideration of the needs of non-major ports which are large in number irrespective of their volumes. The Planning Commission also, in its mid-term appraisal document, has strongly suggested having a comprehensive document for the development of the Port Sector that includes non-major ports, and also a monitoring system for assessing the overall port capacities including those of the non-major ports on a regular basis. 1. 10 Moreover, when perspective business plans were prepared, the maritime sector was growing at a brisker pace and those plans took into consideration the prospective growth rates.

But, unfortunately, with the global slow-down and recession, the major global economies have taken a tumble in every sector. Shipping and Ports are no exception. Accordingly, cargo traffic which had been growing at a rate of approximately 11% annually has shown lower growth rates. Although India has succeeded in effectively surviving the slowdown with the fundamental strength of the economy and the systems and with the various policy measures, achieving the earlier growth rates still remains a challenge for the economy. The current economic indicators clearly point to a robust growth of the Indian economy. 1. 11 It is in this context that the Ministry of Shipping embarked upon the very hallenging task of preparing an ambitious Maritime Agenda for the decade, 2010 2020 to create, build and sustain the maritime infrastructural needs of the Country for the next decade. This document aims to navigate and steer the Indian maritime sector realistically into the premier maritime nations of the world. 3 PART – II PORTS CHAPTER- 2 GLOBAL OVERVIEW OF THE MARITIME SECTOR 2. 1 Introduction 2. 1. 1 International trade is a cornerstone of the global economy. Exchange of goods amongst countries widen the choice of supply and ensures that production takes place where it is cheapest and best. This is reflected in the intensification of globalization and the fact that world trade is growing faster than the world output.

World trade relies on cheap and secure transport. Maritime transport, enabled by, inter alia, technological developments and competitive transport costs, is estimated to handle over 80 % world trade by volume and over 70 % by value. As trade grows, the demand for maritime transport also grows. Technological developments in bulk and container transport have made maritime transport cheaper. Bulk transport involves shipping one homogeneous commodity (e. g. grain, ore etc) at any one time, but in large quantities; in contrast, container transport entails transporting different goods at the same time, but in standard containers that are easy to load and unload.

However, the slower growth in world seaborne trade compared to world trade in general reflects that the weight of the goods transported increases at a slower rate than their value due to rising trade in processed goods like electronic items, medicines, apparel, gems and jewellery etc. Besides, greater use of lighter materials and lower material intensity in the manufacturing process has also led to slower increase in weight. 2. 1. 2 In 2008 international seaborne trade increased @ 3. 6% to reach 8. 17 billion tones. The volume of 8. 17 billion tonnes comprised of 2. 75 billion tonnes of tanker cargo (33. 7%) and 5. 42 billion tonnes of dry cargo (66. 3%).

Tanker trades (crude oil and products) posted marginal growth of 1. 6 % in 2008 in an environment of weak demand. The tanker Cargo, in turn, consisted of 1834 million tonnes (66. 7%) of crude oil and 915 million tonnes (33. 3%) of petroleum products. Dry bulk trade, the main driver of the shipping industry over the past few years, is driven, inter alia, by industrial production and growth requirements. These shipments accounted for more than two-third of total 4 world goods loaded. Dry bulk consisted of 2. 10 billion tonnes of the five traditional dry bulk types (iron ore, coal, food grains, and bauxite/alumina and rock phosphate) and other dry cargo of 3. 2 billion tonnes which showed an increase of 4. 1 % and 5 % respectively. 2. 1. 3 The 2008 financial crisis has been widely described as unprecedented and unforecast, which is disastrous from a risk management perspective. Container volumes in 2009 dipped abruptly by between 15% and 30% year-on-year, depending on the location, in a world that had never before experienced such severe and sustained negative growth. 2. 1. 4 In response to the drop in volumes and revenues, terminal operators and shipping lines have scrambled to renegotiate their commitments. Many lines have tried to postpone or cancel part of their vessel new building programmes and to renegotiate charter rates.

In May 2010 it was reported that a South Korean shipyard had received a $70M cancellation fee for not building three container ships. Lines have also reportedly achieved drastic reductions in terminal tariffs. Terminal operators, too, have tried to reduce their exposure by renegotiating some of the components of their concession agreements with port operators, such as volume guarantees, deadlines and royalty levels. It can take 10 years to get a greenfield terminal project fully up and running. 2. 2 Challenges Ahead 2. 2. 1. The recent past has been unprecedented in the history of container shipping, as traffic volumes have collapsed, freight rates have plummeted and practically all capital investment programmes have been curtailed.

Everybody has been affected, with most ocean carriers reporting record financial losses, box ports and terminals posting losses due to decline in throughput for the first time in their histories and international terminal operators (ITOs) postponing or cancelling new projects and renegotiating contracts agreed when the market was at its height. The following table needs no explanation for top operators about the loss in revenues: 5 Terminal Operators Jan-June, 2009 2,000 1,426 1,384 704 189 Hutchitson Port Holdings (HPH) APM Terminals DP World Hamburger Hafen Logistics, (HHLA) International Container Terminal Services, Inc. (ICTSI) Source : Cargo System, Nov. & Dec, 2009 Revenue Jan-June, 2008 2,500 1,517 1,598 1,043 227 +/- % -20. 0% -6. 0% -13. 4% -32. 5% -16. 7% 2. 2. 2 Moreover, in a bid to cut costs, ocean carriers are putting more pressure on their vendors, including terminal operators.

In particular, they are seeking user agreement changes, reduced tariffs, adjustments to previously negotiated volume and service guarantees, as well as more value-added packages. Despite the reduction in container traffic worldwide expected in 2009, overall container throughput is projected to continuing rising as the recovery takes hold. By 2020, according to some estimates, global container throughput will reach 1 billion TEU, double last year‘s total of roughly 500m TEU. Much of this growth will occur in the emerging economies of Asia, Africa and Latin America where port and terminal infrastructure investment is still needed to accommodate predicted trade flows. 2. 2. 3 Hand in hand with growing container volumes worldwide are growing vessel dimensions.

