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investindia.gov.in-Invest_India.pdf

investindia.gov.in-Invest_India.pdf

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Published by Vaishnavi Jayakumar

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Published by: Vaishnavi Jayakumar on Jun 11, 2014
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06/11/2014

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investindia.gov.in
http://www.investindia.gov.in/?q=ports-sector 
Invest India
Investment Opportunity>>Ports
Sector Overview
India has a long coastline of about 7,517 km along the western and eastern shelves of the mainland. With 12major ports and 187 minor ports, India ranks 16th among maritime countries and has one of the largest merchantshipping fleets in the world. According to the Ministry of Shipping, approximately 95% of the country’s trade byvolume and 70% by value moves through maritime transport, highlighting the importance of ports and their contribution in sustaining the growth and development of the Indian economy.“The increasing trend of Western countries moving their manufacturing functions to low-cost countries, and thelikely prospect of India emerging as a manufacturing outsourcing hub, is expected to contribute to the growth of the country’s marine industry,” according to an Ernst & Young-NMDC report titled Indian Coastline—A NewOpportunity. In terms of volume, cargo traffic at Indian ports increased to 883 million tonnes in 2010–11 from 850million tonnes in 2009–10, according to the Ministry of Shipping.During the 12th Five-Year Plan (2012–2017) about Rs 1,80,626.23 crore is expected to be invested in the portssector, according to revised estimates of the Planning Commission of India. The ports sector received foreigndirect investment (FDI) worth USD 1,635.08 million between April 2000 and July 2011, which was 1.13% of thetotal FDI inflows into India, according to the Department of Industrial Policy and Promotion (DIPP), which is a partof the Ministry of Commerce and Industry and which formulates FDI policy in India.The major ports are Chennai, Ennore and Tuticorn (in Tamil Nadu); Cochin (in Kerala); Kandla (in Gujarat);Kolkata (in West Bengal); Mumbai Port and Jawaharlal Nehru Port Trust (in Maharashtra); Mormugao (in Goa);New Mangalore (in Karnataka); Paradip (in Orissa); Vishakhapatnam (in Andhra Pradesh); and Port Blair (in the Andaman & Nicobar Islands). Among the major ports, Kandla in Gujarat leads in terms of cargo volumes (82 million tonnes in 2010–11)followed by Vishakhapatnam in Andhra Pradesh (68 million tonnes). Cargo volumes at all major ports increasedin 2010–11. Among the non-major ports, Mundra Port and Special Economic Zone Limited (MSEZL), in Gujarat,was the largest operator (52 million tonnes in 2010–11), followed by Essar Ports (40 million tonnes), which hastwo facilities at Vadinar and Hazira, both located in the state of Gujarat.The Government of India has undertaken several projects in recent years to upgrade the quality of the portssector. For example, the year 2010 saw the completion of the first phase of some major projects, including themega container transshipment terminal at Vallarpadam (Kochi) and bulk terminals at Dahej, Mundra and Hazira(all in Gujarat). The first phase at Dhamra (Orissa), a greenfield port, was completed in May 2011. All the major ports in the country have good road and rail connectivity. Moreover, the capacity and quality of theexisting connectivity is being further strengthened to facilitate the smooth flow of cargo. The report of a Committe of Secretaries on rail-road connectivity of major ports suggests each major port should be connected by a four-lane road.
Policy and Promotion
The Ministry of Shipping, the nodal agency for ports, encompasses the shipping and port sectors, includingshipbuilding and ship repair, major ports and inland water transport. As per government policy, 100% FDI isallowed in port development projects. As way of incentive, 100% income tax exemption from income tax isextended to companies investing in port infrastructure. Further, a 10-year tax holiday has been given toenterprises engaged in the business of developing, maintaining and operating ports, inland waterways and inlandports. A major promotional initiative of the ministry is the National Maritime Development Programme (NMDP), an
 
