Business IdeasShipping survives rough economic weather, poised for growth
Having survived the financial turbulence of 2008, India’s port and shipping sector appears poised to sail into good times in the new year, thanks to a slew of steps taken by the government in 2009 to remove bottlenecks.
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The shipping turf also saw a fierce battle between two leading private shipbuilders in a bid to gain control over an offshore drilling firm, while the Dubai financial crisis during the close of the year triggered panic among Indian seafarers.
The year saw a move to transfer the strategic state-owned Hindustan Shipyard to the defence ministry for construction of nuclear submarines, besides setting up of two new shipyards.
Besides these, in a major move to expedite public-private partnership projects amid shrinking maritime trade globally, the shipping ministry authorised port authorities to award contracts to winning bidders without its prior approval.
As a result, 2009 saw completion of 47 projects under the National Maritime Development Programme (NMDP), while work is in progress on 71 amounting to Rs 16,487.95 crore and projects worth Rs 15,000 crore are in various stages to be awarded.
In investment terms, the government had earmarked Rs 55,000 crore for the 11th Five-Year Plan period (2007-12), but the expenditure started in 2009.
The real progress began in 2009, when an empowered committee was set up to expedite the process addressing issues like delays, largely on account of security clearances and late finalisation of model concession agreements. There are 276 projects to be completed during the Plan.
Earlier, the government had to be satisfied with only 70 mt increase in port capacity halfway through the Plan. It had set an ambitious target of doubling the capacity at the 12 major ports to 1,016.55 mt in the 11th Plan from 505 mt.
Now, with capacity expansion programme on in full swing, ports are expected to handle more traffic at the close of the current financial year. The traffic handled at 12 major ports on April 1, 2009, stood at about 575 mt, compared to about 530 mt a year ago.
The 12 state-owned major ports are Kolkata, Paradip, Vishakhapatnam, Ennore, Chennai, Tuticorin, Cochin, New Mangalore, Mormugao, Mumbai, JNPT and Kandla.
The year also saw all preparations to transfer state-owned Hindustan Shipyard (HSL) from the administrative control of the shipping ministry, while the Cabinet can consider it anyday. HSL’s valuation came to a little over Rs 1,000 crore and the transfer would be critical to the Navy’s plan to induct a fleet of nuclear submarines in the coming years.
The government gave clearance for setting up two major shipyards — one each on the East and the West Coast.
Besides, the government prepared a draft Bill for bringing in nearly 200 non-major ports under the purview of Tariff Authority for Major Ports, which at present fixes tariff for the major ports only.
Talking about the private players, one is reminded of the ABG Shipyard-Bharati Shipyard battle. The battle between the two for a controlling stake in Great Offshore ended after the former sold its stake in the offshore drilling firm.
ABG sold its 3 million shares, representing 8.27 per cent stake, in the drilling firm.
The year saw another major announcement by the shipping ministry to develop cruise terminal and infrastructure to attract luxury liners in order to make the country a global tourism destination.
“Cruise shipping would be a path-breaking development in India’s efforts to carve a prominent space in world tourism and it would showcase India as a major source and destination of world tourism,” Shipping Minister G K Vasan said.