Indian port development: another China?

Much of India’s growth is not trade related, but rather service oriented, coming from software, biotech and business and financial services. The trade volumes that make today’s headlines are related to the textile industry.

The Port Trust of India, which is controlled by the Government, manages the major Indian ports, but national port planning is weak and limited in nature. Nevertheless, there are a number of initiatives to encourage private operations at the larger container terminals. These include leasing out existing assets as well as encouraging the construction of new terminals. Tax holidays and 100% ownership are offered as incentives, but there has not exactly been a major rush by foreign investors.

P&O Ports (now DP World) and DP World have invested, but frankly the volume of cargo is not that exciting. Numbers are hard to come by with some direct services, but mainly transhipment providing services for the Indian container trade.

Global Insight estimates that Indian exports to the world are around 2m teu, with Europe and the Far East each getting around 25% of the total. As a whole, growth rates have been close to 15% on average, nowhere near the explosive Chinese rates of 25%-30%.

So it seems the problems related to dealing with the Indian bureaucracy, labour issues and the relatively small trade base have put somewhat of a damper on the level of investment and expansion of the nation’s ports. Despite optimistic reports, it will still be some time before India actually achieves the levels of activity that the world imagines it should be achieving.