Changing trade patterns and new trade partnerships bind nations and markets through an increasingly complex global supply chain system. The current container ship order book is heavily loaded with vessels of the 10,000 TEU plus class range, which will become a bigger part of the world‘s container ship fleet in the years to come, Each of these issues represents important challenges to terminal operations not only in terms of operations and productivity, but also to personnel safety, and environmental impact. As the industry evolves, so must its culture. 2. 3 Global Warming 2. 3. 1 Ports play crucial role in the maritime trade and are the economic drivers for the country and region.

The demand of the sea transport has resulted into increase in the number of ships plying all over the world and also visiting the ports. It is estimated that there are more than 90000 ships plying 3000 ports in the world. Increased traffic at the 6 ports gives rise to increase in the chain of related activities like shipping activities viz. , towing, mooring, berthing, piloting, marine survey, sea patrolling etc. involving use of harbour crafts such as tugboats and launches; bunkering and transhipment / lighterage operations etc. In addition, cargo handling, vehicular traffic, movement of cargo to and from ports through heavy duty trucks and rails, deployment of dredgers to deepen the drafts etc. also result in environmental pollution at the ports in the form of air emission.

Air pollution is causing severe threat to the health of the nearby residents of the port and hence measures in the direction of reducing emission to improve the air quality and also fight against global warming are necessary. Shipping-related PM emissions take horrific toll on coastal population and are responsible for approximately 60,000 cardiopulmonary and lung cancer deaths annually. 3. 8 % of all global premature deaths are due to exposure to PM. It is estimated that with the expected growth in shipping activity, annual mortalities could increase by 40% by 2012. 94% of the Diesel exhaust emission coming from ? mobile sources‘ in the port accounts for approximately 84% of the cancer risk.

Marine fuel bunkering fumes also cause toxic emission leading to nausea and breathing difficulties. 2. 3. 2 The largest air pollutant amongst the above sources for CAC1 is ships which contribute almost 40% followed by heavy duty vehicles 38%. Contribution by harbour crafts, cargo handling equipments and rail locomotives is 7%, 8% and 7% respectively. The main pollutants amongst the CAC for ships are SOx, NOx, PM and acid rains where as for heavy duty vehicles they are NOx, PM and CO. For the GHG2, maximum contribution of pollution of 48% is by heavy duty vehicles followed by ships 25%, harbour crafts 5%, cargo handling equipments 14% and rail locomotives 8%. The major pollutant amongst the GHGs is CO2 followed by CH4. 2. 3. It is pertinent to mention that the World Ports Climate Initiative (WPCI) initiated by the International Association of Ports and Harbours (IAPH) is supported by 55 major ports in the world with the objective of reducing greenhouse gas emissions through developing a GHG emissions inventory and developing a collaborative approach toward collecting information, estimating emissions and developing plans to reduce the footprint 7 of port operations. The mission of the WPCI is to raise awareness in the port and maritime community of need for action; to initiate studies, strategies and actions to reduce GHG emissions and improve air quality; to provide a platform for the maritime port sector for the exchange of information thereon; and to make available information on the effects of climate change on the maritime port environment and measures for its mitigation. 2. 3. 4 IMO incorporated Annex VI to MARPOL Convention to control air pollution sources by ships looking to the growing concern toward air pollution triggered by marine industry.

Convention recommends control of – (i) SOx and PM emission through fuel oil and combustion equipments. It also defines the Emission Control Areas (ECA) and specifies the sulphur content of fuel oil to be used inside and outside the area3. Sample of the fuel oil is required to be maintained on board the ship to know the fuel quality. (ii) NOx by prescribing emission limits by the different engine speeds and ship construction date. (iii) Ozone depleting substances by stoppage of their production and use. (iv) VOC through Vapor Emission Control System (VECS). 2. 4 Productivity Aspects 2. 4. 1 Normally productivity is defined as metrics and measures of output from production processes per unit of input.

Depending on how a terminal‘s performance indexes are defined, productivity can refer to containers per hour, moves per hour or cost per container, for example. It is not all that difficult to measure containers or moves per hour, system suppliers can help a terminal to operate its dockside cranes faster. 2. 4. 2 Automation, training, service and support, spare parts, crane information management systems, preventive maintenance and integration are examples of some of the areas are of focus which is to be looked into in the future. Port and terminal operators will have to implement best practice and cost-cutting initiatives, lean 8 organisations and lean operation processes are better prepared for longer periods of decreasing volumes and rates than the ones that have not adapted. 2. 4. During the rapid growth of the container market in the recent years, most terminal operators did not think it necessary to streamline operations in line with rising in line with rising wages and increasing equipment manning. The current crisis has amplified the importance of cost compositeness, reliability and performance, and has created greater demand for improving performance, enhancing reliability and the use of measurement standards. Global and independent operators have already faced the fact that, over a very short time horizon, they had to reduce costs and improve performance. So far, this has mainly been done by cutting expenditure on training and investment and major staff reductions.

Experience in other industries suggests that such measures can only last a short time, as the business is not geared to run with such a low costs without going through a significant process improvement programme. 2. 5 Encouraging Future 2. 5. 1 All ports were hit by the recession, but not all cargo flows were affected to the same extent, and competitive positioning of ports has changed. The economic crisis is forcing us to prepare better for the future. Lower growth in consumption, more interest in energy and energy security, and a continuing focus on sustainability are characteristics of the post-crisis landscape. The year 2010 has brought favourable conomic news. The World Bank has raised its projected growth rate for the global economy from 2. 0% to 2. 7%. A prominent consulting group has upped its estimate for growth in US GDP to 2. 6% from 2. 2%. China posted spectacular growth of 10. 7% for 4Q/2009, and one forecast indicates that China‘s GDP will expand by 9. 5% in 2010. Some ports in developed countries showed robust container throughput recovery in the second half of 2009. Overall, it is expected that a better economic environment for ports this year. 2. 5. 2 Economists and analysts have begun to speak with some degree of confidence about signs of economic recovery, and this is good news.

