The sector witnessed a peak in award of port development projects attracting investments of around Rs 20,000 crore in FY 2014. This augurs well for the sector in the near future. Ergo, port equipment suppliers can explore this opportunity for bringing profitability to their books.
The Indian coastline is dotted with 13 major ports and about 200 non-major ports. According to the Ministry of Shipping, the Indian shipping and ports sector is the carrier of around 95 per cent of India´s trade by volume and 70 per cent by value. The charts showing cargo handled by major and non-major ports show growth in cargo traffic that means reflect the rise in Indian sea-borne trade. They also show an expected peak of 1,758 MMT cargo traffic in 2017 at these ports. It is expected that Indian ports will handle 2 billion tonnes of cargo by 2016-17 and 2.4 billion tonnes by 2019-20 (See Charts).
The Indian port sector is gaining momentum with the government´s reforms in areas like land acquisitions, forest and security clearances. The government has realized the potential of this sector and has taken initiatives such as 100 per cent FDI for port development projects, income tax incentives, streamlining of security clearance procedures and close monitoring of developmental projects in the major ports. The Centre has also proposed the corporatisation of the public sector ports under the Companies Act. This move will definitely provide the scope for modernization of the major ports, apart from bringing in operational efficiency.
The Shipping Ministry´s ambitious plan of ´Maritime Agenda 2020´ projects capacity augmentation of 3130 million tonnes by 2019-20 at the Indian ports for handling cargo of 2.5 billion tonnes. The government´s port-led development Sagarmala project has further enhanced the growth prospects of this sector. A revision of the Land Acquisition Act is also on the cards, which could expedite the development of greenfield ports.
All this points towards a positive outlook towards the sector. However, the sector needs to improve operational efficiency. In addition to this, mechanization and modernization of port facilities is also crucial for the development of ports in the country. Overall, there is need to create greater awareness regarding automating cargo handling, vessel tracking, data entry, etc. In order to accommodate large-sized container vessels, there is a need for use of advanced technology and facilities, helping to reduce turnaround time and operational cost. For improving overall performance, the sector needs to upgrade and equip itself with state-of-the-art equipment and technology.
Opportunities for vendors
Port equipment vendors can also cash in on the opportunity of prospective growth of the Indian port sector.
ThyssenKrupp is fully equipped with the latest technology offerings for handling bulk material at ports. Some of our port technology equipment includes ship loaders, ship unloaders, belt conveyors, pipe conveyors, stackers and reclaimers, etc. We also offer turnkey solutions in ports where we take complete responsibility of design, supply, erection and commissioning of various material handling equipment,´ says Sivasubramanian Natarajan, Managing Director, ThyssenKrupp Industries India Pvt. Ltd.
Based in Germany, ThyssenKrupp has an R&D set-up which is working on several productivity solutions for ports. ´We have complete access to all those solutions and are in a position to offer to Indian ports on a continuous basis. We don´t need any additional collaboration with any other foreign company. One such technology product is the Continuous Ship Unloader that has the capability of evacuating the entire load of a ship in the shortest time span with the least amount of spillage,´ he adds.
´All ports require jetties for which we are targeting the use of BUMA reverse circulation drilling rigs for drilling large diameters and depths in hard rock as well as through soft rock layers for the construction of foundation,´ says Uthpala Suvarna, Director - Sales & Service, Suretech Infrastructure Pvt Ltd. ´We also offer hydraulic impact hammers and vibratory hammers for driving sheet piles and casings. There is also scope for our cutter suction dredgers for the development of channels in ports, such as is happening at Machilipatnam Port,´ he adds.
The market for reach stackers and container handlers is charting a growth path,´ says Amit Sood, AVP, Material Handling Solutions Division, TIL Ltd. ´Planned government investment in port containerization projects, new ports, designated railway corridors and volume of freight being handled will further grow demand. We see bright prospects for these as they help improve material handling efficiencies,´ he says.
