The relaxation in cabotage law last month could come to the rescue of the domestic port sector at a time when indigenous cargo growth has remained stagnant.
on Thursday acquired 97 per cent in Marine Infrastructure
for Rs 19.50 billion, further strengthening its presence in the east coast.
Infrastructure announced developing through its subsidiary a deep-draft, multi-cargo greenfield port 30 km north of Kakinada city.
Once operational, this new port will have an initial capacity of 16 million tonnes. Also, the share of the Andhra Pradesh government under the bid is 2.7 per cent of gross revenue for 30 years, said GMR
in an exchange notification. “Relaxation in cabotage law will allow Indian ports to attract cargo originating from or destined to foreign ports, leading to growth in (non-indigenous) cargo in India,” said Subrata Behera, analyst (ports and container research) at UK-based maritime consulting firm Drewry.
“This will certainly augur well for new capacities,” he added.
Last month, the shipping ministry issued a notification lifting restriction on foreign-registered vessels transporting loaded or empty containers between Indian ports. Earlier only Indian-registered shipping lines had the right to handle this cargo where they were governed by Indian laws. “Noting the enthusiasm in the domestic port sector at a time when indigenous cargo is not growing, such developments can also strengthen collaborations of ports with foreign shipping lines,” said Behera.
Global container shipping lines such as CMA-CGM
and Mediterranean Shipping Company
(MSC) are among top container lines that have a presence in the country.
“Global container trade growth was over 6 per cent in 2017, and we expect this growth to sustain in 2018 and 2019. Economic growth in the US and Europe is stable and supporting imports,” said Behera, hinting at higher global cargo movement in coming years. Industry experts are of the view that cabotage relaxation alone cannot help new port facilities to sustain on a long-term basis and indigenous cargo growth is equally vital. Cargo traffic handled by the 12 major ports in 2017-18 was up 4.77 per cent on a year-on-year basis and was up 4.58 per cent in 2016-17 compared to the corresponding period last year.
According to a recent Crisil report, “port traffic is estimated to log a compound annual growth of 3-5 per cent over the five years through fiscal 2022, down from 4.4 per cent in the last five years.” The only possible justification for having a commercial port 30 km north of Kakinada (there is a port in Kakinada) is the potential for industrial activity on account of the upcoming Chennai-Vizag Industrial corridor project.