For those in the container terminal business, however, it is not simply a case of waiting for things to return to normal. It is facing the reality of what has become the ? new normal‘. It is necessary to 9 recognise the fundamental changes in the industry in terms of expectations of growth, investment and demand and should respond to these changes assertively and sensibly. 2. 5. 3 International containerised liner trade began on the trans-Atlantic routes just over four decades ago. The centre of gravity of containerised trade gradually shifted to the trans-Pacific services as new global trading patterns evolved. This evolutionary process continues.

By 2009, China had overtaken Germany and the US as the leading exporting nation, having already surpassed Germany as the third largest economy in the world in 2007. Asia has become the new hub of global container trade. The brightest sports in the container industry are now in the container industry are now in the economically emerging markets of southeast Asia, the Indian subcontinent, sub-Saharan Africa, Latin America and the Middle East. 2. 5. 4 Lack of port and transportation infrastructure in these regions persists. This simple fact emphasises the major role that established container terminal developers and operators will continue to play. We serve as crucial catalysts in the global economy by providing access to new markets and the benefits of international trade.

Make no mistake, we are still in the game and we are playing to win. The long term development of ports is therefore determined to a great extent by the following factors; their distinctiveness vis-a-vis their rivals, the extent to which they can attract high-growth cargo segments, the quality of their hinterland connections and their concern for the compete, and such competition is healthy, especially when there is a level playing field. But given the above challenges, co-operation between ports and with port business will become increasingly important. 2. 6 2. 6. 1 Indian Port Scenario As already discussed earlier, the growth in cargo handled at Major and Non- ajor ports in 2009-10 was 5. 8% and 35. 4% respectively compared to 2. 2% and 3. 3% achieved in of 2008-09, The robust overall growth in India‘s seaborne cargo traffic in 2009-10 reflects fairly strong recovery in India‘s growth during the course of 2009-10. The growth in India‘s GDP, Port traffic and growth in world output, world trade volume 10 and world seaborne trade (loading and unloading) since 2005-06 to highlight the India‘s position of stable / vibrant economy is given in Chart I. Chart I : Growth in Indian Seaborne Trade vis-a-vis Growth in Select Parameters 15 10. 9 9. 5 7. 5 12. 2 11. 9 13. 6 10 5 0 9. 7 8. 8 7. 3 5. 1 9. 2 6. 5 5. 2 4. 4 . 7 7. 4 4. 5 3. 6 2. 5 3. 0 2. 5 2. 4 -0. 6 2005-06 2006-07 2007-08 2008-09 2009-10 -5 -10 -11. 8 -15 Indian Seaborne Cargo India GDP Worid Output World Trade Volume World Seaborne Cargo Source: Growth rates for India‘s GDP and Cargo Traffic are based on statistics released by Central Statistical Organization and data available with Transport Research Wing of M/o Shipping, Road Transport & Highways and pertain to fiscal year. Growth rates in the World Output and World Trade Volume refer to calendar years (2005-06 refers to 2005 and so on) based on ( World Economic Outlook, April 2010, IMF ) 11 CHAPTER-3 EMERGING SCENARIO 3. 1 Introduction 3. . 1 The emerging global economy has opened up new avenues in all the sectors in general and maritime sector in particular. The maritime sector through economic liberalization, competition, upgraded technology, application of modern information technology is being talked about world-wide. The impact has been very positive in India as also GDP growth rate attained newer height during the recent past and projected to achieve 9% growth rate during the 11th Plan period. Globally also, apart from the last two years of economic meltdown, the overall emerging scenario is becoming very aggressive which has been described in the following paragraphs. 3. Economic Liberalisation 3. 2. 1 Opening up of the economy results in increase in the volume of imports and exports. The mid term strategy outlined by the Export Import (EXIM) Policy of the Government of India envisages an increase in India‘s share in world trade from the current 0. 80 percent to 1. 5 percent. To meet such ambitious target, cost and speed have to be the essential factors in the movement of cargo. Inefficient port operation and inadequate port capacity not only increase the total transportation cost but also hinder the smooth flow of traffic through the port. Port congestion or detention to a vessel in the port retards the speed of cargo movement.

Fast movement of cargo through ports is of vital importance to a shipper. The primary consideration of port users in the selection of port for movement of cargo is the quality service provided at the least cost. 3. 2. 2 Liberalisation of trade has also resulted in the globalization of the manufacturing process, which in turn has led to a massive increase in trade, with the majority of these 12 manufactured goods moving in containers. As competition increases, manufacturers and shippers strive to minimize transport costs. At the same time, they want guaranteed delivery time and the ability to know the location of their goods on a real time basis.

Port users have been putting enormous pressure on authorities to improve cargo handling efficiency, reduce port costs, and provide facilities to meet the changing demands of the ships and cargoes. Liberalisation has brought in competition in the provision of efficient and customer based services by the port management. The ports which will be able to meet the challenges posed by the competition will emerge as winners and will flourish in the long run. 3. 3 Competition 3. 3. 1 Indian economy is at the threshold of a golden age of growth. Goldman Sachs economists say that over the next 50 years, what they call the BRIC economies (Brazil, Russia, India and China) could become a much larger force globally.

The Goldman Sachs economists predict that India will overtake Italy in 2015, France in 2020, Germany in 2023 and Japan in 2032. China‘s economy will be larger than everybody else by 2016 and even larger than the US economy in 2041. Also they say: ? India has the potential to grow the fastest over the next 30 to 50 years.? Its GDP growth rate will stay above 5 per cent till 2050; China‘s will drop to 5 per cent by 2020 and to around 3. 5 per cent in the mid – 2040s. 3. 3. 2 Global Competition has changed the world and therefore, the business, whether large and small today search the entire world for customers, suppliers, labour, know-how, technical expertise, finance, etc. This has resulted in merger and amalgamation and joint ventures.

Dubai Port International renamed as Dubai World had taken over world-wide rights of P&O operations. Shipowners now group themselves to form a consortia to reduce the cost and increase the capacity which results in enhanced market penetration. 3. 3. 3 Globalisation has its impact on the developments of ports in India. There is a clear trend towards the global ownership and management of port terminals as witnessed by the entry of P&O Lines, Dubai Ports, Maersk Lines and PSA in certain Major Ports. It also means port operators responding to cut throat competition. This has resulted in transfer of a range of port related activities from mainly publicly owned to 13 privately owned undertakings.

