The government has taken various steps in the last three years to boost the sector’s overall efficiency. FY2016-17 marked the introduction of various government initiatives and policy actions that are likely to transform the sector in the long term.
According to K Ravichandran, Senior Vice President and Group Head, Corporate Ratings, ICRA, “The ministry has been proactive in identifying the issues impacting the sector and has tried to gradually address the issues. In FY2016-17, port capacity of 100.37 mt was added against a target of 120 mt at an investment of Rs 95 billion, which was an all-time high annual capacity addition. The year also saw the execution of various projects targeted towards reducing the infrastructure bottlenecks in terms of port draft and mechanisation. On the policy front, there was progress on several policy initiatives like new berthing policy, new stevedoring policy, revision in captive policy guidelines and so on, which if implemented in a timely manner, should be favourable for the growth of the sector, especially since many of the initiatives are towards modernisation and better utilisation of the already existing infrastructure.”
The improvement in efficiency parameters achieved by the major ports in FY2016-17 over earlier years is also a favorable development. The same has allowed the several major ports to record strong financial performance for the year as well.
In terms of the cargo growth outlook, Ravichandran added, “Port sector players will continue to experience healthy growth in cargo in the near term, albeit somewhat lower compared to the recent fiscals, as revival in iron ore exports and pick up in petroleum, oil and lubricant volumes as well as impetus for coastal shipping will be partially offset by lower coal imports following the increase in coal production by Coal India and slowdown in container volumes due to weak exim trade.”
During FY2017, cargo throughput at major ports registered a 6.8 per cent growth to 648 mt as against 606 mt recorded in FY2016. The growth was supported by 164 per cent growth in iron ore cargo volumes supported by a resumption of mining operations in Goa, Karnataka and Odisha as well as growth of 8 per cent in petroleum, oil and lubricants as well as liquid. However, volumes of categories like coal and fertilisers were down by 10 per cent and 12 per cent respectively during the period. Coal volumes continue to register a slowdown as higher domestic production continues to reduce the domestic demand-supply deficit.