Introduction

Ports have played an important role in the economic development of India and its vast hinterland, and are
an important infrastructural resource for the countrys trade. Ports are one of the key infrastructures of the
maritime transport of a country (Ghosh and De 2001). Ports are engines of growth and development for
the economies they serve. They are thus economic drivers of the entire economies (Monteiro 2007). Ports
form a vital link in the overall trading chain and consequently, their level of performance and efficiency
determines to a large extent a nations international competitiveness (Tongzon and Ganesalingam 1994).
While the financial performance of the ports is improving marginally in value terms, problems of
productivity and efficiency affect their operations.
At the outset, a port must be distinguished from a harbour. Most ports have poor harbours, and many
harbours receive too few ships. Harbour is a physical concept, a safe shelter for ships to moor; port is an
economic concept, a centre of land-sea exchange which requires good access to a hinterland even more
than a sealinked foreland. The hinterland of a port should be well-developed because the industries,
refineries and other productive centres located here are important for export potential. Moreover, since
these productive (business) centres also demand imports, this landward access is critical for the survival
and sustenance of a port.

Historical Background and Ports of India

The maritime sector of the country encompasses, inter alia, ports (major and non-major), shipping
(overseas and coastal), inland water transport and navigational aids, besides trained manpower engaged in
the operations of the maritime sector, on board and ashore (GoI 2004). The importance of maritime
infrastructure in facilitating international trade is well recognised.1 Maritime transportation has been the
lifeblood of world trade since time immemorial (Bose 2001). It influences the pace, structure and pattern
of development. India is strategically located on the most famous and important east-west trade route of
the world. Historically, it has been a famous route for all rulers who came to rule the east. Throughout the
ancient and medieval periods, the ports and harbours of India played a crucial role in the expansion of
commerce, trade and culture. From the earliest time to the end of the Moghul period, spices, pepper, oils,
silk, ivory, precious stones and other luxuries of life went from the ports of India to Alexandria, Rome and
other cities of the west Asia and Europe (GoI 1982; Sen 1993). The seaports of India on their part have
played a historical role in the development of maritime trade and economy in India. Even today India
occupies an important place in the maritime world. There can be no second thought that ports have played
an important role in the economic development of India and its vast hinterland. Ports and harbours are an
important infrastructural resource for the countrys trade (GoI 2007). The story of rise and fall of Indian
ports starts with the advent of industrialisation under the British rule. The growth, modernization and
capacity enhancement of Indian ports kept pace with the growth of foreign trade. These, in turn, depended
upon the development taking place on account of industrialisation of the country and its vast economic
hinterland. At the time of independence there were five ports and as the years rolled by, more ports were
opened up in the country to cater to the increasing volume of trade, resulting from extensive progress in
industrialisation and planning of the economy on an organised basis since 1951. India has an extensive
coastline of 7,517 Kms, spread on the western and eastern shelves of the mainland and also along the
islands. Its coast is spread along nine states and four union territories. The nine coastal states of India,
namely, Gujarat, Maharashtra, Goa, Karnataka, Kerala (west coast) and Tamil Nadu, Andhra Pradesh,

Orissa, West Bengal (east coast) have in all 13 major ports, 200 minor and intermediate ports (often
referred to as non-major ports), and a 2.6 million sq km of Exclusive Economic Zone (EEZ).2 The major
ports of India are six each on the west coast, namely, Kandla, Mumbai, Jawaharlal Nehru Port ((JNPT)
near Mumbai), Mormugao, New Mangalore and Cochin, and on the east coast Tuticorin, Chennai,
Visakhapatnam, Paradip, Kolkata, Haldia (though Haldia is a satellite port of Kolkata)3 and Ennore. The
Ennore Port Limited (EPL) is a newly constructed port, and is the first corporate major port registered
under the Companies Act, 1956. It was commissioned in the year 2001.