Changes in the world economy, shifts in composition, magnitude and direction of international trade, innovations in shipping, advancements in cargo handling technology, greater need for multi-modal transport, higher capital intensity and massive private sector participation have been rapidly transforming the competitive scenario in the port sector. 3. 3. 4 In India, the competition has been noticed during the post liberalisation period due to emergence of large number of State and Private Ports and Private terminals within major ports. Competition is emerging among the major ports and also in the ports within and outside the region. This has also compelled the Major Ports to pay more attention for improvement in productivity. Further, a terminal of the Major Port and that of BOT operator within the Major Port has made the port terminal to perform better to meet the competition from the BOT operator.

An example of JNPT is worth mentioning. 3. 3. 5 Another factor that enhances competition is due to the WTO negotiations on commitments in services, which include port services. Under Maritime Transport services, negotiations may lead to agreements where foreign firms would be able to compete for port services including pilotage, towage, stevedoring services, etc. This would throw open these services to be offered by outside agencies. If these occur, there would be increased pressure on port authorities to divest some of the services rendered now. 3. 3 . 6 To stay competitive, port authorities had to modernize and upgrade port facilities to meet the needs of the port users.

However, the investment required and managerial capabilities will pose challenges to public port authorities. 3. 4 Technological Changes 3. 4. 1 The shipping and cargo handling technologies are changing rapidly. The ship size is getting bigger and in tune the harbours need to be deepened and modernized the superstructure. Cargo handling takes place in many forms: bulk, break bulk, liquid bulk and in containers. Containerized traffic is the most prominent type in the era of growing industrial exports. These changes have an influence on the method of working and labour deployment at the terminals. More mechanization, unitisation of cargo and 14 omputerization are becoming imperative. Manning scales have to change. Workforce needs to be better educated and more skilled. 3. 4. 2 With the percentage of containerization growing steadily the growth of container traffic is becoming more and more significant. As per an ESCAP study conducted in 2005, it is estimated that by 2015, Asia‘s share of containerised exports will increase from 55% of the world total in 2002 to 64%, while the share of containerised imports is expected to rise from 46% to 53% during the same period. In order to meet this growing global demand, the Asian ports including ports in India have to adopt the modern cargo handling technologies. 3. 4. The biggest container ship deployed has grown at a tremendous rate over the past few decades. The driving force has been international globalisation. Increased competition and economy of scale have fuelled the development of ever bigger ships. In the early 1970s, the biggest ship was about 2,000 TEU, compared to 14,000 TEU today. Is this development going to continue or will it be curbed by global warming and the carbon footprint. Large ships are green ships by virtue of the fact that the fuel consumption per TEU transported is lower. The cost is also lower due to the economy of scale. Two decades ago, studies were published comparing two 4,000 TEU ships to one 8,000 TEU ship and showed a reduced total cost per unit.

Today, a comparison between two 8k TEU ships and one 16k TEU shows the same trend. The capital cost for the bigger ship is in the order of 20% less and the fuel cost around 40% less, the exact numbers depend on the building price and fuel price. There is a gain to be made by going for bigger units, in terms of not only the cost, but also the carbon footprint. Slow steaming will also contribute to lower fuel consumption, even if more ships are needed in the loop to maintain the service schedule. So, bigger ships going at lower speed are what the world may be looking for in the years to come. But, we all know that big ships need to be filled up to be able to reap the benefits.

In times of fluctuating transport volumes, it is prudent to ask if big units provide the best solution for adjusting the transportation service supply to the demand. To accommodate such vessels, container hub ports must have access channels of sufficient depth, along with advanced and highly efficient terminal facilities. 15 3. 4. 4 Another example in this regard may be quoted about installation of World‘s largest ship to shore crane at Georgia Port. The 242 tonne crane is 142 m. long 114 m high with the boom raised. It can span 22 containers across and 6 containers high. The lift capacity of this crane is 65 tonne under spreader bar and 85 tonne under cargo beams. 3. 5 Global Challenges Ahead 3. 5. According to a study on Perspective of Changes in the Port Industry, made by IAPH , based on ESCAP forecasting assumptions, it has been indicated that ? upto 8000 TEU vessel will be in operation by 2006, and upto 12000 TEU vessel size by 2011 on the major routes. The handling rate is likely to be 160 moves per hour per berth in future. The Shippers choice will be determined by cost of service, transit time, frequency and transshipment.? 3. 5. 2 Another study titled as ? Regional Shipping and Port Development Strategies? conducted by ESCAP in 2005 has made the following findings: ? The total volumes of world international container handling will increase to 576. 4 million TEU by the year 2015 with an annual average growth rate over the period of 6. 9 per cent per annum.

