Ports to lease out land for warehouses, manufacturing to earn more revenue

Five major ports - Kandla, Tuticorin, Kamarajar, JNPT and Paradip - have invited private sector players to build warehouses

Five major ports — Kandla, Tuticorin, Kamarajar, Jawaharlal Nehru Port Trust (JNPT) and Paradip — have invited private sector players to build warehouses and manufacturing units on the land available to them. They expect this business model to yield rich dividends to the ports.

“Land will become a prime source of non-core revenue for the five major ports as they have started the process of inviting bids for setting up of business units at their premises,” a senior shipping ministry official said.

Of the 12 major ports in the country, only these five have incremental land for building warehouses or manufacturing units, the official added.

Experts feel the move was a step in the right direction as establishment of special economic zones were directly linked to port development.

“This is the right thing to do, a better way to leverage the land available with the ports. It will also encourage them to increase their throughput,” former additional shipping secretary Vijay Chibber said.

Some of the ports have started inviting bids for the execution of these projects, including free trade warehousing zones (FTWZ). Under this, private companies would bid to acquire land for developing their warehouses, factories or other facilities.

“The preliminary infrastructure would be developed by the ports before tendering them to the private parties,” the ministry official quoted above said.

While the move was in sync with the government’s thrust on port-led development, experts said thorough due diligence should be done before leasing the land for business purposes.

“Selection of the industry is extremely important, otherwise there is a risk of the initiative becoming a land-grabbing exercise,” said Kushal Kumar Singh, partner, Deloitte Touche Tohmatsu India.

JNPT has invested around Rs 4.5 billion for developing the infrastructure on its land (approximately 684 acres). It has already received bids for Rs 5 billion for a project on 32 acres of it.

According to some reports, JNPT is mulling over acquisition of three ports in Maharashtra. It plans to more than double its profits to Rs 30 billion in the next seven years.

FMCG major Emami has also bagged land at Kandla for a proposed facility, and Container Corporation of India has taken up space at the Paradip port for a warehousing facility. The port is looking at 17 per cent growth in cargo handling — touching 120 million tonnes in FY19.

The techno-economic feasibility report for the usage of land at VOCT (Tuticorin) and Kamrajar ports are underway.