Institutional and Organizational Set-up of Ports

The entries relating to the development of maritime ports are in the Seventh Schedule of the Constitution
and therefore come under the purview of both the centre and the state governments. The 12 major ports of
India are placed in the union list of the Constitution and are such statutory bodies (trusts) administered by
the Ministry of Shipping under the provisions of the Major Port Trusts Act, 1963 and Indian Ports Act,
1908. The Indian Ports Act (1908) mainly describes the regulatory powers of the port authority. It lays
down rules regarding safety of shipping and conservation of ports for the entire port sector and regulates
matters pertaining to administration of port duties, pilotage and other charges. Hence, the Act extends
automatically to all ports and parts of navigable rivers and channels leading to the ports irrespective of
category (i e, major and minor). The Major Port Trusts Act (1963) enables the port to conduct its
regulatory as well as commercial functions. It lays down the institutional framework for the major ports in
India. Accordingly each major port is governed by a board of trustees appointed by the government from
time to time as laid down by the Act. Normally, the term of the board of trustees lasts for three years. The
nominated members of the trusts are replaced by new members as and when vacancy arises. The Major
Port Trusts Act is restricted to the port proper of the major ports. The non-major ports (minor ports) are
placed in the concurrent list of the Constitution and therefore fall within the jurisdiction of the respective
state governments and are governed by the Indian Ports Act 1908. The working conditions of port labour
are governed by the Dock Workers (Regulation and Employment) Act 1948, which stipulates the terms
and conditions of port labour and employment, service rules standards and other welfare issues in the
interest of port and dockworkers. The Act is highly protective of workers rights and offers them complete
job security. Under this legislation, many ports have set up their respective Dock Labour Boards (DLB)
which supply labour to the stevedoring companies and also to the port authorities. The regulatory
framework of the ports in India also includes laws like Merchant Shipping Act 1958 and environmental
regulations (Environment Protection Act 1986). The latter is administered by the Ministry of Environment
and Forests. It earmarks and declares the coastal regulation zones (CRZs) of the country. Under the Act,
port projects whether old or new, also attract provisions of other environment-related laws like Wildlife
Protection Act 1972, Water (Prevention and Control of Pollution) Act 1974, Forest Conservation Act 1988
and Air (Prevention and Control of Pollution) Act 1981. All these acts are most essential for the smooth
functioning of the port sector in India. Further these acts are amended4 from time to time by the
Parliament, to fit and incorporate new rules and regulations brought in due to globalisation, privatisation
and competition in the economy. Besides, there are also other acts such as: the Inland Vessels Act 1917,
the Coasting Vessels Act 1838, the Inland Waterways Authority of India Act 1985, etc. These are also
applicable to the ports and maritime transport as a whole at various points of time and they have to be
adhered to, so that the ports function as a single unit armed with full powers of an organisation.

The remaining ports (non-major, minor, intermediate and private) are under the administrative control of
the respective maritime state governments. A few maritime states such as Maharashtra, Gujarat and Tamil
Nadu have set up State Maritime Boards for the smooth functioning and management of minor ports in
their states. Many other maritime states have not yet set up these boards, but management and control of
their minor ports rests under their ports and fisheries departments. The administration of minor ports
differs from state to state. For all practical purposes the supervision, control and direction of these minor
ports comes from their respective state governments.

Problems Faced by Ports

The ports of India are currently facing several problems which have affected their operations and hence
the sustainability of some of the terminals in the competitive and globalised environment. Some of the
major problems are briefly discussed here:
Low Productivity and Efficiency: The ports of India are reeling with inefficiency that has adversely
affected their enhanced profitability. This is due to under or over-utilisation of capacities. Excess staffing
and labour-intensive methods of handling cargo, outdated cargo handling tools and equipments, etc, is
also a major hurdle for their growth.
Lack of Connectivity: A busy port needs good all-time connectivity to the hinterland more than the
foreland. A network of multi-modal connections to the port is a necessary condition for its success.
Transport bottlenecks have led to congestion in Indian ports and in turn increased the waiting and
turnaround time of the ships at the ports. For instance, Mumbai is a congested port due to the reasons
cited above.
Draft Problems: Adequate draft is essential for the smooth operational efficiency of ports as well as of
the vessels. A well required draft is important today to attract business and big liners of the world. Hence,
the role of Dredging Corporation of India in providing a good draft to the ships is essential.