The total volumes in the ports of ESCAP countries will increase from 133. 7 million TEU in 2002 to 352. 3 million TEU in 2015 at an annual average growth rate of 7. 7 per cent. The study estimates that the world total trans-shipment volume of containers will increase from 58 million TEU in 2002 to 152 million TEU in 2015 at an average growth rate of 7. 7 per cent annum. The study estimates that the total volume of containers trans-shipped within the ESCAP region will increase from an estimated 42. 2 million TEU in 2002 to 109. 6 million TEU in 2015. ? ? ? 3. 6 New Terminals and Global Investments 3. 6. 1 The ESCAP study further estimated that, in total, 927 new container berths will e required to meet anticipated world demand in 2015, of which 569 berths will be for the ESCAP region. The biggest share of this total is accounted for by East Asia, which 16 will require over 270 new berths by 2015. South-East Asia and North Asia will require 148 and 65 new berths, respectively. It is estimated that 66 additional berths will be needed in the South Asia sub-region. 3. 6. 2 However, based on typical costs to develop new infrastructure and procure the handling equipment required to allow the terminal to operate at a satisfactory level of efficiency, the total capital required has been estimated at approximately US$55 billion, of which US$36 billion for the ports in ESCAP region. 3. 6. Another study by UK-based Ocean Shipping Consultants (OSC) analyses the dramatic development in container-handling activity at East Asian ports (includes North East, Far East and South East Asia) for the period up to 2020. Under so-called normal scenarios, OSC forecasts that total container port demand is set to increase by between 102% and 126% over the 2004-15 period, to a maximum threshold of 385 million TEU. By 2020, a further expansion of 20-27% will take the figure up to 487 million TEU. Under this increased-risk scenario, total East Asian container port demand is projected to grow by 88% to 321 million TEU by 2015 and by further 20%, to 386 million TEU by 2020. Despite the increased risks, container port demand growth is still forecast to be substantial 3. 6. On all trade routes cargo volumes are rising – and it is ports that are putting in the investment to make sure that world trade keeps moving. A Ports and Harbour survey of the world‘s 50 ports found that some $40 Billion is being spent by them on infrastructure developments. To this conservative estimate must be added huge investments by terminal operators on equipment. The amount being spent by ports is probably close to the GNP of a country such as Egypt. Alone this year, $700 Million worth of investments at other ports has been chronicled. This is only a sample of the information that gets published – much more is being spent by large and small ports alike. 3. Changes in Information Technology 3. 7. 1 As a result of fallout of 9/11 incident a number of new technologies have been introduced to help the implementation of International Ship & Port Security code in 17 various countries. Now, ships tend to have GPS systems which install a satellite station on a ship. Similarly the use of radio frequency identification (RFID) is gaining ground in logistics and transport planning and optical character recognition (OCR) is being used quite cleverly in terminals to speed up the processing of containers in and out. 3. 7. 2 In latest generation Port, optimization software is giving operators new opportunities to enhance their asset value.

As a result, port planning software have been developed which enable port operators to discover and overcome any operational problems before they start. Singapore‘s unchallenged position as a global transport hub can largely be put down to its geographic good fortune at a cross-road of world trade, but its astonishing throughput capacity is empowered by complex and innovative software managing operations at the port. At the heart of this, are PSA‘s Computer Integrated Terminal Operations System (CITOS) and Portnet. Together, these two integrated real-time e-commerce systems control all of PSA‘s colossal container-moving operations world-wide, from booking tug and erth applications to all the way through stevedoring, loading trucking, tracking and ship-planning and to final billing. As a sign of how accurate container software-controlled system works is demonstrated by the PSA Singapore Terminal system which process one truck every 25 seconds and remotely operates yard cranes at the state-of-the-art Pasir Panjang Terminal. To meet the future requirements and to ensure its continued smooth handling, PSA has embarked on an upgradation programme to further streamline CITOS to CITOS21, making use of new technology. 3. 8 3. 8. 1 Challenges ahead for Indian Ports In order to meet the challenges emanating from intense global competition, dvancement information & communication technology, technological changes in shipping and related sectors coupled with stiff demands from trade, ports in India are required to gear-up themselves by modernizing the port infrastructure, enhancing the quality of service and increasing the productivity level at par with International standards. 18 CHAPTER – 4 OVERVIEW OF PORT SECTOR IN INDIA 4. 1 Introduction 4. 1. 1 The developments in International Port and Shipping Sector raise both threats and opportunities to the Indian Port and Shipping Sector. Indian Ports and Shipping are becoming increasingly competitive among themselves in India and abroad. On the other hand, it has opened up new opportunities to deliver quality service of international standards. Keeping in view the above, an overview of the Indian port sector has been made which is divided into two parts i. e. , Overview of the Major Ports and that of Nonmajor ports 4. 1. During 2009-10, the Major and the Non-major ports in India accomplished a total cargo throughput of 849. 89 million tonnes reflecting an increase of 14. 27% over 200809 compared to a marginal increase of 2. 5% in 2008-09. The growth in cargo handled at Major and Non-major ports in 2009-10 was 5. 76% and 35. 44% respectively compared to 2. 16% and 3. 31% achieved in of 2008-09. The robust overall growth in India‘s seaborne cargo traffic in 2009-10 reflects fairly strong recovery in India‘s growth during the course of 2009-10. Further analysis of the performance upto 2009-10 for major & non-major ports is made in the following paragraphs: 4. 2 Major Ports – An Overview 4. 2. A noteworthy feature of the performance of India‘s port traffic during the years 2002-08 in particular has been its much higher growth compared to corresponding growth in world seaborne trade. To a large extent, the strong growth of India‘s seaborne cargo traffic reflected buoyancy in India‘s overall Gross Domestic product (GDP) growth and robust growth in merchandise trade in recent years. As a result, growth in India‘s seaborne cargo throughput during 2002-08 outstripped growth in both world trade and output. In the face of uncertain global market conditions and more challenging domestic market environment, India‘s seaborne cargo traffic grew by a mere 2. 49 per cent in 2008-09 but recovered sharply to 14. 27% in 2009-10. 19

Deceleration in the growth of cargo traffic during 2008-09 is attributed to mainly exogenous factors rooted in global and domestic growth dynamics. 4. 2. 2 In order to realize this growth potential, a number of policy initiatives have been taken during the recent past. Attention has been focused on improvement in infrastructure, modernization of existing facilities, better logistic chain, doing away the licensing system, more openings in the domestic retail market with entry for the world class players, increased avenues for Special Economic Zone type of projects etc. Canalysing system has been done away with. Indian Oil Corporation, Oil Coordination Committee, have ceased to be the only agency for import of Petroleum crude and products.

State Trading Corporation is no longer the canalysing agent for import of newsprint, edible oil, sugar and foodgrains. The role of Mineral & Metal Trading Corporation as the sole canalysing agency for import of fertilizer, rock phosphate and sulphur has been taken away. In the context of Port sector, Private Sector have been allowed in development of Port Infrastructure – new berths are being commissioned on BOT basis. Documentation procedures have become simple. To become globally competitive, utmost importance has been placed on development of physical infrastructure like roads, airports, seaports, railways in general and Port Sector in particular. Single window concept with web based Port Community System has been introduced in many Ports.

