- Commentary -

October 26, 2009 (FinancialWire) (Cross Border: U.S. India News Wrap) — The Indian Government has recently awarded seven projects totaling over INR 1,800 crore (USD 380 million) that will expand capacities of key ports across the Subcontinent. This figure will be increased ten fold by early 2010 with the addition of another 19 projects.

Key players already involved in some of the projects include the Hong Kong based Nobel Group (SIN: N21) as well as Indian players such as MMTC, Essar Shipping Logistics (BOM: 500630) and Gammon Infrastructure (BOM: 532959). There are also several container terminals to be set up at major ports across the countries as are projects for improving existing port berths. In all these 26 projects are expected to increase capacities of Indian ports by 42%. The Indian Shipping ministry intends to double capacity at major and non-major ports in the country to 1,590 mt by 2012 from the present 795 mt.

Need for better infrastructure is the driving force:

The pressure exerted by a growing economy is prompting private participation in the country’s infrastructure premise. Increasing trade through both imports and exports of goods further adds an impetus to growth as shipping forms a primary and important trade route.

Analysts have predicted a continued slow recovery in the global shipping industry. Although Asian shipping markets have underperformed in recent times, the opportunity for infrastructural investments is large, especially in India. Most major Indian ports have been government owned ports and the issue of whether there is scope for foreign shipyards has been discussed in the past. In recent years, the maritime industry has also called for Major Indian ports to be transformed into listed entities for them to benefit from the both economic boom in the country and to max its funding potential. The Mumbai Port Trust has infact formed a B-O-T (build - operate - transfer) JV with Dragados SPL, of Spain, to construct an offshore container terminal (OCT) at the Indian west coast port. More overseas players could also be interested in magnum projects such as the ones being announced.

Besides, amidst a pressing need for improving managerial efficiency the government has taken to encouraging PPP participation in developing the infrastructure at these ports. India’s transport infrastructure has often been described as ‘inadequate’ notwithstanding its prime position for key demand markets and its geographical positioning. Modernization and up-gradation of its ports would breathe a fresh air of revival in the centuries old industry.

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