Ports infrastructure market in India is projected to grow at a CAGR of over 9 per cent during 2016-2025, on account of heavy funding at ports and related infrastructures. A roadmap has been prepared for increasing the Indian port capacity to 3,500+ MMTPA by 2025 to cater to the growing traffic. This includes port operational efficiency improvement, capacity expansion of existing ports and new port development. Meanwhile, private sector ports are also not behind in developing and modernising handling capacities. In this scenario, opportunities are immense for port equipment players.
Cargo traffic scenario
As per available reports, in FY19 (up to December 2018), traffic at Major Ports of India increased by 3.77 per cent year-on-year to reach 518.64 million tonne. In FY 19 (up to December 2018), the container volume reached 7.33 million TEUs, registering a growth of 8.34 per cent year-on-year. 'Upgradation of port infrastructure, digitization of procedures, streamlined inspections, reduced logistics costs and superior hinterland connectivity are expected to play a pivotal role in increasing cargo traffic in Indian ports in line with the port capacity expansion envisaged under Maritime Agenda 2010-20 of the Ministry of Shipping, Government of India,' says Anil Bhatia, Vice President - ASales and Marketing, TIL.
The biggest growth drivers of port equipment are obviously the port and port-related infrastructure developments happening in the country. Also, the growth in cargo traffic at Indian ports has also added to the growth of cargo handling equipment. With containerisation on the rise, container handling equipment segment is finding a huge growth prospect. Containerised trade is touching double-digit growths as against a CAGR of 4 per cent from 2007-17. According to Praveen Waychal, Director- Solution Sales, India Region, Cargotec India, the major demand driver for any port is the increase in the exim trade. He adds, 'Ports sector in India is being driven by high growth in external trade. The domestic demand for higher level of services and consumption of goods is increasing in India. These are sure catalysts for driving the growth of trade. We also believe the investments for creating new infrastructure along with improving the present infrastructure, government's policy support for enhancing the industrial output are the major growth drivers in India.'
Challenges and opportunities
According to Sanjay Saxena, Senior Vice President and Business Head - South Asia, Heavy Equipment Business, SANY Heavy Industry, most cargo ships that sail between East Asia and America, and Europe and Africa pass through Indian territorial waters. This strategic location of India has created new opportunities for Indian ports for transshipment of cargo. Currently, most of the transshipment of cargo is happening at ports in Sri Lanka, Dubai, Singapore etc. Indian ports need to raise their facilities to a hub port and change regulations accordingly to attract more international cargo at Indian ports. Bhatia informs, 'In order for India to develop into a global maritime hub through integration with global production networks, our ports will need to play a significant role in transshipment, which is essential to cross-continental traffic and smooth functioning of global trade. Presently, India has no major transshipment ports. So the next big challenge is for India to develop good transshipment facilities.'Saxena highlights the government's new steps for the development of ports that create new opportunities, 'Government has adopted and implementing policies including mega port development, capacity augmentation for the major ports, PPP model, encouragement in foreign direct investment by providing 10 years of tax holidays, improvement in infrastructures, increase in trades by creating new special economic zones and coastal economic zones and smart technology adoption.'
Waychal highlights the challenges faced by equipment players related to the CMVR Act. 'We need a support on ease out of registration of the port equipment with transport authorities which are typically over dimensioned equipment. Present CMVR Act does not have provisions to accommodate such cases where equipment is not used on public roads, but are oversized and have higher axle loads than permissible in CMVR Act. The authorities who issue homologation certificates are not willing to act on cases which are deviating on these parameters. Ministry of Transport can look at how they can ease out this process. This needs urgent attention.' Saxena sees huge opportunities for port equipment players at Indian ports. 'Major CFSs in India are adopting the deployment of RTGs to minimise the cost and for faster delivery of the services. So, there is a potential requirement for the RTG segment. Also, some of the ports are revamping their fleets because the existing fleet either has become obsolete or going to become so in the next couple of years. So, there will be significant requirement of replacing the old equipment with new ones.'
The future looks positive for port equipment segment considering the amount of expansion plans going on in the Indian ports sector. It is evident from the reports that cargo traffic at Indian ports is going to grow in the coming years, while new port projects will be coming up along the coastline of the country. While new projects will require latest port equipment to handle different types of cargo, the existing ports will be revamping old equipment with new ones to meet the growing demands. All these point towards a positive future for port equipment players, though with a caution of some unforeseen developments that may escalate.