Indian Ports, earlier developed to handle bulk and break bulk cargo, are developing more containerized handling facilities. Development of International Container Transhipment terminal at Cochin is in the offing. Due to concerted efforts over the years, Jawaharlal Nehru and Chennai ports are attracting larger number of mother vessels for containers. 4. 2. 3 Details of the private sector investments, port development through National Maritime Development Programme, Traffic growth, capacity creation, overview on nonmajor ports etc is given in the following paragraphs. 20 4. 3 Private Sector Participation ? The Government has been encouraging private sector participation in port development since1996.

The major areas which have been thrown open for private investment, mainly on Build, Operate and Transfer (BOT) basis with revenue sharing mechanism which include construction of cargo handling berths, container terminals and warehousing facilities, installation of cargo handling equipment, construction of dry-docks and ship repair facilities, etc. The preferred route for private sector participation is through open competitive bidding. ? Foreign direct investment upto 100% is permitted for construction and maintenance of ports and harbours. ? In order to bring in uniformity and transparency in the PPP Process, standardized RFQ, RFP and Model Concession Agreements have been put in place by the Ministry of Shipping, Government of India. ? Tariff setting Mechanism for PPP Projects have been modified to herald upfront fixation before the projects are bid out 4. 3. Details of PPP projects Commissioned and under implementation At present, 22 projects with private sector participation (BOT basis or on captive use basis) are in operation at the Major Ports at a cost of Rs 6335. 50 crore and with a capacity of 132. 65 million tonnes. There are 21 projects under implementation at an estimated investment of Rs. 12648. 43 crore which are expected to add 171. 45 million tonnes to the capacity at Major Ports. Details are given at Annexure V (a) and V (b). 4. 3. 2 Details of PPP Projects awarded during 2009-10 The award of projects on PPP basis has gathered momentum with several projects being awarded and several others planned for award at the Major Ports.

In the financial year 2009-10, a record of 13 projects have been awarded in the port sector on Public Private Partnership basis in the major ports of the country which included construction/development berths and terminals, mechanisation of 21 existing berths etc. These 13 projects envisage an investment of Rs 2653 crores and a capacity of 65. 65 million tonnes. Details are given at Annexure V (c). 4. 4 National Maritime Development Programme 4. 4. 1 Development of Ports is an ongoing process based on the requirement of the trade and the future projections of traffic. Projects are taken up based on the requirement of individual ports to cater to the traffic.

Recognising the catalytic role which the maritime sector has to play in India‘s fast growing economy and in fulfilling the trade objectives the National Maritime Development Programme (NMDP) has been formulated by the Ministry of Shipping, Govt. of India. Under the Programme, 276 projects to be taken up for implementation over the period from 1. 4. 2005 to 31. 3. 2012 have been identified. Total investment involved under the Programme is Rs. 1,00,339 crores at 2004-05 prices. Out of this, Rs. 55,804 crores is for the Port Sector and the balance is for the Shipping and Inland Water Transport Sectors. 4. 4. 2 In the Major Ports, 276 projects undertaken under National Maritime Programme cover the entire gamut of activities, namely Development construction/upgradation of berths (76 nos. ), deepening of channels (25 nos. , rail/road connectivity projects (45 nos. ), equipment upgradation/ modernization schemes (52 nos. ) and other related schemes (78 nos. ) for creation of backup facilities. The objective is to upgrade and modernize the port infrastructure in India which will enable it to benchmark its performance against global standards. 4. 4. 3 Based on the above exercise the projected traffic of the major Ports emerged at the level of 615. 70 million tonnes. To meet the projected traffic of 615. 70 million tonnes by 2011-12, it was estimated that capacity of around 800. 41 million tonnes would be required. After implementation of NMDP schemes, the capacity of major ports which was 397. 0 million tonnes during 2004-05 has increased to 616. 73 million tonnes as on 31. 03. 2010. Some schemes are being implemented and some schemes are under planning stage. 22 4. 5 Port Traffic – Major ports 4. 5. 1 The major ports have witnessed a lot of ups and downs in the growth pattern of traffic during the last five decades, but the thirst for upsurge in achieving the new heights in traffic handling is still continuing. The overall compound Annual rate of Growth (CAGR) of traffic at major ports during 1950-51 to 2009-10 has been 5. 80 percent, whereas during the post- liberalisation period i. e. from 1991-92 to 2009-10, the CAGR was 7. 31 percent.

If the CAGR of traffic growth at major ports is taken into consideration for the last 5 years, it has been 7. 28 percent, whereas it is 10. 73 percent if the traffic is taken for the 3 years before the global economic recession period i. e 2008-09 & 2009-10, which is the highest growth rate since 1960 . Details of growth rates at various period is given as under : Year 1950-1951 1959-1960 1969-1970 1979-1980 1989-1990 1999-2000 2009-2010 1951-2010 1992-2010 2006-2010 2006-2008 Traffic (In Million Tonnes) 20. 10 31. 50 54. 43 77. 59 147. 58 271. 92 CAGR* (%) 5. 12 5. 62 3. 61 6. 64 6. 30 7. 51 5. 80 7. 31 7. 28 10. 73 561. 09 Period 60 Years Post Liberalized Era Last 5 Years Excluding recession period TRAFFIC GROWTH AT MAJOR PORTS 600. 0 561. 09 MILLION TONNES 500. 00 400. 00 300. 00 200. 00 100. 00 0. 00 1950-51 1959-60 1969-70 1979-80 1989-90 1999-00 2009-10 20. 10 31. 50 54. 43 147. 58 77. 59 271. 92 YEARS 23 4. 5. 2 Cargo traffic at 561. 09 million tonnes at India‘s 12 major ports during 2009-10 accounted for around two-third of India‘s total sea borne cargo (849. 9 million tonnes) and showed an improvement in growth to 5. 80% in 2009-10, compared to 2. 2% increase in 2008-09. Total cargo of 561. 09 million tonnes comprising of cargo loaded, cargo unloaded and transhipped to the tune of 322. 6 million tonnes, 211. 0 million tonnes and 26. 6 million tonnes respectively.

