Fiscal year 2015-16 ended with a positive note for the port sector with 94 million tpa of cargo handling capacity added through 34 capital investment projects. This, according a government release, has been the highest capacity addition in the history of major ports. According to statistics available with Indian Ports Association (IPA), capacity addition during 2014-15 was around 71 million tpa, implying year-on-year growth of 32 per cent.
It is also interesting to observe that much of the capacity addition in FY16 was concentrated in the last quarter of the year, which is January to March 2016. According to IPA statistics, capacity addition at major ports during the first three quarters of FY16 was only around 22 million tpa.
The government release also observed that sheer port efficiency improvement has resulted in growth in cargo handling capacity. It is estimated that nearly 50 million tpa of cargo capacity was virtually added through efficiency measures. For instance, Kandla Port in Gujarat became the first Indian major port to cross the 100 million tonne traffic mark in FY16. This was possible due to a 20 per cent improvement in port efficiency. Similarly, bolstered by a 12 per cent improvement in efficiency, JNPT became the first major port to earn Rs.1,000 crore of net profit; it did so in FY16. Paradip Port in Odisha could handle its highest ever 24 million tonnes of coal cargo in FY16 owing to a 30 per cent improvement in operational efficiency.
Given that 94 million tonnes of cargo handling capacity was added during FY16, it is estimated that the total annual handling capacity of major ports was around 965 million tonnes as of March 31, 2016. As of the end of the XI Plan period (March 31, 2012), this metric stood at around 700 million tpa.
Major ports appear to be on a recovery path with profit margins improving from 27 per cent in FY14 to 39 per cent in FY16, the release said. Collective efficiency improvement has lowered logistics cost for the trade, creating a estimated benefit of Rs.400-500 crore per year; turnaround time has also reduced by over 40 per cent in Paradip, Tuticorin and Visakhapatnam. Meanwhile, capital projects worth Rs.72,818 crore have been awarded to port modernization as well as capacity addition through developments of new ports or new terminals at existing ports. These are expected to add significant cargo handling capacity in the coming years. It is also estimated that port-led development has potential for direct employment generation for 40 lakh persons while indirectly for 60 lakh persons.