Port sector requires over Rs 1.5 lakh cr investment

A staggering sum of over Rs 1.5 lakh crore investment is required in the country's port sector in the next five years, of which a major chunk is expected to come from the public-private partnership, the Economic Survey said today.

"Investment required for ports sector development during the 12th Plan would be about Rs 1.55 lakh crore. Capacity augmentation and efficiency improvement would require increased investment from the private sector," it said.

Private participation is needed particularly for mechanisation of cargo handling, improvements of drafts at the ports, strengthening port connectivity by building road and rail links, and technology upgradation and automation.

The challenge for the sector is to build vibrant, efficient, and safe ports and shipping services and a strong base for the ship building industry, it said.

Capacity expansion of ports in the 12th Plan is proposed largely through private sector investment and internal accruals. It would be a challenge to garner about 80% (about Rs 1.23 lakh crore) of the required investment through PPP (public-private partnership), it added.

Ministry of Shipping proposes to develop two new major ports -- one each on east and west coasts -- and build facilities for full mechanisation of cargo handling and movement, besides two hub ports each on the west and east coasts -- Mumbai (JNPT), Kochi, Chennai, and Visakhapatnam.

"Indian shipping companies faced problems of restricted cash inflows in 2011-12 due to very low charter hire and freight rates in all segments of shipping," it said.

Charter rates are the rates of hiring a tanker.

Port and offshore operations, and other factors are expected to contribute substantially and provide a support level for the sector's total sales during the year. During 2012-13, sales are expected to grow by 5.7%, the survey said.

The global shipping industry witnessed turbulent times last year due to economic slowdown.

On the other land, for domestic sector, small window of relief came during the period after economic slowdown in 2008.

While the bulkers and tankers segments have seen a downturn, the offshore segment and sub-sea vessels has ensued cash visibility for companies, it said.