Sunil Kalra, Divisional Manager - Maritime Cranes, Liebherr India, sees great potential for Liebherr mobile harbour cranes in India. ´In just a decade, Liebherr has sold 85 mobile harbour cranes in the country,´ he says. ´Customers include Krishnapatnam Port Company Ltd, Adani Hazira Port Pvt Ltd and Mundra Port and Special Economic Zone Ltd. More deliveries will follow on the back of growing value for the flexibility of mobile harbour cranes that can efficiently handle containers, bulk, general cargo and heavy loads. Additionally, economic development will boost demand as efficient cargo handling infrastructure in ports is essential for strong growth,´ Kalra says.
´We have supplied lift trucks, reach stackers, rubber-tyre gantry cranes and ship-to-shore cranes to most big port terminals in India,´ says Saeesh Nevrekar, Country Manager, Konecranes India. ´All these products have potential; we see India as an important emerging market,´ he asserts.
´Indian ports need to modernise in order to reduce the waiting time for the ships calling at Indian ports. India needs to develop more modern port facilities with higher handling capacities. The ports need better road/rail infrastructure connectivity for smooth transportation of material and equipment to the final destination. The port sector needs to overcome major obstacles in land acquisition, environment clearances etc., to set up world-class facilities. The present government has made its priority to get these clearances on fast track. Many private players have shown their interest to invest in the Indian port sector. All this will result in a healthy growth of the sector in near future,´ says Natarajan while commenting on the hindrances facing the country´s port equipment industry.
The Indian port equipment industry is undergoing a rapid transformation by moving from a low volume, intensive use of equipment structure to high volume, and specific use one. Regarding this, Natarajan observes, ´India has a large potential for transportation of material through waterways within the country. The port industry will see usage of large-size handling equipment and sophisticated automation for enhancing the productivity of ports.´
Regarding the measures taken by the government with respect to tax policies for export of equipment; tax policies to improve demand; incentives for players to invest in R&D, technology, etc; tax policies pertaining to import of new and used equipment, Natarajan asserts, ´The tax concessions for equipment purchases should be extended to ports as in the manufacturing sector. Besides that, the frequently changing tax structure is not good for the industry.
It is essential to have long-term tax structure (at least for 10 or 15 years) so that the investors will also get the opportunity for making prudent investments in the sector. R&D plays a key role in developing port sector in India for scaling up the capacity and modernization where manufacturers like us can bring world class equipment and technology to the Indian port sector.´
As the prospects for port infrastructure developers brighten, increased competition will usher in advanced technology and better prospects for the space as a whole.
Green ports need of the hour, says Gadkari
Efforts are on to convert all ports into green ports and develop all the 12 major ports, so that these facilities along with highways will contribute at least 2 per cent of GDP in the next two years, says Union Minister for Road Transport, Highways and Shipping, Nitin Gadkari. As a maiden step the Ministry has initiated use of bio-diesel at Haldia Dock, Kolkata Port.
´Usage of bio-diesel at ports should be enhanced, as it will help in controlling pollution. Like Haldia port, every port should become a green port,´ the minister says. He adds that it is a step not only towards ´Clean India´ but also in the direction of a ´pollution-free India´.
On why many Indian ports have outdated equipment, Gadkari says, ´Definitely, the Ministry is taking steps. Not just for equipment but also for software, training of officials, we need to increase efficiency, there is a need to change and upgrade. We have to go for international standards. The Ministry is consulting a lot of other countries. At the same time we are bringing certain changes in the law to improve the condition of ports. In two years from now it will be possible to improve the ports. ´The ministry is working on different projects on different modes. The government has its own constraints; it is quite difficult for the government to invest the money. Everything can´t happen immediately, we are (in the process of) doing it,´ Gadkari told INFRASTRUCTURE TODAY.
The Minister also informed that a slew of steps are being taken to develop not only all 12 major ports but also the minor ports that come under the control of State governments. Citing an example on why we should think of development of inland waterways, he said that transport of vehicles through water costs only 30 paise per km as compared to one rupee by railways and Rs 1.5 by roads.
´The Ministry is trying to improve and develop inland waterways traffic. We are trying to increase the water traffic by 15 per cent, which is currently a mere 3.4 per cent. I´m not declaring anything but this is our target and we know it is difficult but we are committed to do it. We are trying to increase the services between ports. We want prioritise waterway travel for goods and services,´ he said.
Minister asserts that the government is conscious about the concerns of the employees of ports. ´No employee would lose his job due to the modernization and up gradation of ports in the country,´ he adds.