The Indian dredging market is serviced by both domestic and foreign players. Some of the major players are the Dredging Corporation of India (DCI), Adani Ports and Special Economic Zone Limited (APSEZL), Mercator Limited, Jan De Nul Dredging and Dharti Dredging and Infrastructure Limited. These companies procure and charter a diverse fleet of vessels and other auxiliary equipment to undertake dredging operations.
The dredging industry has received increased government attention in the past two-three years. Several initiatives are being taken to promote growth, and these have led to an increase in the demand for dredging. In the coming years, immense opportunities will arise from the increasing seaborne trade, government impetus through initiatives such as the Sagarmala programme and the Jal Vikas Marg Project (JMVP), and desilting of reservoirs, lakes and waterbodies.
Incorporated in March 1976, DCI’s main objective is to cater to the dredging requirements of the major ports. In December 2018, four major ports – the Visakhapatnam Port Trust (VPT), the Jawaharlal Nehru Port Trust (JNPT), the Deendayal Port Trust (DPT) and the Paradip Port Trust (PPT) – signed an MoU among themselves to acquire a 73.44 per cent stake in DCI. As per the MoU, VPT acquired a 19.44 per cent stake, while JNPT, DPT and PPT acquired the remaining 54 per cent stake (18 per cent each).
Apart from the traditional areas of capital and maintenance dredging, DCI’s portfolio of services also includes inland/shallow water dredging, land reclamation, beach nourishment, project management consultancy (PMC) services, sand mining and marine construction.
Its current fleet comprises 10 trailer suction hopper dredgers (TSHDs) with a total hopper capacity of 59,000 cubic metres (cum), three cutter suction dredgers with an installed hopper capacity of 31,576 cum and one backhoe dredger with a maximum bucket capacity of 9 cum. DCI’s annual maintenance dredging capacity is 60 million cum as against the total market potential of approximately 80 million cum. The gap of 20 million cum is due to the decommissioning of four TSHDs as well as the increase in demand for maintenance dredging (owing to widening and deepening of port channels to facilitate higher draught vessels).
Over the past decade, there have been a number of changes in the dredging policy and, accordingly, DCI’s role has also changed. Earlier, DCI was the only dredging company in the country to meet the requirements of the major ports, the Indian Navy and other maritime organisations. However, it now has to compete not only with local companies but also with international players.
So far, DCI has been able to maintain a strong foothold in the dredging market. The public sector dredging company is expected to gain further following a number of initiatives taken by the government such as the launch of Sagarmala and the Jal Marg Vikas Project, declaration of 106 new waterways, and the increased focus on coastal development. There are also rising dredging requirements at upcoming greenfield projects and on the Indo-Bangladesh protocol route, and the need for desilting of reservoirs and ponds. In an attempt to further increase its share of the growing dredging market, DCI plans to acquire high capacity dredgers along with shallow water dredgers to enhance its capabilities and execute bigger dredging projects.
To increase its market share, several issues that have been impeding growth in the segment need to be addressed. There is a need to set up dedicated training centres for training the present manpower to cope with technological changes. DCI is already providing such training to its staff. Another major challenge is the lack of research and development, and innovation in the dredging industry. There is also a need to set up adequate dredger building facilities so as to reduce the time and cost of mobilisation of dredgers and their components. At present, most of the spares for dredgers are procured from original equipment manufacturers based abroad. Such spares need to be manufactured domestically not only to reduce costs but also to ensure round-the-clock availability. The shortage of dredge repair facilities in the country is also an issue that needs to be addressed to reduce the downtime of dry docks and ensure maximum utilisation of the available resources.
Rock dredging, underwater blasting and deep-sea mining are other areas that are yet to receive their share of attention. There is hardly any Indian company with expertise in these fields and there are no defined policy guidelines either. Indian companies need to gain expertise in these new areas to tap the available opportunities.
Private contractor perspective
There are a number of issues hampering growth of the dredging segment. The conditions stated in the bid documents of government-owned dredging projects are stringent and the bidding parameters are not defined clearly. Despite various deliberations, the Indian dredging industry has been unable to develop a comprehensive contract document based on International Federation of Consulting Engineers (FIDIC) guidelines. FIDIC is an international standards organisation that formulates conditions for contracts recommended for construction works where tenders are invited on an international basis. With some minor modifications, these contracts are widely used in domestic projects. Presently, most dredging contractors use a standard contract which fails to meet project-specific requirements.
Also, the risks associated with dredging contracts are not predetermined and are left to the contractor’s interpretation. Proportionate, if not equal, sharing of risks between the implementing agency and the contractor is needed to reduce ambiguity. The lack of detailed soil investigations is another concern raised by private contractors. A pre-notice to the contractors to witness soil investigations can help them mobilise proper dredgers, thereby resulting in timely execution of projects. In addition, detailed information of the project site and project-affected people will also reduce delays in project implementation. Absence of the required expertise and research and development are the other challenges faced by contractors in the industry. Developing in-house engineering capabilities, training the workforce to handle advanced dredgers, engaging well-reputed universities for providing PMC services, etc., are possible solutions.
As per a clause of the dredging policy, only TSHD owners are entitled to a rebate by the government. As TSHDs are relatively capital intensive, they are usually owned by bigger companies. According to private contractors, any kind of rebate or incentive should be based on the quantity dredged and other performance parameters, instead of the ownership of a particular type of dredger. In this respect, the government needs to support local dredging companies (especially smaller ones) to equip them both mechanically and technologically so as to develop the Indian dredging market as a whole.
The road ahead
The Indian dredging market is set for exciting times ahead thanks to increased activity in the ports and inland waterways sectors. The creation of new berths and terminals at the existing ports as well as the development of new ports will drive the demand for dredging. Land reclamation, waterfront development and beach nourishment are other growth drivers for the dredging market.
Given the increase in demand, there exist significant opportunities for private contractors as DCI alone cannot meet the demand. Indigenisation of dredgers and other equipment has also received attention, primarily in light of the Make in India initiative. However, a number of issues and concerns still remain. These need to be urgently addressed to ensure that contractors are able to capitalise on the opportunities provided by the growing dredging industry.
Based on a presentation by Rajesh Tripathi, Chairman and Managing Director (CMD), DCI; and a panel discussion among Harsharan Singh Dharni, CMD, Rock and Reef Dredging; Sanjeev Kumar, Head, Business Development, Dredging, APSEZL; and T. Janakaraj Thomas, Adviser, Jan De Nul Group, at a recent India Infrastructure conference