PESTEL ANALYSIS ON PORT SECTOR

OF INDIA
Submitted to:-
Prof. Arbuda Sharma

Submitted by:-

Name – Sarthak Aggarwal

Roll No. 173045

Batch – IMG (17)

Course – Global Business Environment

Section – D
 ACKNOWLEDGMENT
‘’It is not possible to prepare a project report without the assistance &
encouragement of other people. This one is certainly no exception.”

On the very outset of this report, I would like to extend our sincere & heartfelt
obligation towards all the personages who have helped me in this endeavour.
Without their active guidance , help , cooperation & encouragement , I would
not have made headway in the project.

I am ineffably indebted to Prof. Arbuda Sharma for conscientious guidance and

encouragement to accomplish this assignment.

I extend my gratitude to FORE SCHOOL OF MANAGEMENT for giving us this

opportunity.

I also acknowledge with a deep sense of reverence, our gratitude towards my

parents and member of my family, who have always supported us morally as
well as economically.

Any omission in this brief acknowledgment does not mean lack of gratitude.
TABLE OF CONTENT

S.No. Topic Page No.

1. Overview of the Sector 1-7

2. PESTEL Analysis 7-9

3. Potential Interventions 10-11

5. References 11
 OVERVIEW
The Ministry of Shipping, nearly 95% of India's trade volume and 70% by
monetary value occurs via maritime transportation. In November 2020, Prime
Minister Narendra Modi rebranded the Ministry of Shipping to the Ministry of
Ports, Shipping, and Waterways.

India's port sector is a critical component of the country's infrastructure,

playing a vital role in India's trade and economy. The sector has witnessed
significant growth in recent years, driven by factors such as India's growing
economy, increasing trade volumes, and government initiatives.
India has a long coastline of over 7,500 km and a large network of ports,
including 13 major ports and 200 non-major ports. The major ports are
controlled by the central government, while the non-major ports are
controlled by the state governments. The major ports handle about 95% of
India's trade by volume and 68% by value.

The major ports located on the eastern coast are Tuticorin (Tamil Nadu),
Chennai (Tamil Nadu), Ennore (Tamil Nadu), Visakhapatnam (Andhra Pradesh),
Paradip (Odisha), Haldia & Kolkata (West Bengal), and Port Blair (Andaman &
Nicobar Island). while the maior ports located on the western coast are Kandla
Port (Gujarat), Mumbai (Maharashtra), Navasheva (Jawaharlal Nehru Port),
Murmagoa, New Mangalore (Karnataka), and Kochi (Kerala).

Kolkata Port : Only riverine port in India. Known for twin dock systems viz.,
Kolkata Dock System (KDS) on the eastern bank and Haldia Dock Complex
(HDC) on the western bank of river Hooghly.

Paradip Port : Located at confluence of river Mahanadi in Bay of Bengal in

Odisha. It was the first major port on East Coast commissioned in independent
India.

New Mangalore Port : Located at a site called Panambur in Karnataka at

Gurupura river confluence with Arabian Sea.

Cochin Port : Located on the Willingdon Island on the south west coast of
India. Located on the cross roads of the east-west Ocean trade. The port is
called natural gateway to the vast industrial and agricultural produce markets
of the south west India.

Jawaharlal Nehru Port Trust (Nhava Sheva) : It is also known as Nhava Sheva
and is the largest container port in India, handling around half of containers of
all major ports. It is located on eastern shore of Mumbai harbour off Elephanta
Island and is accessed via Thane creek.

Mumbai Port : One of the oldest modern ports of India. It is the largest and
most important seaport along the western coast of India.

Kandla Port : Kandla port was built after partition as the Karachi port on
western coast had gone to Pakistan. It is known for handling much of the crude
oil imports of India.
Vishakhapatnam Port : Vizag port is located in Andhra Pradesh and is known
for bulk of Cargo handling on east coast.

Chennai Port : Chennai Port is the largest port in the Bay of Bengal and second
largest port of India after JNPT. It is largest port at east coast.

Tuticorin Port : This port has been now renamed as V. O. Chidambaranar Port.
It is located in the Gulf of Mannar. Tuticorin is the only port in South India to
provide a direct weekly container service to the United States.

Ennore Port : This port is now named as Kamarajar Port Limited. It is first
corporate port of India and is registered as a public company with 68% stake
held by government.

Marmagao Port : Marmagao port in Goa is leading iron ore exporting port of
India.

Port Blair : It is the 13th and youngest major port of India declared in 2010.
The port is of strategic importance to India as it is closer to two international
shipping lines viz. Saudi Arabia-Singapore and U.S-Singapore.

Two New Ports : The government has decided to set up two new major ports,
one at Sagar in West Bengal and other at Dugarajapatnam in Nellore district of
Andhra Pradesh. The date of completion of the Phase-I of the project at
Dugarajapatnam is 2018 and for Sagar 2019-2020.
India’s key ports had a capacity of 646.10 million tonnes per annum (MTPA)
during April-January 2023. From April-October 2022, all key ports in India
handled 446.50 million tonnes (MT) of cargo traffic. India's merchandise
exports in FY22 were at US$ 417.8 billion, up 40% from the previous year. In
FY23, merchandise exports reached US$ 447.46 billion.

The Government has taken several measures to improve operational efficiency

through mechanisation, deepening the draft and speedy evacuations.

PESTEL ANALYSIS
Political Factors

The Indian government has been supportive of the ports sector through
initiatives such as the National Maritime Development Programme (NMDP)
and the Sagarmala project. These initiatives aim to promote growth in the
sector by providing financial assistance, streamlining processes, and
developing infrastructure.