These problems hinder the provision of services to the agents, stakeholders, shipping companies, traders,
demanders of port services and the country as a whole. Development of ports after independence was
taken up in a planned manner. Mechanization and modernization of cargo-handling facilities at ports have
been a thrust area in recent years, with emphasis on development of dedicated infrastructure. Deepening
of ports to receive larger vessels has been another priority area.

Non-Major Ports

List of Non-Major ports of Gujarat, Maharashtra and Andhra Pradesh

Gujarat
1 Mandvi
2 Navlakhi

Maharashtra
1 Dahanu
2 Tarapur

Andhra Pradesh
1 Bhavanapadu
2 Calingapatnam

3 Bedi
4 Sikka
5 Jafarabad
6 Okha
7 Porbandar
8 Veraval
9 Bhavnagar
10 Bharuch
11 Magdalla
12 Koteshwar
13 Mundra
(i) GAPL Mundra
(ii)Old (Mundra)
14 Jakhau
15 Jodia
16 Salaya
17 Pindhara
18 Beyt
19 Rupen
20 Mangrol
21 Kotda
22 Madhwad
23 Navabandar
24 Rajpara
25 GPPL(Pipavav)
26 Mahuva
27 Talaja
28 Ghogha
29 Khambhat
30 Dahej
31 Bhagwa
32 Onjal
33 Vansi-Borsi
34 Billimora
35 Valsad
36 Umarsadi
37 Kolak
38 Maroli
39 Umergaon
40 Mul-dwarka

3 Nawapur
4 Satpati
5 Kellwa-Mahim
6 Arnala
7 Datiware
8 Uttan
9 Bassein
10 Bhiwandi
11 Manori
12 Kalyan
13 Thane
14 Versova
15 Bandra
16 Trombay
17 Ulwa-Belapur
18 Panvel
20 More
21 Mandwa
22 Karanja
23 Thal
24 Rewas
24 Alibag
25 Dharamtar
26 Revdanda
27 Borli/Mandla
28 Nandgaon
29 Murud-Janjira
30 Rajpuri
31 Mandad
32 Kumbharu
33 Shriwardhan
34 Bankot
35 Kelshi
36 Harnai
37 Dabhol
38 Palshet
39 Borya
40 Jaigad
41 Tiwri-Varoda
42 Purnagad
43 Jaitapur
44 Vijaydurg
45 Deogad
46 Achara

3 Bheemunipatnam
4 Kakinada
(i)Anchorage (Kakinada)
(ii)Deep Water
5 Narsapur
6 Machilipatnam
7 Vadarevu
8 Nizampatnam
9 Krishnapatnam
10 Gangavaram
11 Mutyalammapalem
12 Ravva

47
48
49
50
51
52
53

Malvan
Niwti
Vengurla
Redi
Kiranpani
Ratnagiri
Dighi

The growing importance of non-major ports

The effective cargo handling at the non-major ports has helped in alleviating the congestion at major
ports. Four maritime States, viz, Gujarat, Maharashtra, Goa & Andhra Pradesh together accounted for
96% of total cargo traffic handled by the non-major ports in 2008-09. And out of these four non-major
ports we are focusing on the three states viz Gujarat, Andhra Pradesh & Maharashtra as these three states
have largest number of non-major ports. And these three states are handling greater volume of cargos as
compared with the other non-major ports. The collected data reveals the western state of Gujarat,
accounted for 72.8 percent of the traffic handled by non-major ports, followed by Andhra Pradesh, at 16.2
percent; and Maharashtra, at 5.6 percent as per 2014. Cumulatively, these three states represented about
95 percent of total volumes routed via non-major cargo hubs during April to September 2014.
Hinterland Connectivity: As indicated earlier Ports in India need to improve efficiency in turnaround
times and equipment productivity to match global standards. Poor efficiency is also caused by slow
evacuation of cargo from ports or slow turnaround of ships. While port capacity is being enhanced,
appropriate improvement in road and rail connectivity will be needed. If that does not happen there will
be a negative impact on the private investment which is targeted at 73.7 percent of the total investment
during the XI Plan. In this area better coordination between road, rail and port authorities is badly needed.
Dedicated Freight Corridor is also going to help. The recommendations of the Committee of Secretaries
constituted to address hinterland connectivity include construction of a four-lane road as well as double
railway line connectivity for each major port, consideration of projects less than minimum prescribed IRR
on case to case basis, and consideration of budgetary assistance and also the assistance under VGF
scheme for such projects. The Committee further recommended that 10 road projects of value Rs 2036
crore and 8 rail projects of value Rs 2014 crore, which had already been sanctioned, should be completed
in a time-bound manner.
Proximity of the port to the city and the enormous growth of the urban center, population and city traffic,
gradually resulted in rising congestion in the connections of the port with the hinterland by rail and road.
Since crude and POL are the main commodities handled in the port, the main mode of hinterland transport
is pipeline. A network of sub marine pipelines is used to transfer oil and petroleum products to two oil
refineries in the area. For the other cargoes road transport is the main transport mode in spite of the
congestion. The relative minor role of the railways in cargo transport results in the lack of railway
capacity and the heavy burden of the sub-urban passengers rail traffic.
An improvement could be the planned development of a dedicated rail freight corridor (like Wadala
Kurla). Consultant recommends to have an additional three dedicated lines constructed. Similarly plans

