New Delhi: Global firms including Rio Tinto and Noble Group are interested in participating in India’s Rs55,800 crore ($11.5 billion) port expansion projects, a top government official said.
Shipping secretary APVN Sarma told the agency on Friday that India would build 50 new ports over the next five years as it looks to overhaul creaky infrastructure and reduce congestion at ports that is holding up trade and growth.
“There is enthusiasm and lot of participation by the ‘who’s who’ internationally in the shipping and port sectors,” he said in an interview in his office overlooking the red sandstone Parliament.
Other consortia to show interest include ones with Portugal’s top construction firm Mota-Engil, London-based investor Eredene Capital and local firms such as Larsen & Toubro, he said.
India has 12 major ports, where ships load and unload three-quarters of the country’s annual traffic of 723 million tonnes. The rest is handled at 200 smaller ports.
The global downturn has posed a major challenge to India’s ambitious plans to ramp up its infrastructure spending to $500 billion for the five fiscal years ending March 2012.
Analysts have said the country needs to build roads, ports, highways and power plants faster than ever before to return to 9% growth rates. The economy grew 6.7% in 2008-09 (April/March), the slowest in the last six years.
Port capacity is inadequate to cope with rising traffic — Indian ports’ average turnaround time is 3.85 days compared with 10 hours in Hong Kong — and it can take more time to clear cargo within the port than to actually ship it there.
Cargo traffic at major ports in India rose 2.1% in 2008-09 to 530.4 million tonnes, compared with a 13.9% rise a year earlier when external trade was booming.
India allows foreign firms to build and maintain ports and harbours, but foreign investment in the sector was $493 million in 2008-09, nearly half of the flow in the previous year, a recent government report said.
“Things are now coming on track,” Sarma said.
“They (foreign investors) won’t really look into temporary 1-2 years of recession. They will look at what is the potential. And India is a destination which has big potential,” he said.
On Monday, the government significantly raised spending on infrastructure in its budget and allowed state-run lenders to refinance up to 60% of long-term projects.
Sarma said the country would double port capacity to 1.5 billion tonnes by March 2012, when cargo traffic would also have doubled to 1 billion tonnes.
The shipping ministry has said six port projects worth Rs3,320 crore, which will increase capacity by 31.2 million tonnes, are set to be awarded.
Sarma said the government would spend about Rs45,000 crore on fleet expansion and inland waterways by March 2012.
He said state-run Shipping Corp of India’s plans to buy 32 vessels this fiscal year were on track, although tight global credit meant it was a challenge for it to raise the Rs5000-7000 crore needed to upgrade its fleet.
“We have requested the finance ministry to make some line of credit available,” Sarma said.
The ministry has also sought cabinet approval to buy three dredgers for redging Corp of India Ltd at a cost of Rs1,570 crore.