Traffic Growth at Major Ports (Last 5 years) Year Traffic Handled (In million tonnes) 281. 10 383. 75 423. 57 463. 78 519. 31 530. 53 561. 09 % Change over Previous Year 3. 30 11. 30 10. 38 9. 49 11. 97 2. 16 5. 76 CAGR*(%) over last 5 years 5. 46 8. 09 10. 16 10. 28 10. 78 8. 43 7. 28 10. 73 2000-01 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2005-06 to 2007-08 4. 5. 3 The analysis of cargo handled at 12 major ports reveals that Paradip Port posted highest increase by 22. 8%, followed by Mormugao (17. 2%), Cochin (14. 5%), Kandla (10. 1%), Tuticorin (8. 1%), Chennai (6. 2%), JNPT (6. 1%), Mumbai (5. 1%), Kolkata Dock System (5%) and Vishakhapatnam (2. 5%).

The Paradip Port accounted for a share of 10. 2% in the total cargo handled by the major ports but contributed more than one-third of the incremental traffic handed at the major ports in the country during 2009-10. Details of port-wise traffic handled and its growth during 2009-10 against previous year is given as under: 24 Traffic handled at Major Ports (2009-10 & 2008-09) ( in million tonnes) % Variation against previous year 4. 96 (-)20. 13 22. 84 2. 49 (-)6. 93 6. 20 8. 07 14. 45 (-)3. 17 17. 19 5. 14 6. 06 10. 07 5. 76 Port Kolkata Haldia Paradip Visakhapatnam Ennore Chennai Tuticorin Cochin New Mangalore Mormugao Mumbai Jawaharlal Nehru Kandla Total 4. 6 Traffic handled during 009-10 13. 04 33. 38 57. 01 65. 50 10. 70 61. 06 23. 79 17. 43 35. 53 48. 85 54. 54 60. 76 79. 50 561. 09 2008-09 12. 43 41. 79 46. 41 63. 91 11. 50 57. 49 22. 01 15. 23 36. 69 41. 68 51. 88 57. 29 72. 22 530. 53 Commodity- wise Traffic 4. 6. 1 In terms of Commodity-wise traffic at 12 major ports, the increase during 2009-10 as compared to 2008-09 has been observed in all broad categories of cargo, except finished Fertilizer & Thermal coal. Amongst the dry bulk categories, fertilizer raw material (dry) and Iron ore posted robust growth rates of 11. 6% and 6. 7% respectively. Coking coal traffic, which is mainly imports, recorded modest growth of 4. 6%.

Container traffic which largely reflects trade in manufacturing goods and components showed significantly growth of 8. 7% compared with a small increase of 1. 02% in 200809, while ? other cargo? traffic increased sharply by 20. 9% in 2009-10. Commodity wise and port wise traffic details for the year 2009-10 and 2008-09 is given in Annexure – II 4. 6. 2 An attempt has also been made to analyse the CAGR during last five years – for the each commodity group. As expected the maximum CAGR of 13. 05% have been noticed in container traffic, followed by 9. 80% for fertilizer and raw material and 8. 18% for the other miscellaneous cargo. The overall CAGR of the Port traffic has been 7. 28%.

It is pertinent to note that the last five years include the period of 2 years of 2008-09 and 2009-10 which has affected the growth of the port traffic due to global 25 slowdown and recession. If these two years are not considered and the previous three years i. e. 2005-06 to 2007-08 are taken in to account, the CAGR reached at a level of 10. 73 percent. As may be seen from the following table, the impressive growth has been noticed in all the commodities Commodity- wise Traffic Growth (Last 5 years) (in million tonnes) Commodity 2005-06 2006-07 2007-08 2008-09 2009-10 CAGR during last 5 years 142. 09 79. 17 58. 76 12. 19 61. 98 69. 38 423. 57 154. 34 80. 59 59. 98 14. 13 74. 44 81. 0 463. 78 168. 75 91. 80 64. 93 16. 63 92. 27 84. 93 519. 31 176. 14 94. 04 70. 40 18. 23 93. 14 78. 58 530. 53 175. 08 100. 33 71. 71 17. 72 101. 24 95. 01 561. 09 POL Iron Ore Coal Fert.. & Raw Mat. Containers Others Total 5. 36 6. 10 5. 11 9. 80 13. 05 8. 18 7. 28 during 3 years i. e. 2005-06 & 2007-08 8. 98 7. 68 5. 12 16. 80 22. 01 10. 64 10. 73 SHARE OF PRINCIPAL COMMODITIES HANDLED AT MAJOR PORTS DURING : 2009-2010 OVERALL: 561090 POL (1,75,081) 31% (In ‘000 Tonnes) OTHERS (95,008) 17% FERT. RAW MATERIAL (6,778) 1% IRON ORE (1,00,333) 18% FIN. FERT. (10,939) 2% CONTAINER (1,01,242) 18% COKING COAL (28,334) 5% THERMAL COAL (43,375) 8% 4. 6. As far as the cargo composition is concerned, the pattern remains unchanged during the past 5 years. During 2009-10, POL traffic maintained predominant share of about 31%, followed by container and iron ore traffic around 18% respectively while the 26 share of coal traffic was 13. 8%. This clearly shows that the investment made at major ports in modern cargo handling equipment has resulted in growth of traffic over the years. 4. 7 Port Capacity 4. 7. 1 For the first time, the total cargo handling capacity in the Major Ports exceeded the actual traffic handled as on 31-3-2001 and the trend is still continuing. The capacity in the ports as on 31. 03. 2010 was 616. 73 million tonnes against the traffic of 561. 9 million tonnes with a capacity utilization of 90. 98%, which is incidentally lowest during the last five years. It shows that the capacity available was more than the traffic at ports, which is an ideal situation. Commodity wise and port-wise capacity as on 31-03-2010 is given in Annexure – III. Capacity Utilisation at Ports ( Last 5 years) Year 2000-01 2005-06 2006-07 2007-08 2008-09 2009-10 Traffic Handled (In million tonnes) 281. 10 423. 57 463. 78 519. 31 530. 53 561. 09 Capacity ( in million tonnes) 291. 45 456. 20 504. 75 532. 07 574. 77 616. 73 Percent Utilisation (%) 96. 44 92. 85 91. 88 97. 60 92. 30 90. 98 CAPACITY UTILISATION Traffic 700. 00 600. 00 500. 0 400. 00 300. 00 200. 00 100. 00 0. 00 Capacity 574. 77 530. 53 616. 73 561. 09 MILLION TONNES 423. 57 281. 10 291. 45 456. 20 463. 78 504. 75 519. 31 532. 07 2000-01 2005-06 2006-07 2007-08 2008-09 2009-10 YEARS 27 4. 7. 2 The capacity at Major Ports was augmented through construction of new berths/jetties/terminals and also through mechanization of cargo handling. It may noted that at the time of formulation of National Maritime Development Programme during 2005, the capacity of all the major ports was at the level of 397. 50 million tonnes and it was estimated that the same will reach to the tune of 800. 41 million tonnes by the year 2011-12.

