4.1 Chapter introduction
This chapter presents the analysis of secondary data. The data has been analysed in accordance with the objectives of the study. Figures have been used to illustrate the main points in the discussion. Also, the researcher refers to the literature to support the analysis.
4.2 The Indian Port Sector
The India is bestowed with a long coastline of about 7,517 km along both the eastern and western sides of the main land (Haralambides and Gujar, 2012). The country has one off the largest merchant shipping fleets as evidenced by its 187 minor ports and 12 major ports (, 2017). As per the Ministry of Shipping, ports are very vital as they contribute in sustaining and developing the Indian economy. About 95% of all trade in India is done through maritime transport.Dasgupta& Sinha (2016) also contend that the current trend of Western nations of moving manufacturing goods to developing nations and the high likelihood of India to emerge as a manufacturing hub will greatly contribute to the growth of India’ s maritime industry. Besides that, the cargo volume of India as per the Ministry of Shipping increased from 850 million tonnes between 2009 and 2010 to 883 million tonnes in 2010-2011 (India, and Analysis, 2017). The major ports in India are Cochin, Kolkata, Jawaharlal Nehru Port, Mumbai Port, Port Blair, Vishakhapatnam, New Mangalore, Paradip and Chennai, among others (Association, 2017).
There are several challenges faced by the Indian ports. There is a lack of easy financing options for the port projects which has been caused by delays in obtaining approval from the government and compliance with the coastal rules. There is a lack of private participation and green projects which are mostly in remote locations suffer much because they depend on government support to create infrastructure for access to the sites. Besides that, Prakash and Rao (2011) report that a majority of port projects are congested with untrained and unskilled staff which ultimately affects the development of such ports as they suffer from low labour productivity, inefficiency and industrial actions. Even if the government agrees to take part in implementing different strategies, Panigrahi and Pradhan (2012) argue that they fail to meet deadlines thus delaying growth. The other challenges facing the India Port Sector include poor technology, inadequate navigation aids, lack of equipment to handle large capacity, insufficient dredging capacity, inefficiency caused by poor connectivity and inadequate cargo-handling machinery and equipment.
4.3 The impact of the Indian government on port modernization on the Indian Port Sector
The modernization of the Indian ports remained amongst the top priority sections of the government in 2007 (, 2017). Traffic in the Indian ports has increased significantly and 2025, the ports will be required to handle 2500 MTPA while the current capacity is 1500MTPA. De (2011) asserts that around 10 MTPA can come from modernization of ports. The government of India has taken several measures to modernize the ports. There has been construction of new terminals and berths and also upgrading of projects for berths (Association, 2017). The government has also succeeded in installing new and modern equipment for handling cargo and the draughts have been deepened to handle larger vessels. For smooth movement of vessels, the government initiated the installation of Vessel Traffic Management System (VTMS).
The figure below shows the levels of cargo traffic at non-major ports in India and it is clear that traffic is accelerating since the financial year of 2007 and is expected to be at 815.2 in 2017 (India, and Analysis, 2017). Use of new technology and infrastructure by modernising ports can help to reduce this traffic.
Figure 3: Cargo traffic at non-major ports

