Industry Overview

India’s ports play a crucial role in its trade and economy, accounting for 95% of export volumes and 70% of export values. India has 13 major ports and more than 205 designated minor and intermediate ports. Indian ports and the shipping industry are critical to the country’s economic progress. India is the world’s sixteenth-largest marine country, with 7,516.6 km of coastline and 20,275 km of national waterways throughout 24 states. This posture aligns India with 80% of the global maritime oil traffic, highlighting its potential to become a significant maritime player.

The Indian government plays a vital role in assisting the port industry and has permitted Foreign Direct Investment (FDI) of up to 100% through the automatic route for port and harbor building and maintenance projects. It has also provided a 10-year tax break for businesses that construct, maintain, and operate ports, inland waterways, and inland ports.

In FY24, all major ports in India handled 817.97 million tonnes (MT) of cargo volume, up 4.45% from 784.305 million tonnes in FY23. India’s merchandise exports in FY23 reached $451 billion, up from $417 billion the previous year. The government has implemented many initiatives to improve operating efficiency, including mechanization, deepening the draft, and expedited evacuations.

Capacity in increase by FY28

According to Motilal Oswal Financial Services, India’s ports sector is expected to increase capacity by 500-550 MTPA (Maximum Torque Per Ampere) yearly between FY2023 and FY2028. Further, port expansion will be driven by increased handling of petroleum, oil, and lubricants (POL), coal, and containerized goods. India’s ports today handle 95% of the country’s export volume and 70% of its export value, demonstrating the sector’s importance in facilitating trade.

The sector currently works at a capacity of 2,604 MTPA, although this is likely to increase dramatically in the next years. Between FY23 and FY28, India’s ports are forecast to increase capacity by 500-550 MTPA per year, driven by sustained expansion in petroleum, oil, and lubricants (POL) handling, as well as coal and containerized cargo.

In addition, freight traffic is likely to increase at a constant annual pace of 3-6%, with utilization rates stabilizing at around 55% in the medium term. Container traffic is expected to expand at a 4-7% annual rate over the next five years, driven by rising imports, lower freight costs, and the normalization of global supply chains. Transshipment, which today accounts for roughly 25% of India’s container throughput, remains a significant market, with key ports such as Chennai playing an important role in supporting it. The research also emphasizes the different responsibilities that major and non-major ports play in India’s port ecosystem.

Major and Non-major ports to play a vital role

Major ports, which are supervised by the central government, are typically located near industrial areas and handle a diverse range of cargo types based on regional demand. However, shared access channels cause congestion at these ports on a regular basis.  Non-major ports, administered by state governments or private operators through public-private partnerships, exhibit greater operational flexibility and efficiency, resulting in less congestion.

Non-major ports experienced a 7.6% increase in cargo traffic in FY23, exceeding major ports’ 4.7% gain.  According to the research, both big and minor ports will play important roles in boosting the sector’s overall growth.  India’s ports will continue to play a crucial role in trade and economic growth due to increased cargo traffic, improved infrastructure, and operations, according to the research.

Government initiatives

The Indian government has adopted policies and initiatives to improve port capacity and efficiency. The Sagarmala Programme, which began in 2016, is a major program targeted at lowering logistics costs for both export-import (EXIM) and domestic freight. The program aims to boost port capacity to 3,300 MTPA by 2025, with investments of INR 6t over 800 projects.  Optimizing logistics efficiency and lowering transit time can save INR 350-400 billion yearly.

Other initiatives include the Maritime Amrit Kaal Vision 2047 proposes to create six mega ports with world-class facilities, increasing India’s port handling capacity from 2,500 MTPA to 10,000 MTPA by 2047. This strategy aims to achieve 100% cargo handling at PPP berths and integrate sophisticated digital technologies into port operations.

Conclusion

India’s ports are vital for its economic trade and growth, and with the country’s massive coastline and strategic neighborhood, there are significant upbeat opportunities for marine expansion. The Government’s policies to support FDI, Sagarmala, and the Amrit Kaal Vision 2047 are fostering growth in capacity and operational efficiency. All these efforts along with the rising significance of India’s major and minor ports, make them powerful engines for the country’s economic growth and global trade competitiveness in the future.

The image added is for representation purposes only