Augmentation of Port Capacities would Enable Ports to Work Optimally

Improve Exim Trade and Raise Declining GDP Numbers says M Rafeeque Ahmed, President, FIEO

M Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO) while commenting on CCEA’s approval of Rs 17,630 crore projects in the port sector to augment the capacity of major ports by about 151 million tonnes per annum (MTPA) stated that it is a positive development. Of a total of 276 projects, covering capacity augmentation and modernisation schemes in 13 major ports, under the NMDP 82 have been completed so far, while the work in 98 others is in progress. The National Maritime Agenda 2010-20 included in its ambit capacity creation projects with a target capacity of over 3 billion tonnes by 2020. FIEO chief stated that at the macro-level, impetus to infrastructure thereby investment in the economy would raise GDP numbers which have fallen to a decade low of 4.5%.

FIEO Chief stated that what is, perhaps, heartening is that the response has been good with the maximum number of 11 qualified bids for the Ennore container terminal and 7 qualified bids for the JNPT 4th container terminal. One of the reasons could be TAMP allowing market forces to determine tariffs rather than them being imposed by TAMP – the ramifications of this may also need to be assessed for MSME export sector and how these would impact cost of doing business/transaction costs added Shri Ahmed.

FIEO Chief elaborated that for the export sector, the doubling of container handling capacity which is at 11.57 million TEUs (Over 146 MTPA) is of specific relevance as typically JNPT which traditionally covered the western hinterland suffers from congestion and working beyond its installed capacity in peak season to over 110% leading to delays and diversion of cargo to adjoining ports of Mundra and Kandla, increasing overhead costs for exporters.

Shri Ahmed also felt the need for specialised Maritime Finance Corporation as banks suffer a severe asset-liability mismatch if funding infra projects given the longer gestation period/quantum of funds required. FIEO chief stated that given that the 12^th plan envisages $1 trillion for infra development, garnering resources /Raising funds for infra projects needs to be institutionalised in the form of a specialised Maritime Finance Corporation to appraise and fund port projects, given their specialised nature and requirements and floating a global entity for raising funds internationally. This is necessary given the fact that central plan for infra have been historically low for example Rs 81,004 crores and Rs 1,07,871 crores for 2012-2013 and 2013-2014 which is only about 28% of plan allocations.

[Source: FIEO Press Release dated 6^th February 2014]