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Business Posted On Sunday, February 14, 2010 | United News of India
New Delhi, Feb 14:
Highlighting the lower levels of private investment in Indian port sector, ASSOCHAM has emphasised the need for investment friendly policies so that the projected investment of 22 billion dollars for the sector during the 11th plan period could be accomplished.
According to a paper brought out by the chamber, as against an anticipated private investment of 13.64 billion dollars in Indian port sector between 2007-08 and 2011-12, this sector could attract private investments only to an extent of 3.21 billion dollars in about five deals with an average deal size of 80.2 million dollars.
Gujarat Pipavava was the first port in India that received private funding to the tune of 30 million dollars from IDFC PE's India Development Fund.
Subsequently, the flow of PE investments begin in other ports which included 3iS investment in Mundra port and Krishnapattam port and Warburg Pincus investment in Gangavaram Port.
''In the port sector, the projected investments for 11th plan period is around 22 billion dollars, of which 62 per cent is expected to be contributed by private sector. However, so far only 3.21 billion dollars of private investments have come to port sector despite reasonably impressive economic growth of India,'' the Chamber said in a statement today.
Between 2000-2009, container traffic has increased at a CAGR of 13.5 per cent and is further expected to increase from current 7.7 million twenty-foot equivalent units (TEUs) to 20 million TEUs by 2020.
According to the Chamber, several new projects involving 600 million tonnes of cargo handling capacity have already commenced and besides, new projects are on the anvil at the major ports of Chennai, Cochin, Ennore, Mumbai, Paradip and Vizag.
The warehousing market segment is estimated to grow from 20 billion dollars to about 55 billion dollars by 2012 and warehousing activities account for about one-fifth of the country's logistics industry.
At present, inefficient infrastructure is the single-most critical issue faced by the port sector.
''Despite India's impressive economic growth, its dilapidated roads, congested ports, inadequate power and complex state regulations impede the development of logistics and warehousing sector,'' the Chamber pointed out.
The Government has already provided incentives to private sector for developing logistics parks and free-trade warehousing zones.
There are 12 major and about 200 non-major ports in the country which account for 95 per cent of India's total trade in terms of volume and about 70 per cent in terms of value.
Most of these ports have almost 100 per cent capacity utilisation levels and are unable to receive larger vessels due to draught constraints which resulted in substantial gaps between the Indian ports and their global counterparts.
''This increasing disparity can also be attributed to numerous other challenges, including complex regulatory approvals and high costs due to taxation norms,'' said ASSOCHAM.
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Friday, September 03, 2010