India’s global port strategy questioned

Plans by India’s Ministry of Shipping to set up a state-owned ports company to acquire ports and terminals abroad have come into question.

The Ministry has said that it wants to create a Special Purpose Vehicle (SPV) called India Ports Global (IPG), to explore overseas investment opportunities.

The plan is that IPG will initially control funds worth about $530 million (25 billion rupees) collected from India’s network of 13 government-owned ports, including Madras and Mumbai. The cash will be used to acquire overseas ports and container terminals in East Asia, Africa and Australia, as well as other regions with close trade links to India.

A report by Dredging Today, however, has raised doubt over whether the ministry’s plans are in fact feasible.

“India’s port sector, despite being in existence for hundreds of years, is in no way comparable to the best in the world today. Cargo handling costs at Indian ports are higher than those at their counterparts in the neighbouring countries,” the report said.

“The government-owned major ports are governed by one set of rules, while private ports under the State governments operate under different regulations. There is a dichotomy in the tariff structure and there are regulatory issues too,” the report added.

India’s maritime trade with overseas countries earmarked a turnover of $600 billion during 2010. This is expected to double that by 2014. As a result, the ministry is looking to the Port Authority of Singapore (PSA) and DP World, as inspiration for their goals.

However, the Dredging Today report stated that while the aspirations are admirable, “one should realise the circumstances these ports were in when they ventured out for global opportunities. Both Singapore and Dubai had become world-class transhipment centres. They had reached a saturation level in their home country.”

The report goes on to say that India has not yet reached that level, and that it must first upgrade its own facilities, and build on its capacities to meet the expected demand.

“We have been talking about making Jawaharlal Nehru Port a major transhipment hub ever since it was commissioned more than two decades ago. Vallarpadam, in the South, another international transhipment terminal in the making, is faced with teething troubles. The Shipping Ministry could not even ensure the assured draught at the terminal on time so that it could handle large vessels.

“Clearly, for Indian ports, there’s a lot to be done at home before going global,” the report concluded.

Source-Portworld 5-7-2011