exist to improve the road transport system. Consultant stresses the urgency of the hinterland connections
and warns that any substantial delay in the implementation in road implementation projects would have
an adverse impact on road traffic and result in major congestion in particular considering new port
projects recommended.

Gujarat State
It has an area of 75,686 sq mi (196,030 km 2) with a coastline of 1,600 km. Most of the coast line lies on
the Kathiawar peninsula. It has a population in excess of 60 million. The state is bordered by Rajasthan to
the north, Maharashtra to the south, Madhya Pradesh to the east and the Arabian Sea as well as the
Pakistani province of Sindh on the west. Its capital is Gandhinagar, while its largest city is Ahmedabad.
Gujarat's maritime sector is considered to be the most proactive and well developed sectors of India.
It is endowed with 1215 km length of coastline which constitutes about one-sixth of the total Indian
coastline. Out of 41 ports located along its coastline, 40 are non-major ports while one port, viz. Kandla is
a major port. Presently, 20 non-major ports in the state are handling cargo. The overall growth in port
cargo traffic in case of Gujarat was 5.9% during 2008-09 compared to 2% for overall cargo growth for
India.
Objectives of Integrated Port Policy:
To increase Gujarats share in the export and import sectors in national and international trade and
commerce in pursuance of the policy of liberalization and globalizations
To reduce the burden on existing major ports on the western coast of India
To provide port facilities to promote export oriented and port based industries which are estimated to
contribute 50% of the total industrial investment in Gujarat
To take full advantage of the strategic location of Gujarat coast by(a) Encouraging shipbuilding, ship repairing ad related manufacturing activities and;
(b) Providing facilities for coastal shipping and ferrying passengers between Saurashtra and
South Gujarat and other destinations
To meet Gujarats potential power requirements by(a) Establishment barge mounted power plants and;
(b) Providing exclusive port facilities for importing different kinds of power fuel
To attract private investment for the development of minor ports BOOT framework has been envisaged
to provide(a) Timelines of infrastructure creation
(b) Efficiency of operation and operational autonomy to the private sector
(c) Synchronization with hinterland development

(d) Governments role to be maintained only in appropriate areas, and;

(e) Government financial liabilities to be kept to a minimum

Maharashtra State
Policy Initiatives for Port Development
Development on BOOST basis. Developers selection on MOU basis or by tender if many investors
interested
Concession period of 50 years
Concessional Whargage
Government land on lease, if available, at market valuation.
Equity participation by Government/MMB up to a maximum of 11%
Road linkage to nearest State Highway to be part funded by the State and rail connectivity by Developer
Freedom to fix tariff
Policy Guidelines for Captive Terminals
Land and site for jetty will be leased out for a period of 30 years
Development on Build, Operate & transfer (BOT) basis
No berthing dues from vessels calling at captive jetty
Whargage charges as per the prescribed rates notified by the State Government
At the end of 30 years, the jetty, superstructure & facilities on jetty will revert back to MMB

Andhra Pradesh

Most operational SEZs: Andhra Pradesh has 38 operational special economic zones (SEZs), higher than
any other state in the country. It also has the highest number of IT/ITeS-related SEZs in India. The hitech city in Hyderabad is the largest IT facility in India.

