NEW DELHI: India has allocated less than $4.4 million of public funds for infrastructure development across its major ports for fiscal years 2016 and 2017. At the same time, the country is accelerating its drive for private investment with initiatives including setting up a new department to facilitate private investment in port and maritime-related projects.
Just Rs. 29 crore ($4.36 million) is so far allocated from the public budget for investment in infrastructure across all 12 public port trusts for fiscal 2016 and 2017, minister of state for shipping, Shri Pon. Radhakrishnan said in a written response to a question posed in the Rajya Sabha, India’s upper house of parliament, but the recently established Investment Facilitation Cell will channel and facilitate private investment in the ports and maritime sector.
The more than $4 million in funding is far below levels of public funds put into major ports in recent years. From fiscal 2012 and 2013 to fiscal 2015 and 2016, a total of Rs. 646.6 crore of public funds was invested in the 12 ports, including more than Rs. 120 crore in fiscal 2015 and 2016 alone.
It is not clear whether more public funds will be made available for port projects during the year. What is clear is that the government is putting a much bigger emphasis on attracting private funds to drive its highly ambitious port and maritime development plans. Last month Prime Minister Narendra Modi hosted the inaugural and high-profile India maritime investment summit in Mumbai. The ministry of shipping said 140 public-private-partnership business agreements worth $13 billion were officially signed during the event with a further 240 projects worth $66 billion to come on stream in the next few years.
The projects include 27 port-based industrial clusters, new greenfield ports and coastal shipping and inland waterway developments. Details were not given on whether an expected 18 agreements for investment in Jawaharlal Nehru Port Trust were concluded, including an agreement between JNPT and the Maharashtra Maritime Board to construct a new deep-sea satellite port at Vadhawan to the north of Mumbai. JNPT accounts for the majority of the containerized freight handled at India’s major public ports.
Private investment is also being sought for port modernization programs, hinterland connectivity and multimodal logistics solutions, as well as new marine clusters at Saurashtra in Gujarat and Ennore, Tamil Nadu, for shipbuilding, ship repair and recycling. A memorandum of understanding to cooperate on port development and operation was signed with South Korea’s ministry of oceans and fisheries. Together with joint participation in port-related construction, building and engineering projects, the MoU envisages technology sharing and strengthening administrative, technical and human resources through exchanges.
Of the public funds allocated to major ports in the current fiscal year, the majority are for work on the port of V.O. Chidambaranar in Tamil Nadu, with smaller amounts allocated to Chennai, Mormugao and Cochin. At 286.07 crore, V.O. Chidambaranar, formerly Tuticorin port, received the majority of the public budget for port infrastructure development since fiscal 2012 and 2013.
“Development and improvement of capacity of cargo handling at major ports is a continuous process. Various activities such as augmentation of berths/terminals, mechanization of berths, installation of state-of-the-art equipment, capital dredging, improving rail-road connectivity to ports etc. are regularly carried out to meet the demand of the market and improve the capacity of port,” Radhakrishnan told the Rajya Sabha.
India’s 12 public port trusts registered a combined operating profit of Rs. 4,268 crore in the year ending Mar. 31, 2016, an increase of Rs. 670 crore on the previous year. The figure represents an operating margin of 39 percent compared with the 27 percent margin booked in fiscal 2014 to 2015. JNPT became the first Indian port in history to book a net profit in excess of Rs. 1,000 crore.