Port infrastructure is the next big goldmine

The next infrastructure opportunity is ports. Reason: India has set aggressive export growth targets, but these cannot be achieved without an increase in port capacities. Some 95 percent of India’s export-import cargo passes through ports, and most ports are swamped with business, with capacity utilisation running as high as 88 percent in 2009-10.

[caption id=“attachment_7915” align=“alignleft” width=“380” caption=“Thar Dry Port in Sanand.Amit Dave/Reuters”]  [/caption]

Not surprisingly, the ministry of shipping’s recently released “Maritime Agenda” focuses on creating fresh capacity, which calls for an investment of Rs 2,80,000 crore over the decade. The agenda expects capacity utilisation levels to be freed up appreciably by 2019-20 from the current levels, as some heavy investments get made in the ports sector.

Capacity utilisation at Indian ports is expected to have eased from over 88% in 2009-10 to slightly over 83% in this year (2011-12). It is expected to decline further to 78%, but rise slightly to 80 percent by 2019-20. Hence the need for investment.

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This improvement in capacity utilisation is expected to ride on the back of faster capacity creation as compared with the growth in traffic. The Maritime Agenda document projects the capacity to improve from 963 million tonnes to 3,130 million tonnes by 2019-20, showing a compounded annual growth rate (CAGR) of 18.3% over the period. This growth is projected to be faster than the expected traffic growth over the period, which will grow from 850 million tonnes in 2009-10 to 2,495 million tonnes in 2019-20, reflecting a CAGR of 11.4% over the period.

To ensure that the envisaged investment takes place, policy moves like encouraging public-private participation, vibrant land acquisition policies, and corporatisation of major ports are key initiatives to look for. If that doesn’t happen, one can forget about growing port infrastructure.