Whereas, at the time of formulation of 11th five year plan document for port sector during March 2007, the total capacity of the Major Ports was at the level of 504. 75 million tonnes against the actual traffic handled at level of 463. 78 million tonnes. 4. 7. 3 Keeping in view the robust growth in all the sectors of economy and the GDP growth at level of about 9%, the total capacity envisaged at Major Ports by the end of 11th plan period is at the level 1016. 55 million tonnes, whereas the traffic at Major Ports is projected at the level of 708. 09 million tonnes. A number of initiatives have already been taken by the Ministry of Shipping and rigorous monitoring are being done by various wings of the Ministry for formulating and devising programmes for enhancement of Port Capacity Projects.

Private sector investment is being encouraged in the ports and several Public Private Partnership projects have been envisaged for enhancement of capacity during the 11th Five Year Plan. The following statement shows the capacity addition and the traffic growth since 2004-05 till 2009-10: (in million tonnes) Items Actual Achievement – as on 31-03-2005 – as on 31-03-2006 – as on 31-03-2007 – as on 31-03-2008 – as on 31-03-2009 – as on 31-03-2010 Projection – as on 31-03-2012 Capacity 397. 50 456. 20 504. 75 532. 07 574. 77 616. 73 Addition Traffic 383. 75 423. 57 463. 78 519. 31 530. 36 561. 09 708. 09 – – 58. 70 48. 55 27. 32 42. 70 41. 96 – 1016. 55 (as per XI Plan Document) 4. 8 Non – Major Ports – An Overview 4. 8. There are 176 non-major ports situated along the peninsular coast-line and seaislands. These ports are located in maritime states of Gujarat, Maharashtra, Goa, Karnataka, Kerala, Tamilnadu, Andhra Pradesh, Orissa, West Bengal and Union territories of Puducherry, Daman & Diu and Lakshadweep. Out of these ports, only a 28 few ports are well developed and provide all-weather berthing facilities for cargo handling. In 2008-09, only 60 Ports (including ports of Andaman & Nicobar Islands) were reported to have handled cargo traffic. 4. 8. 2 Non-major ports in India collectively handled 288. 80 million tonnes of traffic during the year 2009-10 as compared to 87. 37 million tonnes of cargo handled in 200001 (Chart-1).

The Cumulative Annual Growth Rate (CAGR) growth in traffic during 2000-01 to 2009-10 achieved by Non-major ports was 14. 2% as compared to 9. 7% achieved by all the ports in the country. The share of cargo traffic of Non-major ports in the total cargo traffic handled by all ports in India has increased from 10. 9% in 2000-01 to 34% in 2009-10. This trend definitely shows the level of competition which Major Ports has faced during the last few years and is likely to continue in years to come and as per current indications, non-major ports will have an edge over major ports due to their growth rates as a number of green field ports are coming up with huge capacities through private sector in non-major ports.

Commodity-wise and state-wise Traffic details for 2009-10 and 2008-09 is given in Annexure –IV. Chart 1 : Traffic Handled by Non- Major Ports (Million Tonnes) 300 250 206. 38 200 150 100 50 0 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 87. 37 95. 52 108. 3 136. 96 118. 86 150. 12 184. 92 213. 22 288. 80 4. 8. 3 Commodity Composition of Non-Major Port Traffic Commodity composition of traffic handled by non-major ports during the past few years is given in Table 1. 29 Table 1 : Commodity -wise Traffic Handled at Non-major Ports Traffic Handled (million tonnes) Year POL & its Iron Products Ore Building Material Coal Fertiliser & FRM Others Total 000-01 2005-06 2006-07 2007-08 2008-09 2009-10 46. 39 (53. 10) 69. 72 (46. 44) 81. 20 (43. 91) 91. 04 (44. 11) 97. 82 (45. 88) 145. 11 (50. 25) 5. 78 (6. 62) 28. 84 (19. 21) 33. 97 (18. 37) 34. 22 (16. 58) 35. 86 (16. 82) 49. 07 (16. 99) 8. 38 (9. 59) 13. 39 (8. 92) 14. 39 (7. 78) 16. 26 (7. 88) 13. 26 (6. 22) 14. 96 (5. 18) 9. 59 (10. 98) 13. 57 (9. 04) 14. 02 (7. 58) 15. 45 (7. 49) 21. 46 (10. 06) 41. 29 (14. 30) 2. 98 (3. 41) 5. 61 (3. 74) 6. 82 (3. 69) 7. 11 (3. 44) 8. 85 (4. 15) 6. 12 (2. 12) 14. 25 (16. 31) 18. 99 (12. 65) 34. 52 (18. 67) 42. 30 (20. 50) 35. 97 (16. 87) 32. 23 (11. 16) 87. 37 (100) 150. 12 (100) 184. 92 (100) 206. 38 (100) 213. 2 (100) 288. 80 (100. 00) (Note : Figures in parentheses indicate percentage share of cargo handled to total cargo handled-row-wise). 4. 8. 4 POL & its products (50. 3%) was the single largest commodity handled at non major ports in 2009-10 and its share has ranged between 44% ( in 2006-07 ) to 55 % ( in 2001-02 ). It is observed that during last ten years, the relative shares