Largest ITIR in development: Indias first Information Technology Investment Region (ITIR) will be
developed in Andhra Pradesh over an area of 202 sq km. ITIR is likely to attract investments of around
US$ 40.4 billion.

Revenues of US$ 10 billion from IT sector

Revenue from the IT sector crossed the US$ 10 billion mark over 2012-13.

Worlds largest single deposits of barytes

Andhra Pradesh has the largest single deposits of barytes in the world. It has around 70 million
tonnes of baryte reserves, accounting for 94 per cent of total baryte reserves in India.

Largest producer and exporter of bulk drugs

Andhra Pradesh ranks first in the manufacturing of bulk drugs in India and accounts for around
one-third of the national production of bulk drugs.

One of the largest mineral storehouses

Andhra Pradesh is the largest producer of barytes and limestone in India. It also has the largest
reserves of granites (estimated at 2.4 billion cubic metres) and beach sand (241 million tonnes) in
the country.

Largest producer of spices, fruits, eggs

The state is the largest producer of spices, fruits and crops, including citrus, papaya, oil palm and
tomato, in India. It also ranks first in the production of eggs and third in milk production in the
country.

SWOT Analysis

Strengths

Strategic location
Hinterland Land availability
Ability to handle multiple types of cargo
Cost effective

Weaknesses

Opportunities

New cargo like ro-ro and LNG

Revenue potential
Sustainability of revenues
Resources allocated
Growth potential.

Lack of mechanization
Restrictions arising from limited draft
Sub-optimal utilization of space around
the port
Shortage of skilled staff
Lack of infrastructure to attract containers
Customer services
IT connectivity
Constraints in night navigation
Storage area management
Lack of uniformity in operational
efficiencies
Procedural delays.
Financial Shortage
Threats

Increasing competition from GMB ports

The presence of international players in
GMB ports
More upcoming private ports.

Market Size

The Indian ports sector received FDI worth US$ 1,637.30 million in the period April 2000November
2014, as per the Department of Industrial Policy and Promotion (DIPP). The ports sector was also
awarded 30 projects in FY14, investing over Rs 20,000 crore (US$ 3.24 billion) which is a threefold
increase over the preceding year.
In FY14, coal cargo traffic grew by 20.6 per cent to 104.5 million tonnes (MT) from 86.7 MT in FY13.
With regard to commodities, there was a rise of 25 per cent in handling of fertilizers in April 2014 as
against April 2013. Iron ore handling also grew by 16.8 per cent during that period.

Investments

A massive investment into Indias ports and its road sector has been announced by Indian Minister for
Shipping, Road Transport and Highways, Mr Nitin Gadkari, which is expected to help boost the countrys
economy. According to the Economic Times, the Kolkata Port Trust along with the Indian government is
to construct a port in the Sagar Islands at a cost of more than US$ 1.8 billion. Gadkari has also announced
additional investments of more than US$ 520 million in the port sector for floating storages and a dry
bulk cargo handling terminal.
Reliance Industries has signed shipping agreements with one of the worlds largest shipping
companies, Mitsui OSK Lines Ltd (MOL), for transporting liquefied ethane from North America
to India. MOL will supervise the construction of six Very Large Ethane Carriers (VLECs),
ordered by Reliance. MOL will also operate and manage the vessels after these are built and
delivered.
Jawaharlal Nehru Port Trust would take 60 per cent equity in the Indian company to be formed
for developing the Chabahar port in southeastern Iran. Kandla Port Trust (KPT) would hold the
remaining equity. The Special Purpose Vehicle (SPV) is likely to be named Indian Ports Global
SKIL Ports and Logistics is planning to invest Rs 1,000 crore (US$ 162.17 million) to build a
multipurpose terminal at Karanja near here over the next two years. The proposed terminal would
be developed on a 200 acre land parcel at Karanja, off the financial capital's eastern coast, and
would have a sea frontage of 1,000 metres.
Sajjan Jindal, the owner of diversified JSW Group with interests in steel, cement and power, has
bought a 10 per cent stake owned by global hedge fund Eton Park Capital in his privately-owned
ports company JSW Infrastructure for roughly Rs 600 crore (US$ 97.3 million). The stake sale
signals the bright prospect of the Indian ports sector as cargo traffic rises with increase in demand
for steel, coal and petroleum products.
Hyderabad-based infra player IL&FS Engineering Services has announced that it has secured a
port project worth Rs 179.84 crore (US$ 29.18 million) in Maharashtra. "The company has
received a letter of award (LOA) from IL&FS Maritime Infrastructure Company Limited
(IMICL) on behalf of Dighi Port Limited for engineering, procurement, and construction (EPC)
contract for the evelopment of multipurpose berth, backup yard development and utilities of
multipurpose terminal berth 5 on the north of Dighi Port, Agardanda in Maharashtra," the
company said. According to the company, the project completion period is 545 days from the date
of notice to proceed (NTP) and the scope of work includes design and construction of
multipurpose berth, reclamation of 50 acres of backup area, among others.

