The past year saw developments across the entire maritime chain – ports, shipping, shipbuilding, coastal shipping and inland water transport (IWT). Progress was documented in project award and completion, the start of new construction works, promotion of ease of doing business and environment-friendly modes of transport, and the introduction of new technologies. The government has been proactive and has announced a plethora of long-term measures that are expected to take the sector to new heights.
Indian Infrastructure provides a snapshot of key developments in the past year…
- The government has been taking the requisite steps to resolve issues faced by private players. In September 2018, the Ministry of Shipping (MoS) cleared a bailout plan for stressed public-private partnership (PPP) projects at the major ports. In addition, it finalised the criteria for identification/classification of stressed projects at these ports. The MoS also prepared a three-point formula that includes extending the free storage period at the major ports (as compared to that available at nearby private ports) with a view to optimising capacity utilisation of berths. In another development, in July 2018, the MoS had offered a four-month window for PPP cargo terminals at the major ports operating under the restrictive 2005 rate regime to migrate to the market-driven pricing structure finalised in 2013 for new projects and set terms and conditions for the move.
- To promote exports at Indian ports, in June 2019, the Special Economic Zones (Amendment) Bill, 2019, was passed in Parliament. The bill will replace the ordinance that was circulated in March 2019 that had paved the way for trusts to set up units in special economic zones.
- A number of modernisation, mechanisation and digitalisation initiatives were taken at the major ports to promote the ease of doing business. In June 2019, an MoU was signed between the V.O. Chidambaranar Port Trust and the Central Warehousing Corporation (CWC) for facilitating direct port entry (DPE) of e-sealed factory stuffed export containers to the port. For this, the CWC will use the 18,357 square metre area earmarked in the truck parking terminal of the port for operating and managing the DPE facility for a period of 30 years on annual lease rental basis. The facility will enable the direct movement of containers from factories without intermediate handling requirement at any container freight station.
- In March 2019, the Central Board of Indirect Taxes and Customs introduced Turant Customs as part of the next-generation reforms to further improve the ease of doing business. Further, in line with the Make in India and Digital India initiatives, the Indian Ports Association launched an upgraded port community system, PCS1x in December 2018. It is a cloud-based new-generation technology, with a user-friendly interface. In October 2018, DMICDC Logistics Data Services Limited implemented its digital container tracking solution at Cochin port.
- Several new projects were also inaugurated during the year. These include a mechanised coal handling facility at New Mangalore port (10 million tonnes per annum [mtpa]), cargo Berth nos. 14 and 16 at Deendayal port (9 mtpa), a multi-purpose clean cargo berth at Paradip port (5 mtpa), a modernised cruise terminal facility at West Quay IV at Chennai port, a fourth cement terminal at Cochin port (0.5 mtpa) and coal jetty I, the north cargo berth III and a railway line from the marshalling yard to Hare Island at Visakhapatnam port (Rs 1.39 billion).
- The year also witnessed the laying of foundation stones for some important projects at Paradip port. These include the development of a liquefied petroleum gas terminal at the south oil jetty, a new coal import berth and a multimodal logistics park, mechanisation of three coal handling berths, construction of a second exit road and a flyover from the port, and connectivity to the mechanised coal and iron ore handling plants. Besides, the foundation stone was laid for the development of an additional liquid cargo jetty at the Jawaharlal Nehru Port Trust (JNPT) (4.5 mtpa, Rs 3.09 billion) and a 140 kW rooftop solar power plant and widening of the harbour entrance at Visakhapatnam port.
- With a view to creating trade-related infrastructure at the port, in July 2019, JNPT signed a co-developer agreement with DP World to develop a free trade warehousing zone (FTWZ). Earlier, in October 2018, Hindustan Infralog Private Limited, a joint venture between DP World and the National Investment and Infrastructure Fund, had secured the contract for the development and operations of the FTWZ. The contract value is Rs 5.67 billion ($78 million).
- Connectivity has become a key focus area for the government. JNPT, the country’s largest container handling port, signed an MoU with all the terminals at the port for a new inter-terminal rail handling operation (ITRHO) agreement, effective from August 1, 2019. The ITRHO agreement aims to maximise train placement and track productivity, increase efficiency, ensure cost-effective handling, reduce the dwell time of the import inland container depot (ICD) boxes, connect the export ICD boxes to the respective terminals and increase the rail quotient at JNPT.