initiative to develop the maritime sector, with an outlay of USD 11.8 billion. The policy lists measures for enhancing private investment, improving service quality and promoting competitiveness to meet medium- andlong-term objectives. With this objective, the Department of Shipping has finalized the list of projects to be takenup in major ports under the NMDP up to 2011–12. These projects will involve a total investment of Rs. 55,804crore. The programme will be implemented through public/private partnership in two phases.Besides the NMDP, the government has initiated two more notable regulatory and policy initiatives to ensure theholistic development of the Indian port sector — the National Maritime Agenda 2010–20 and the Draft PortRegulatory Authority Bill, 2011.The National Maritime Agenda 2010–20 outlines the framework for the development of the port sector with atarget capacity of over 3 billion tonnes by 2020, largely through private sector participation. The agendaenvisages a cumulative investment of around Rs. 2,774 billion in the port sector between 2010 and 2020 in threephases. The non-major ports are expected to account for 61% of the proposed investment and the major ports for the rest.The agenda also suggests policy-related initiatives to improve the operating efficiency and competitiveness of Indian ports. These include major ports to be turned into landlord ports by 2020 with their role being to provide theport infrastructure, while operations and services would be provided by the private sector participants.The Draft Port Regulatory Authority Bill, 2011, provides for the establishment of a regulatory authority to regulaterates for facilities and services provided at the ports and to monitor the performance standards of port facilitiesand services. The regulatory authority will be tasked with the job of framing guidelines for port authorities andprivate operators on rates that will be charged for various services. Further, the authority will also lay downperformance norms and quality standards to be met by port authorities and private operators, besides monitoringtheir performance. Port authorities and private operators running facilities with a cargo-handling capacity of lessthan 5 million tonnes a year will be outside the purview of the authority.
Major Players
Significant investment is being done on BOT basis by foreign players. Some of these foreign players are Maersk(JNPT, Mumbai), P&O Ports (JNPT, Mumbai and Chennai), Dubai Ports International (Cochin andVishakhapatnam) and PSA Singapore (Tuticorin).Some of the prominent Indian port companies include Mundra Port and Special Economic Zone Limited, EnnorePort Limited, Mormugao Port Trust, Kakinada Seaports Limited, Krishnapatnam Port Company Limited, DhamraPort Company Limited and Adani Petronet (Dahej) Port Private Limited. There are several port terminal operatorstoo, with some of the big companies being TM International Logistics Limited, Chennai International TerminalsPrivate Limited, Nhava Sheva International Container Terminal Private Limited, Chennai Container TerminalPrivate Limited, Mundra International Container Terminal Private Limited, Sical Iron Ore Terminals Limited,International Seaports Haldia Private Limited, Vizag Seaports Limited and Ennore Tank Terminals Private Limited.Major companies that operate as port service providers are Ocean Sparkle Limited, Seabird Marine ServicesPrivate Limited, Sealion Sparkle Maritime Services Limited, Sealion Sparkle Port & Terminal Services (Dahej)Limited, IMC Limited, Polestar Maritime Limited, TM Harbour Services Private Limited, International SeaportDredging Limited, Adani Logistics Limited, Navkar Corporation Limited, Pipavav Railway Corporation Limited,Saurashtra Containers Private Limited and Triway Container Freight Station Private Limited.
Sector Outlook
 According to estimates by the Ministry of Shipping, cargo volumes in India are expected to breach the 1-billiontonne mark in the 2011–12; the 2-billion tonne mark by 2016–17; and 2.4 billion tonnes by 2019–20. A report onthe Indian port sector (ICRA Rating feature, September 2011), released by consultancy firm ICRA, states that theprospects for cargo growth over the medium- to long-term remain positive based on the level of activities in thekey end-user industries.Going forward, growth of traffic at Indian ports is expected to be driven mainly by higher volumes of coal (to meetrequirements of the large number of current and proposed thermal power projects based on imported coal);

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