(Source:India, and Analysis, 2017)
Additionally, there has been implementation of a port community system through websites. Haralambides and Behrens (2000) also add that the government has encouraged benchmarking activities aimed at upgrading the existing ports to meet international standards. Port modernization in India has majorly been conducted under the Sagarmala government project. The aim of this project is to modernise India’s ports and develop coastlines to contribute to the nation’s growth.
The project was approved on 25th March, 2013 and since then, there have been substantial changes (Bakr, 2001). The Sagarmala project has helped to modernize ports under three themes; mechanization, dredging and development of new terminals. In relation to mechanization, there has been low productivity due to use of low capacity equipment which are mostly out of date and as such they have been replaced with new ones as identified in ports such as Tuticorin, Kandle and Haldia. The government has introduced technology based solutions like OCR and RFID in the port sector. There has also been improvement of rake turnaround time in KDS and gate processing in Chennai. Concerning drenching, the government has recognized that there is need for draft enhancement in India if they are to compete with the accelerating growth in container and cargo traffic. Plans to increase the draft at Ennore and Paradip from 16 to 18 are already in motion (Amit, 2017). The government has also developed new terminals to increase the capacity of the existing ports. As such, new edible oil terminals are being developed in Kochi, multipurpose cargo terminals in Uran and other terminals in Nhava and Ro Ro.
Some of the ports that have been modernised include the Port of Madras and Vishakhapatnam Port. Also, there has been development of a modern deep sea port in West Bengal to facilitate berth vessels that require a minimum draft of 18m. Rail connectivity to the International Container Transshipment Terminal at Vallarrpdam Cochin port India is also underway. Currently, the ports of Mormugao and Kamarajar are being expanded to increase their drafts by 18metres so that they can handle capsize vessels. The Sagarmala project, as per Patel and Bhattacharya (2010) is focussed on developing infrastructure so as to move goods quickly from ports by cutting the logistic costs. The waste caused by poor infrastructure in the Indian cost contributes to about 4.3% GDP (Patel and Bhattacharya, 2010). Due to the poor infrastructure at the port, India transshipment cargo is being handled by other South Asia hubs like Singapore or Colombo and this costs the country almost $230 million (Patel and Bhattacharya, 2010). Furthermore, it forces India shippers to more to get their goods to the international market. Therefore, upgrading infrastructure through the Sagarmala project will help to reduce these costs significantly.
4.4 Indian government has influenced new port development in the Indian Port Sector
The Indian port sector has twelve large ports which are administered by the government and other 200 small ports managed by the state governments (Safaei, 2003). According to the Ministry of Shipping, 69 of the small ports were documented to have ran cargo traffic between 2014 and 2015 (, 2017). Additionally, Nadkarni (2006) asserts that with the increase in domestic and international trade volumes, the maritime infrastructure sector is expected to significantly grow. India needs more ports to cater for the rising container volumes as shown below
As per the figure below, Twenty foot equivalent unit (TEUs) in India’s ports is increasing from 2013 and is expected to be 8.2 million in 2016. Therefore, there is need to develop ore ports to accommodate this increase.
Figure 4: Fiscal year throughput at major India Ports

(Source:India, and Analysis, 2017)
There is, therefore, need to develop new ports to handle the increasing growth in the Indian’s port sector. Mandal,Roychowdhury and Biswas(2016) contend that in the financial year 2014-2015, 44.75% of the major traffic was handled by the minor ports. As stated earlier, the ports will be expected to handle a capacity of 1500 MTPA and this extra capacity as per Haralambides and Behrens (2000) will have to come from new ports. The table below shows traffic handled by both ports in India from 1992 to 1999. As per the table, traffic in both minor and major ports has improved significantly.
Figure 5: Traffic handled by major and minor ports

(Source:India, and Analysis, 2017)
It is this notion that the Indian government has took initiatives to develop new ports. According to the Indian government, the need for new ports has been propelled by capacity saturation, non-availability of ports and strategic locations. Ports such as Jawaharlal Nehru Port (JNPT) are saturated with traffic and have a limited capacity to expand (Haralambides and Gujar, 2011). Therefore, building new ports is the only way to cater for increased traffic in such ports. Moreover, there are some specific spots along the coastline that lack an operational port forcing cargo to travel to longer distances to access alternative ports. The result is increased costs in handling cargo and waste of time. Creation of new ports at such locations will improve the movement of cargo. Most of transhipment cargo from India depends on the ports of Singapore and Colombo. As such, developing a transhipment hub at the southern tip of India will be of great help to the sector (, 2017).
Currently, the government has already identified locations for the development of new ports and some are already underway. The Greenfield major ports that the government plans to develop are Maharashta, ParadipSatelite Port, Machilipatnam, Tamil Nadu (, 2017). Also an international container shipment hub is being developed at Vizhinjam (Kerala) and Enayam (Tamil Nadu). India’s Port of Kolkata has also proposed the development of a port at West Bangal in Sagar Island in order to reduce constraints such as high dredging cost, long river navigation and draft navigation. The new port in Enayam is also expected to be operational by 2020 (, 2017)). The Enayam port is expected to be formed using a special purpose vehicle (SPV) that will be used as a major gateway container for cargo. According to the government, the new port in Odisha is expected to increase the port’s capacity from 140 to 250 million tonnes per year by 2020 (, 2017).
4.5 The effect of the Indian government policies on FDI on the Indian Port Sector
According to Mandal, Roychowdhury and Biswas (2016), most of the developing nations are keen to attract foreign capital in order to promote their economic growth. Reports from the World Bank that date back to as far as 1990s show that India is a very attractive destination for FDI and especially in the infrastructure sector (, 2017). The Indian port sector has been able to attract foreign investors. The table below show the throughput of major ports in India.
Figure 6: Throughput of major ports in India

