Indian ports are exploring smart and sustainable solutions to diversify their portfolio and reduce business risks. With a 7,516 km long coastline, pristine island chains and abundant tourism sites, the Indian port sector offers several new areas of growth such as roll-on/ roll-off (ro-ro) ferries and cruise tourism. Similarly, increased industrial activity has led to the introduction of a relatively new concept of smart port cities, wherein the technologies deployed support the basic port infrastructure. Going forward, such new business areas are expected to open up a plethora of opportunities for the maritime sector.
Indian Infrastructure provides an update on the emerging areas of growth in the port sector…
Ro-ro services are vital for the movement of cargo (chiefly automobiles) from manufacturing centres to both outside and within India. While some ports have dedicated ro-ro terminals, others are utilising either general cargo berths or non-functional dedicated cargo berths for handling such traffic. Ro-ro is a niche/fragmented, yet a fast growing segment in the water-based transport sector. In order to reduce the burden on highways and provide a cheaper alternative too, the Ministry of Ports, Shipping and Waterways (MoPSW) has asked all major ports to develop ro-ro and roll-on/roll-off passenger (ro-pax) infrastructure on the lines of Hazira port. Earlier, in February 2020, the MoPSW extended 80 per cent discount on vessel-related charges and cargo-related charges given to coastal ro-ro vessels by another two years. The discount, which was first introduced in September 2016 for a period of two years, has now been extended till January 2022. The discount for coastal transportation of vehicles through ro-ro vessels, ro-pax vessels, pure car carriers, pure car and truck carriers, and pure truck carriers is in line with the ministry’s thrust to increase the share of coastal shipping.
The development of domestic cruise tourism is yet to be fully explored in the country, although it is a well-developed industry globally. As such, the Indian peninsula, which extends over 1,000 miles into the Indian Ocean, holds immense potential to develop the cruise industry. In this regard, the government has undertaken a plethora of initiatives to develop the cruise industry in the country. The key ones include guaranteed berths to cruise ships, removal of ousting charges, concessional uniform single rate for all major ports, exemption of biometrics for e-visa for three years for ease of travel, cabotage waiver off for foreign cruise vessels, and upgradation and modernisation of existing cruise terminal and construction of new terminals, among others. Meanwhile, the Maritime Vision 2030 document has emphasised the importance of encouraging cruise tourism in the country. Cruise tourism has been gravely impacted due to the Covid-19 outbreak. In a big relief to the cruise industry, the MoPSW rationalised tariff rates for cruise vessels in August 2020 for a period of one year.
In a bid to reduce power bills, which is a vital operating cost, the ministry has been promoting the use of renewable sources of energy by installing grid-connected, rooftop solar and wind power projects at all major ports. All major ports were declared to have switched to renewable energy to meet their entire power requirements in February 2020. Meanwhile, the V.O. Chidambaranar Port Trust has planned to install a wind farm at the port facility to generate 50 MW-100 MW of electricity. The port trust has appointed the National Institute of Wind Energy as a project consultant to prepare a detailed project report for developing a wind farm in a period of four months.
India is one of the top consumers of gas in the world. The country meets almost half of its gas requirements through imported gas, in the form of liquefied natural gas (LNG). A number of LNG and liquified petroleum gas (LPG) terminals have been planned to switch to a more gas-based economy. For a long time all the LNG import terminals were located on the west coast at four facilities – Dahej, Hazira, Dabhol and Kochi. In the past 12-18 months, two facilities have been added on each coast – Mundra (west coast) and Ennore (east coast). Taken together, the existing LNG capacity of the country stands at 39 million tonnes per annum (mtpa). Recently, in January 2021, the Minister for Petroleum, Natural Gas and Steel inaugurated Shell Energy India Private Limited’s first small-scale LNG supply infrastructure, a truck loading unit at its LNG terminal in Hazira.
India’s logistics industry has huge scope for improvement. Accounting for about 14 per cent of the gross domestic product, logistics costs are too high in comparison to those in developed nations, where these figures stand at less than 10 per cent. Multimodal logistics parks (MMLPs) have been identified as a part of the solution to address this issue. As part of the National Perspective Plan, prepared under the Sagarmala programme, seven MMLPs were proposed in Madhya Pradesh, Chhattisgarh, Rajasthan, Odisha, Telangana, Uttarakhand and West Bengal.
Recently, in January 2021, the Gujarat government’s Department of Industries and Mines has signed an MoU with Adani Ports and Special Economic Zone Limited for establishing an MMLP at Virochan Nagar, Ahmedabad. Touted as the country’s biggest park of its kind, the logistics park will be spread in an area of 1,450 acres and is expected to attract an investment of Rs 500 billion. Earlier, in October 2020, the foundation stone was laid for the country’s first MMLP at Jogighopa, Assam. Estimated to cost Rs 6.94 billion, the park will provide direct air, road, rail and waterway connectivity to the north-eastern region.
The Sagarmala programme also envisages the development of smart industrial port cities (SIPCs) as a part of its port-led industrialisation component. It also aims to increase coastal trade through SIPCs. A first project of its kind in India, the Kandla SIPC started off in 2017, with the aim of attracting private sector investments in excess of Rs 100 billion. With features such as smart utilities and a smart traffic system, along with a command centre, the SIPC will be equipped to support a population of about 65,000. A major coastal trade handling facility on the east coast, Paradip port is another site identified for development as a smart city. The project includes the construction of an MMLP by the Container Corporation of India, a 4 mtpa pelletisation unit (177 acres) by Thriveni Earthmovers, a wood park and a dedicated food park for edible oils.
Along with SIPCs, free trade warehousing zones have also been planned to create trade-related infrastructure. In January 2021, DP World laid the foundation stone and commenced construction work on its Nhava Sheva Business Park free trade zone (FTZ) project. The Rs 10 billion worth FTZ investment comes under Hindustan Infralog Private Limited, a joint venture between DP World (65 per cent) and the National Investment and Infrastructure Fund (35 per cent) to invest up to $3 billion in ports, logistics and related sectors.
The way forward
In the coming years, ro-ro services will be expanded and the use of renewable energy in the port sector is expected to increase further, which would reduce vital costs. The emerging middle class and the decreasing base price of many cruises will make India a lucrative market for cruise tourism. Providing connectivity to different modes of transport will help in reducing inefficiencies in the logistics value chain. More SEZs are to be set up in the near future to facilitate the movement of goods to and from ports efficiently, and cost-effectively and to increase the competitiveness of Indian goods globally. Net net, these developments are expected to bode well for the port sector.