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Gujarat model for port development

Ports and shipping have not received much attention. Vibrant economies over the globe have focused on this sector to great benefit. Countries like UK, Germany, the Netherlands, Japan, South Korea, Singapore and now China, have all built handsome capacities way ahead of demand. Tiny countries like Singapore, UAE and Sri Lanka cleverly leveraged their ports advantage for economic growth.

The past ten years were colourless, especially in the low growth phase post-2008 and witnessed little expansion. In 2013-14 all Indian ports handled around 980 million tonnes. Contrast this with the traffic handled by a single port of Singapore of 2330 million gross tonnes and 32.6 million TEUs of containers in 2013.  Ports of Rotterdam, Shanghai and Dubai have also emerged large ports.  These handle as much or even more cargo than all the ports of India put together.

Among the Indian states, Gujarat has understood the importance of port development for economic growth. Making best use of its geography with a long coastline, the state set up the first private sector port at Pipavav which quickly led to a massive expansion policy: the state today has ports that together handle around 40 per cent of cargo ferried in Indian ports. Making excellent use of natural gas, Gujarat set up two LNG terminals that together have a capacity of 13.6 million tonnes. Three more gas terminals are taking shape.  Its Mundra Port has the world’s largest fully mechanised coal terminal with capacity of 60 million tonnes. Last year Kandla port handled most cargo among the India’s major ports. At 120 million tonnes the Jamnagar Port of Reliance handles more cargo than the three major ports of Tamil Nadu at Chennai, Tuticorin and Ennore.

Other states with long coastline including Maharashtra, have not exerted to leverage their natural endowment. Chandrababu Naidu recently stated his plan: “Andhra Pradesh has a 1000 km coastline. No other state has such a long coastline. We have four ports on the east coast. We are going to develop another ten ports. We want to make Andhra Pradesh a port hub and a gateway for India.”  Despite having a long coastline and its MPs holding the Shipping and Ports portfolio and for over a decade Tamil Nadu has not exerted overmuch to build on this natural resource. The Chennai Ports have been beset with problems of congestion and delays. The turnaround of vessels takes long. Eastern ports in India are served by feeder-lines with transshipment at Colombo or Singapore for destinations in Europe, US and elsewhere. There is the absence of direct services to western countries, which account for bulk of the exports from Chennai and its hinterland. Besides the longer time, higher costs are involved in transshipment.

Look at the booming exports of automobiles and auto components from Tamil Nadu: Hyundai Motors, Renault Nissan and Ford Motor Company export among them annually around 400,000 cars. The thriving component industry accounts for a few thousand crore of auto component. The state also has a strong garment and leather exports cargo.  The missing element is the lack of interest and involvement on the part of the state government to work in tandem with industry and the Centre to expand the volume. In the matter of minor ports, development in the state has been poor. For long Cuddalore, Nagapattinam and Kolachal were stated to have a lot of potential, but have made little progress. The refinery of the Nagarjuna Group at Cuddalore has been taking years.

The handsome investment of around Rs 4000 crore made by L&T at Kattupalli on a large container terminal, ship building, ship repair facilities and engineering workshop has been languishing for want of custom. An involved leadership in the state like in Gujarat or Andhra Pradesh, can help win custom for this huge facility which in turn will benefit the state’s economy and employment. An aggressive Chandrababu Naidu busy building his capital not far from Chennai, would strengthen the Krishnapatnam and other ports existing and planned near Chennai to woo custom from northern Tamil Nadu.

Gujarat has shown, the involvement of the states can help create capacity in quick time. This in turn will attract investments and accelerate development.  The southern states would do well to work in tandem with business and the Centre and pitch for direct shipping services from southern ports to major export destinations.

 

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