Indian Ports – Muddling Through Somehow

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In fiscal 2008-09, India’s twelve major ports handled only 2% more cargo than the year before. (That compares with 12% growth the year before.)

Perhaps it’s just as well. At 530 million metric tons, the major ports were running at just over 100% of their capacity. That, and the relatively unsophisticated cargo-handling, means it takes a ship 5-7 days on average to unload at one of those ports. In Singapore, it takes 6-8 hours.

Once the material is off the ship, the problem’s not over: there’s a rail bottleneck. So getting the goods inland takes time, too.

The government has major plans to improve the ports, but a recent assessment by ICRA, a credit rating agency, doesn’t think they’ll make their targets. It’s taking too long. (But ICRA also thinks cargo volumes won’t grow as fast, so service might improve anyway.)

Perhaps the longer-term solution will come from some subset of the 200 or so ports controlled by the States, which already process more than a quarter of India’s sea-trade. Unlike the 12 major ports, whose tariffs are set by a governmental authority, these port can set their own prices. The state governments have less funding to develop their facilities, so a few are inviting in private sector investors, including foreign-owned companies. One example is Gujarat Pipavav Port Ltd, 54.8% owned by a unit of the Danish company AP Moller-Maersk A/S, which operates Pipavav, a port in Gujarat.

Infrastructure is perhaps the single biggest obstacle in India’s rapid growth path. Ports. Airports. Power. Water. Roads.

Yet, I’m more optimistic than I sound. We’ve been talking about infrastructure shortfalls for decades, and yet India’s managed positive economic growth year after year. India’s always been particularly good at workarounds and muddling through.

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About webmaster

I'm an international Business Consultant; author of "India Business Checklists" published by John Wiley
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