- Some developments also took place at Deendayal port, the country’s largest port in terms of cargo handled. In August 2018, the Deendayal Port Trust’s board approved the implementation of the revised master plan layout for the Kandla location (Location 2) of the smart industrial port city at the Kandla-Gandhidham-Adipur complex, detailed estimates for the development of a mechanised fertiliser handling facility at Berth no. 14, and the appointment of Indian Port Rail Corporation Limited for undertaking a traffic study and financial modelling of the Jaisalmer-Bhabhar section of the Jaisalmer-Kandla port-rail connectivity project.
- The past year saw the award of some key dredging projects as well. The Chennai Port Trust issued a letter of acceptance to the Dredging Corporation of India (DCI) for capital dredging along Jawahar Docks (JD) 4 and 6 and JD West berths for deepening up to 14 metres chart datum (CD), and for the upcoming coastal berth for deepening up to 9 metres CD at the port. The Cochin Port Trust also awarded the maintenance dredging contract for 2019-20 to DCI. The contract value is Rs 1,140 million.
- Some progress also took place at the non-major ports. In March 2019, the Odisha government inaugurated the second and third berths under the Gopalpur port expansion project. The scope of work involved the expansion of the port’s cargo handling capacity from 3.5 mtpa to 20 mtpa. During the same month, the Maharashtra government inaugurated the Karanja terminal, a port and logistics facility complex at the Karanja creek in Raigad district.
- While most of the greenfield non-major ports are still under conceptualisation or at the pre-implementation stage, some developments were witnessed with respect to laying of foundation stones. The foundation stone for the Ramayapatnam port project was laid in January 2019. On the flip side, recently in August 2019, the Andhra Pradesh government cancelled the concession agreement with Navayuga Engineering Company for the Machilipatnam port, the foundation stone for which was laid in February 2019.
- On the shipping front too some important developments were noted. The Sea Cargo Manifest and Transshipment (Amendment) Regulations, 2019, came into effect from August 1, 2019. The regulations are applicable to all cargo to be discharged, loaded or transshipped at any Indian port, and for cargo transiting via any Indian port (with foreign cargo remaining on board).
- The MoS has also revised the guidelines for chartering of ships by providing the right of first refusal to firms that have ships built in the country. When tendering is undertaken to charter a vessel, the bidder offering a ship built in India will now be given priority over one offering a foreign-built ship, in case both have the same bid quote.
- For facilitating the movement of fertilisers through coastal shipping, in June 2019, the Department of Fertilisers approved a policy for reimbursement of freight subsidy for transportation of fertilisers through the coastal shipping route. Earlier, the financial support was available only for fertiliser movement via rail. In September 2018, the MoS eased the conditions for foreign flag vessels to carry fertiliser cargo along the coast by modifying the cabotage relaxations announced in June 2018.
- In order to raise funds for taking on more repair and retrofit works, Garden Reach Shipbuilders and Engineers Limited issued its initial public offering (IPO) in September 2018. The three-day IPO, which opened on September 24, 2018, received a tepid response and was subscribed by just 1.81 times, even after being extended to October 1, 2018.
- Cruise tourism is another segment which has garnered attention. In October 2018, a cruise service was launched between Mumbai and Goa, while the newly modernised cruise passenger facilitation centre at Chennai port received its maiden vessel, MV Le Laperouse, on December 25, 2018.
- In November 2018, the government inaugurated Phase IA of the Varanasi multimodal IWT terminal project. This was marked by the receipt of the first intra-country container vessel carrying PepsiCo’s consignment through inland waterways on October 30, 2018. The Inland Waterways Authority of India’s (IWAI) vessel, MV RN Tagore, carried 16 containers equivalent to 16 truckloads of food and snacks.
- Marking a first for an Indian waterway to be used as a channel to transport goods between two countries, the government flagged off an inland waterways vessel carrying cargo from Bhutan to Bangladesh in July 2019. IWAI’s vessel, MV AAI, made the maiden voyage from Dhubri in Assam to Narayanganj in Bangladesh, along the Brahmaputra river (National Waterway-2) and the Indo-Bangladesh protocol route.
- In sum, the long-term outlook for the sector remains positive backed by a series of policy initiatives, the announcement and completion of projects, technological developments, etc., and the government actively responding to challenges such as connectivity, and financial and administrative hurdles. Overall, the sector will remain heavily dependent on global trade cycles. In this respect, increased government support is expected to provide a facilitative environment for stakeholders.
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