Eastern ports turn busier as India’s trading patterns shift

Eastern ports turn busier as India’s trading patterns shift

Mumbai: Ports on India’s east coast, which lag behind those on the west coast in terms of cargo movement, are garnering a greater share of the business as the nation’s trade with China and other East Asian economies surges.

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The emergence of China as India’s largest trading partner will boost business for east coast ports because they are closer to East Asian markets, experts say. China overtook the US as India’s largest trading partner in fiscal 2010, according to commerce ministry data.

Ports on the west coast have traditionally handled at least twice the container traffic their eastern counterparts process. That trend seems to be reversing as India’s merchandise trade with Asian nations grows faster than that with the West.

Western ports’ share of capacity is estimated to drop to 66% in the year to March 2014 from 77% in fiscal 2010, according to audit and consulting firm KPMG India. In comparison, the share of eastern ports will rise by as much as 11 percentage points in the same period to 34%.

Given the under 2% increase in cargo traffic at major Indian ports in 2010-11, it is likely that the shift will help ease congestion at western ports. It is also likely to spur the development of not just port and allied infrastructure on the east coast, but also that of special export zones and the industry in general.

To cater to India’s increasing trade with East Asian nations such as China and Japan, and other Asia-Pacific nations, new capacity as well as port infrastructure has been developed towards the east coast, said Gagan Seksaria, associate director (transportation and logistics) at KPMG India.

Besides rising trade with China, the demand for coal to fuel power projects in eastern India has also led to growth in the east coast ports, said shipping secretary K. Mohandas. India may need to import as much as 150 million tonnes of coal a year by 2015 to fuel power plants, according to industry estimates.

With the increase in rail connectivity, a lot of the coal imported through western ports will be routed through eastern ports and moved by train to meet demand in the hinterland, Seksaria said.

“The rebuilding of Japan after the earthquake as well as the resultant sluggishness in domestic steel production is expected to generate further demand for import of construction-related cement and steel," he added.

In April, industry lobby Federation of Indian Export Organisations (Fieo) said bilateral trade between India and China was likely to have reached $60 billion (Rs 2.7 trillion today) in the year to 31 March from $42.4 billion in 2009-10. It is likely to reach $100 billion in the next four years, according to a commerce ministry estimate.

“The export basket of India is diversifying in the context of financial crisis in the US and European markets," said Ramu S. Deora, president of Fieo. “India is exporting more to China, Thailand, Indonesia, Taiwan, Korea and Japan."

West coast ports are getting saturated and growth in the northern hinterland raises the requirement for gateway ports to ship out cargo, said Hemant B. Bhattbhatt, senior director at audit and consulting firm Deloitte Touche Tohmatsu India Pvt. Ltd.

“Moving cargo through land to west coast ports from the northern hinterland is also becoming unviable," he said.

Several countries such as Singapore, Australia and South Korea that did not figure prominently among India’s trading partners in the early part of the last decade are now among the country’s top partners, according to data from the commerce ministry.

Graphic by Ahmed Raza Khan/Mint