Environment issues holding investment of Rs 50,000 crore in port development alone: ASSOCHAM study

Source: ASSOCHAM

- Efficiency of Indian ports need to improve, observes the trade body

Investment worth over Rs 45,000-50,000 crores is awaiting environmental clearances in the port sector alone with bulk of the plans stuck in Tamil Nadu, an ASSOCHAM study has revealed.

Several PSUs and private sector firms have lined up fresh investment in multi-purpose and specialised ports. However, the maximum of environment clearances are pending in regard to Tamil Nadu and Gujarat, the study which analysed the official data, suggested.

“At a time when there is a real dearth of bankable investment projects, keeping the projects in key infrastructure waiting does not speak well of the system involved”, said the chamber’s spokesman.

The data up to March, 2013 showed that a host of projects were pending green clearances for ports such as Kancheepuram, Udangudi, Vanagiri, Manapad and Cheyyar. Projects were also pending in states like Gujarat and Maharashtra.

The ASSOCHAM study noted that the impact of slowdown in the international commodity trade is divergent on different ports.

For instance, the average growth in cargo handled in Tamil Nadu ports has been quite low between 0.2 per cent and 3.2 per cent. With a coastline of 906 km, Tamil Nadu has three major ports at Chennai, Ennore and Tuticorin and 15 non-major ports including the L&T promoted facility at Kattupalli.

Likewise in Andhra Pradesh, the average trend growth in cargo handled has been dismal in the last three years with 2012-13 showing a decline of 1.9 per cent and the previous two years showing a meagre expansion of less than two per cent.

While Maharashtra has been a little better, growth in the state has also dropped to 3.4 per cent in 2012-13 from six per cent in the previous year, reflecting a slowdown in the economy.

Ban on export of iron ore seems to have taken a toll on cargo performance at Goa ports where cargo traffic plummeted to 21 millionn tonnes in 2012-13 from 60 million tonnes in 2011-12.

Karnataka managed to do well, while Kerala kept the falling trend.  In a somewhat a similar contrast, while Odisha managed to do well with 14 per cent growth, West Bengal saw a let- down with about seven per cent drop in cargo handled from its ports.

But Gujarat has registered growth with over nine-12 per cent growth. Likewise, the state has done better in terms of capacity creation.

The performance has been affected by slowdown as also the lack of business investment due to various reasons.

The study said that India does not figure in world’s top 20 container ports while eight of these are in China with Shanghai being number one.

Even as India’s global trade needs to become more competitive in terms of transaction costs, efficiency of Indian ports need to improve. The port efficiency has a major impact on transaction cost of shipping lines.

Although major Ports have improved their efficiency of operations over the last few years, the efficiency level of Indian ports is far from satisfactory when compared to several competing countries like China, said the ASSOCHAM paper.

All the same average Turnaround Time for all major ports improved from 8.10 days in 1990-91 to 3.63 days in 2005-06.This time again increased steadily to 5.29 days in 2010-11. In 2011-12, the average TRT declined to 4.56 days and further to 3.94 days in 2012-13.

The shipping industry is grappling with the slowdown in demand and the overall weak growth in advanced economies meant slower imports in developed regions. In 2012, imports grew at a modest 0.6 per cent, a sharp fall from the 5.0 per cent recorded in 2011.