The regulatory environment for the ports sector is evolving, with the
government taking steps to streamline processes and reduce bureaucracy. This
is likely to make it easier for ports to do business and attract investment.

India is a stable democracy, which provides a favourable environment for long-

term investment in the ports sector. This is because investors are more likely
to invest in countries where there is political stability and a rule of law.

Economic Factors

India is one of the fastest-growing economies in the world, which is driving

demand for maritime transportation services. This is because economic growth
leads to an increase in trade, which in turn increases the need for ports to
handle goods.

The Indian government is investing heavily in infrastructure development,

including ports. This is expected to benefit the ports sector in the long term by
increasing capacity and efficiency.
Foreign direct investment (FDI) in the ports sector is increasing, as foreign
investors recognize India's potential as a maritime hub. This is because India
has a large and growing population, a strategic location, and a relatively low
cost of labour.

Social Factors

Rising disposable incomes are leading to an increase in consumer spending,

which is driving demand for imported goods. This is because as people have
more money, they are more likely to buy goods from other countries.

Urbanization is leading to a concentration of population in coastal areas, which

is putting pressure on port infrastructure. This is because as people move to
cities, they need to be able to get goods and services, which requires ports to
be able to handle more traffic.

Changing consumer preferences, such as the growth of e-commerce, are

driving demand for logistics services. This is because people are increasingly
buying goods online, which requires ports to be able to handle more packages.

Technological Factors

The digitalization of the ports sector is leading to improvements in efficiency

and productivity. This is because digital technologies can be used to automate
tasks, improve communication, and track shipments.

Automation is being used to reduce reliance on manual labour, which is

leading to cost savings. This is because automated systems can do the work of
multiple people, which can save ports a lot of money.

Big data is being used to improve port operations and decision-making. This is
because big data can be used to analyse trends and identify patterns, which
can help ports to make better decisions about how to allocate resources.
Environmental Factors

The implementation of stricter environmental regulations by the Indian

government is increasing the costs associated with port operations. This is
because ports need to invest in new equipment and technologies to comply
with these regulations.

Climate change is leading to more extreme weather events, such as storms and
floods, which can disrupt port operations. This is because these events can
damage port infrastructure and make it difficult for ships to operate.
Growing public awareness of environmental concerns is putting pressure on
ports to adopt more sustainable practices. This is because people are
increasingly concerned about the environment and are demanding that
businesses take steps to reduce their impact.

Legal Factors

The proposed Goods and Services Tax (GST) could have an impact on the ports
sector. This is because the GST is a new tax system that could change the way
that ports operate and pay taxes.

India has a complex set of labour laws, which can make it difficult for ports to
hire and retain skilled workers. This is because these labour laws can be
difficult to comply with and can make it expensive to hire employees.

India's intellectual property laws are relatively weak, which could pose a risk to
ports that invest in innovation. This is because ports may not be able to protect
their intellectual property from being copied or stolen.

Overall

The PESTEL analysis shows that the ports sector in India is facing a number of
challenges, but also has a number of opportunities. The sector is likely to
benefit from government support, economic growth, and rising disposable
incomes. However, the sector will need to address the challenges of
environmental regulations, climate change, and public awareness.
 POTENTIAL
INTERVENTIONS
• Strengthen government support and coordination: Enhance collaboration
between central and state governments to streamline decision-making processes
and ensure consistent implementation of port development policies.

• Promote public-private partnerships (PPPs): Encourage PPP models to attract

private sector investment and expertise in port infrastructure development and
management.

• Enhance transparency and regulatory predictability: Provide clear and

transparent regulatory frameworks, ensuring consistency and predictability for
investors and port operators.

• Prioritize infrastructure investment: Allocate adequate funding for port

infrastructure development, including capacity expansion, modernization, and
connectivity enhancements.

• Promote trade facilitation: Streamline customs procedures, reduce non-tariff

barriers, and implement digital solutions to expedite cargo clearance and
movement.

• Encourage maritime cluster development: Foster the growth of maritime clusters

around ports to attract ancillary industries and generate employment opportunities.

• Invest in skill development and training: Provide vocational training and upskilling
programs for port workers to enhance their capabilities and adapt to technological
advancements.

• Promote community engagement: Engage local communities in port development

plans, address their concerns, and ensure equitable distribution of benefits.

• Implement sustainable urban planning: Integrate port development with urban

planning strategies to accommodate population growth and minimize environmental
impact.
• Accelerate digital adoption: Implement digital technologies across port
operations, including automation, data analytics, and intelligent port management
systems.

• Embrace innovation and R&D: Encourage collaboration between academia,

industry, and research institutions to develop innovative port solutions and enhance
operational efficiency.

• Adopt smart port technologies: Utilize smart sensors, IoT devices, and data
analytics to optimize resource allocation, predict traffic patterns, and improve port
safety.

• Enforce stricter environmental regulations: Implement stringent environmental

standards for port operations, including pollution control measures and waste
management strategies.

• Promote sustainable port practices: Encourage ports to adopt eco-friendly

technologies, such as renewable energy sources, energy-efficient equipment, and
green building practices.

• Invest in coastal ecosystem restoration: Support initiatives to restore and protect

coastal ecosystems impacted by port development activities.

• Reform labour laws: Simplify and modernize labour laws to facilitate hiring and
retention of skilled workers in the port sector.

• Strengthen intellectual property protection: Enhance intellectual property rights

and enforcement mechanisms to protect innovations and investments in port
technologies.

• Clarify tax policies: Provide clear and transparent taxation policies for the port
sector, ensuring consistency and predictability for businesses.