The Indian government is planning to invest US$60 billion in its ports by 2020, according to report from Bloomberg, as part of a massive program to overhaul the country's transport and power infrastructure.
Prime Minister Manmohan Singh hopes to catch up on China, the world's fastest-growing major economy, by boosting annual GDP growth to beyond the ten percent mark. The country has fallen far behind China, whose economy is now three times that of India. However, inadequate investment infrastructure has created bottlenecks that have constrained India's growth and stoked inflation.
These problems are highly visible in the country's hugely congested ports. Last week, ocean carrier APL announced that it was experiencing significant problems in Chennai because of severe congestion and yard delays. Jawaharlal Nehru Port has also faced serious congestion since mid-June, despite a drop in volumes. Cargo-handling at Indian ports costs more than twice as much as in Singapore and takes more than four days on average, compared with six hours in Hong Kong, according to India's Department of Commerce. Rail and road links to ports are also reportedly poor.
The weakness of the ports is having an impact on the broader economy. Bloomberg cites the case of power-equipment maker Thermax, based in Pune. The company's managing director MS Unnikrishnan reported that the transportation time for cargo moving inbound or outbound from India's ports was around 45 days. This puts Thermax at a disadvantage to its rivals in China, where according to Unnikrishnan the same process takes roughly seven days.
According to figures the Ministry of Shipping, port projects worth US$2.3 billion are currently in progress. The government is partly depending on companies such as DP World and AP Moller-Maersk for investments aimed at upgrading ports capability from 963 million tonnes in 2010 to 3.1 billion tonnes by 2020. Crucial to the plan is the establishment of deeper berths for bigger container ships as a means to boost exports.