Government Initiatives
The Indian government will develop 10 coastal economic regions as part of plans to revive the countrys
Sagarmala (string of ports) project, according to the Daily Shipping Times. The zones will be
manufacturing hubs supported by port modernization projects and could cover 300-500km of coastline.
The government is also looking to develop the inland waterway sector as an alternative to road and rail
transport for getting goods to the nations ports and is hoping to attract private investment into the sector.
The Minister of State for Shipping, Mr Pon. Radhakrishnan has informed that following steps have been
taken by the Government for capacity expansion of ports:

Upto 100 per cent FDI under the automatic route is allowed for port development projects.
Income tax incentives are allowed as per Income Tax Act, 1961.
Bidding documents like RFQ, RFP and Concession Agreement have been standardized
Enhanced delegation of financial powers to Shipping Ministry to accord investment approval for
PPP projects.
Streamlining of security clearance procedures.
Close monitoring of developmental projects in the Major Ports.
The Ministry of Shipping has formulated a Perspective Plan for development of the Maritime Sector,
namely, The Maritime Agenda (2010-2020). This Plan has estimated the traffic projections and capacity
additions at the ports upto the year 2020. Based on the estimated growth, it has projected capacity of 3130
million tonnes by 2019-20.
In the Union Budget 201314, the government allocated Rs 11,635 crore (US$ 1.88 billion) for the
expansion of the VO Chidambaranar (VOC) Port in Tuticorin. Industry representatives, especially
exporters, feel that the enhancement of berthing facilities there will increase exports and result in big
savings in freight for manufacturers who have to send their products bound for the west through Colombo
in Sri Lanka.
The Ministry of Shipping has finalised guidelines which allows Indian companies to register their ships
under foreign flags. This follows the governments decision to create a new category of fleet called 1
Indian controlled tonnage. The guidelines will be announced shortly, as per an official.
The National Maritime Agenda 20102020 is an initiative of the Ministry of Shipping to outline the
framework for the development of the port sector. The agenda also suggests policy-related initiatives to
better the operating efficiency and competitiveness of ports in the country.
The Minister for Road Transport, Highways and Shipping Mr Nitin Gadkari said that his ministry will
coordinate with other ministries of Environment & Forests, Tourism, Power and Water Resources, River
Development and Ganga Rejuvenation for developing transport and tourism along the river Ganga.

Road Ahead
Increasing investments and cargo traffic point to a healthy outlook for Indias ports sector. Services
benefiting from these investments include operation and maintenance (O&M), pilotage, and harbouring
and provision of marine assets like barges and dredgers.
The Planning Commission of India in its 12th Five Year Plan projects a total investment of Rs 180,626
crore (US$ 29.31 billion) for this industry. Also, through its Maritime Agenda 20102020, the Ministry of
Shipping has set a target capacity of over 3,130 MT by 2020, driven by private sector participation. Over
50 per cent of this capacity is anticipated to be generated at non-major ports.
-----References:Indian Ports Association, Ministry of Shipping, Media Reports, Press Releases.