(Source: Poelhekke and van der Ploeg, 2010)
At the moment, most ports in India have old and poorly maintained equipment and a framework varies with the general economic goals of the government. The government has not yet focused on the resources that are required for port development. Although the private sector is the best option for the India port sector, it is unclear whether it will rise to the occasion. Besides that, it is imperative for the government to define the parameters for restructuring the port in a way that attracts national and international capital (Poelhekke and van der Ploeg, 2010). To attract foreign investors, the Indian government has allowed 100% FDI through automatic route. Automatic route as per Mandal, Roychowdhury and Biswas (2016) entail that the port sector does not need prior approval from the government. As such, investors are exempted 100% income tax for 10 years (Weintrit, 2013). The government has also allowed for formation of joint ventures between foreign and major ports without tenders. This initiative is aimed at attracting new technology from the joint venture and introduce better management systems for the creation of efficient port infrastructure while at the same time improving confidence of private sector in funding ports (Haralambides and Gujar, 2011). Joint ventures will allow for the expansion of port infrastructure. Foreign investments will also be in the form of port trusts and this is a huge deviation from the previous policy whereby foreign investors were only permitted to be Transfer Operations and Build own in pot trusts such as providing cargo handling facilities. As per the current government policy, Port Trusts will be the majority partners for all ventures in cargo handling facilities.
According to Banerjee & Gupta (2013), Tariff Authority for Major Ports (TAMP) has power over for major ports and this results in an unhealthy competition between the major and minor ports. An induction of the FDI will further deepen and broaden the already existing intense competition between the minor and major ports. In such a case, it will appear unfair to subject the major ports to TAMP while allowing the minor ports freedom to adjust their tariffs. It is on this notion that the Ministry of Shipping issued new Guidelines in 2013 that confirm with the international practise. The permission of 100% FDI has also impacted on infrastructure in the port sector. The government has opened various areas of port functioning such as construction of cargo, warehouse facilities, and container terminals to the foreign and private investors. Furthermore, FDI will be able to supplement skills, technology and domestic capital for economic growth. Haralambides and Behrens (2000) contend US $ 1635 million FDI was received during 2000-2013. This FDI was used to develop terminals at JNPT and International Transhipment Terminal at Cochin Port (Kristiansen, 2013).
According to the figure below, there has been an increase in FDI in ports since 2000 to 2009.
Figure 7: Foreign Direct Investment in Ports

(Source: India and Analysis, 2017)
The government also plans to use the foreign investment for port connectivity. Currently, traffic in India is majorly carried by road and rail. However, the conditions of bot roads and rails is very poor resulting in higher costs and waste of time. Railways face capacity problems especially on the Delhi-Mumbai sector and this results in 130% congestion and delays at the ports (, 2017). The governments intends to use the inward FDI to construct two Dedicated Freight Corridors (DFCs) that will provide extra tracking capacity. Some of the foreign investors in the Indian port sector include Dubai Ports World (UAE), AP Moller Maersk (Denmark), Jan Del Nul NV (Belgium), PSA Singapore (Singapore), Royal BoskalisWestminister NV (Netherlands) and Hyundai Engineering and Construction Company Limited (South Korea).
4.6 Chapter summary
The Indian government has greatly impacted in the Indian port sector in various ways. The government has allowed 100% FDI through automatic rout and this has attracted foreign investors who have enhanced transfer of technology and skills. More importantly, the FDI has been used to develop port infrastructure. Besides that, the Sagarmala project that the governmentinitiated is set to see modernization of ports. The Indian government has also embarked on the development of new ports to ease traffic and handle large vessel capacity.