|‘Relaxation in cabotage for all Indian ports is must’|
MD, APM Terminals Pipavav
|Port Pipavav, a successful public-private enterprise, is emerging as an important gateway port on the West Coast of India for containers, bulk and liquid cargo. Prakash Tulsiani, MD, APM Terminals Pipavav, talks to Supriya Oundhakar about necessity of relaxation in cabotage law for all Indian ports, port’s performance despite recession, factors hampering investments in port sector and many more. He says that the phenomenal growth number at ports like Singapore, Port Klang and Tanjung Pelepas cannot be replicated in Indian ports without transhipment volumes, and in order to do that a relaxation on cabotage for all Indian ports is a necessary first step.|
Despite having a huge coastline, Indian port sector
has not been able to scale the global shipping map as
compared to South-East Asian ports. Can you please
comment on the factors, which led to dismal growth of
Indian port sector?
We have to consider the following facts to put this in context:
Despite the recession, APM Terminals Pipavav has recorded five fold growth in its profit this Quarter. Can you please appraise us the factors which have led to the outstanding performance?
The profits are a reflection of the increasing volumes, in turn a reflection on the value proposition APM Terminals offers to its customers:
The reduced interest cost on loans is also a contributing factor in this quarter’s results. All of the above factors have contributed to an evolved ecosystem at APM Terminals Pipavav, which has been built over time and is now reaping the rewards.
Last year Cabinet relaxed cabotage Law for Vallarpadam terminal allowing foreign-owned and foreign registered container ships to carry cargo between Indian ports. Do you expect the Govt should give such relaxation in cabotage law to other Indian Ports also? If ‘yes’, how will it help to boost Indian Shipping sector?
Approximately 70 per cent of the 10 million TEUs of containerised trade in India pass through the ports in Gujarat and Maharashtra. This is an attractive base cargo for shipping lines. With a relaxation in cabotage they can plan their networks in such a way so as to make ports in Gujarat and Maharashtra their hubs instead of transhipment ports abroad of which any one of them has the base cargo potential as of Indian ports and instead they rely on s ervicing Indian cargo transhipment.
This will help the trade in India with larger vessels calling on Indian Ports - the economies of scale that will make their way back to the importer/exporter and make them more competitive vis-a -vis other countries. Indian exports and imports will not spend time idling at transhipment ports abroad. Instead more frequent and direct services will emerge and make Indian importers and exporters more competitive on their delivery schedules.
Support infrastructure like a bunkering industry/ ship chandling/ ship repair to support the large number of vessels visiting the ports in India could become viable. Tank farms like the ones in APM Terminals Pipavav could be employed to store the bunker fuels. The availability of tanks and product vessels could encourage other products and industries to set up shop. The energy demand could bring in power plants in turn the power plants will ship in coal and the ports will invest in people and mechanisation making it even more competitive and eventually leads to developing a self-sustaining loop with the port as the pivot.
The flip side of continuing with cabotage law is that we end up protecting an Indian flagged fleet of container vessels which are even less than 20 having 2000 TEUs capacity and presently serves a negligible amount of India’s containerised trade. Given the scale that shipping fleets across the world are augmenting their capacities with 18,000 TEU vessels. The current Indian flagged fleet is outdated and will continue to require state patronage at the expense of the entire Import Export Trade of India.
As per a report, even after relaxation in cabotage law, there are no global shipping lines to take advantage of this policy change. Why?
Ports in Maharashtra and Gujarat as well as ports in Tamil Nadu and Andhra Pradesh have a strong case for cabotage relaxation. The possibilities of the permutations and combinations multiply exponentially as more and more Indian ports receive cabotage relaxation. By not relaxing cabotage, we may forever give up on those possibilities and lose our volumes and edge to other transhipment ports in the region.
What changes would you like to see in Govt policy on ports sector?
The Government is doing extraordinarily well in building not only port capacity but also utilising that capacity. Sustaining profitability will rely on policies that look at the ecosystem as a whole. We would like to see the planning of industrial parks around ports, cabotage relaxation and a review of TAMP policies. Last but not least the connectivity via road or rail to the hinterland is of the utmost importance for development of ports sector in India.
What are the hindrances, which are hampering foreign investment in the port sector? In such scenario, how do you envisage the growth of Indian shipping and maritime sector?
Land acquisition and TAMP are major concerns, which are being addressed. Land side infrastructure like road and rail still remain a concern. National highway infrastructure is unable to keep pace with the burgeoning road traffic. Due to lack of development rail routes are congested. So, the development of Delhi – Mumbai Freight Corridor is one of important infrastructure elements that need to be fast tracked as soon as possible.
Union Shipping Minister G K Vasan launched Maritime Agenda 2020, which included creation of port capacity of about 3200 MMT by 2020. What will be Pipavav port’s role in achieving the target? Can PPP model help to achieve the expected capacity?
The Union Shipping Minister has done an exceedingly well in creating port capacity. There has been immense interest and activity in the ports sector in the recent past and the most heartening aspect of the policy direction is that it is forward looking. APM Terminals Pipavav will share the load of the Maritime Agenda 2020 and already has planned expansion of container facilities to 1.5 million TEUs and an additional 2 million MT of liquid bulk capacity will come on stream in the first quarter of 2014.