Trends

A New Lease on Life

mining
Major reforms in government policy and mechanisation of Indian mines bode well for mining equipment OEMs, because last few years the mining sector was posting negative growth. Both these factors will give a new lease on life for equipment manufacturers, who were harshly impacted by a prolonged recession in the sector.

Early last year the government promulgated the Mines and Minerals (Development and Regulation) Amendment Ordinance, (MMDR), to bring about landmark reforms in India’s mining sector. The most important reform therein -- of open and transparent bidding for mining lease and concessions -- has opened up the sector, unleashing the latent potential of a sector mired in scams and sluggish growth till recently. Along with regularizing mining auction the Act also encourages modernization of Indian mines. Also India’s mineral and metal endowments are largely unmapped and unexplored, only about 13 percent of 575,000 square kilometers with geological potential in India has been explored in detail so far, with minimal private-sector involvement, according to the Federation of Indian Mineral Industries. The new mining ordinance will encourage further exploration activities to tap this largely untapped potential. While the Regulatory enablers are now in place, enablers on the demand side are also in place. Fuelled largely by the ‘Make in India’ campaign, growth of India’s manufacturing sector will turn demand for industrial commodities robust. And demand for coal from the power sector will fuel coal mining to fill the gap currently met by imported coal. The government has targeted an investment of a trillion rupees ($15 billion) over five years to double mining output and cut mineral imports. All these factors, of vast untapped reserves, the new MMDR, and mechanization of India’s mines, add up to a substantial market for mining equipment of all sorts. However, plenty of hurdles remain on the demand side for OEM suppliers, many of which can be removed by policy reforms.

 

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Making it Hydrophobic

WaterproofingAn insidious material, water has always been the bane of all construction materials, most of which will be destroyed by it given enough time. Now, as construction materials become more sophisticated, there are concomitant advances in waterproofing systems and methods, there is a shift from passive waterproofing to active waterproofing. And nanotechnology has opened up seminal possibilities of engineering hydrophobic construction materials and aggregates.

The demand for waterproofing systems and chemicals in India will likely increase by leaps and bounds in the near future. In keeping with the overall buoyant trend in the construction sector, this segment is poised to see robust demand. India's demand for housing is projected at 11 crore houses by 2022 according to KPMG. There is a huge wave of urban renovation and redevelopment projects in the housing and urban infra segments. Add to this the trillion dollar Budget to modernize India's infrastructure which will generate EPC projects in infra verticals like transport and power, and it all adds up to huge demand for waterproofing of all kinds of structures. According to 'India Construction Chemicals Market Forecast & Opportunities, 2018,' the Indian construction chemicals market is forecasted to witness exponential growth, especially in its admixtures segment in the next five years. The market revenue for the Indian construction chemicals market is expected to reach up to US $ 1.13 billion by the end of 2018. In 2012, the admixtures and waterproofing systems constituted over 60 per cent of the overall construction chemicals market in India. Major players include Pidilite Industries, BASF, Sika, McBauchemie, Fosroc, Chembond, Dow Corning, Chryso, Choksey Chemicals, Perma Construction Aids, Polygel India, Buildcore Chemicals, Bostik India, Nile Waterproofing Material Co, etc. The overall market is fairly consolidated but there is considerable fragmentation of individual products and application areas. There are a large number of global players operating in India. The top 7 players account for 50 per cent of the market; next 20 players 25 per cent and the remaining 25 per cent comprises of small and unorganized players. In the past there has been a considerable change in the market share of companies due to which medium-sized and regional manufacturers have gained considerable share of market. There are many other regional and smaller players as well. Approximately 300 companies are estimated to be operating in this segment.

Currently the Indian market is clocking a strong growth rate of 17 per cent per annum, where in the waterproofing segment has been clocking a CAGR of 9.2 per cent, which is projected to increase in the near future. FICCI predicts that the market size for construction chemicals has the potential to grow to Rs 5,000 crore over the next few years if the industry promotes itself professionally and increases the level of awareness in the construction industry. As per a knowledge paper by Tata Strategic Management Group, commissioned by FICCI, waterproofing chemicals is a major segment accounting for a 14 per cent share within the overall market for construction chemicals in India. The Indian construction chemical market has over 80 per cent business in new builds, which will increase demand for waterproofing in a major way. The size of this segment was estimated at Rs 500 crore in 2014.

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The Green Matrix


GreenEarthGlobeGlobal urban population is expected to grow from 47 per cent in 2000 to 70 per cent in 2050. Expansion of the built environment will destroy or disturb natural habitats on over 70 per cent of Earth’s land surface by 2032, driven by population growth and urbanization. If this trend continues, Earth as an habitat could be rendered uninhabitable by end of this 21st century itself. Therefore a paradigm shift is required in the concept of Green Buildings.

Due to its very nature of activity the Construction sector, has been among the most polluting sectors degrading the environment. Like mining it leaves a permanent trail of environmental destruction. Fortunately it is also among the best placed of all sectors to reverse rapid degradation of Mother Earth. And that awareness is evident in the new trend of eco friendly construction across the world. The entire construction industry -- from materials to methods to equipment, have now acquired a Green hue. And everybody wants a rub of that Green!

Green Parameters

  • Recyclable Materials
  • Renewable Energy
  • Water Conservation
  • Zero Discharge Habitats

The new buzz word in our sector is 'Eco-friendly' construction or Green Buildings. This is because there is now a paradigm shift in the way the concept of a building is defined, which is in an environmental context. The environmental concept of a building now encompasses 'embodied energy' in the building or its carbon footprint in terms of materials and construction processes. On occupancy and 'in use,' the next parameters are energy efficiency, water conservation, and its air quality. And the underlying denominator is the lifecycle of a structure, which means at the end of its lifecycle even in demolition it should be environmentally safe where in all materials can be recovered and recycled back into the construction cycle. It is important to recycle construction materials because buildings account for 20 per cent of global greenhouse gas emissions, that's 9 billion tons of carbon dioxide each year. Concrete, aluminum, and steel are among the materials with the highest embodied energy content and are also responsible for large quantities of CO2 emissions – for example, 9.8 million tons of CO2 are generated from the production of 76 million tons of finished concrete in the US. Existing building practices and technologies are inefficient and generate high levels of greenhouse gas pollution. For example, by using existing technologies, the EU could reduce emissions from the building sector by about 400 million tons of CO2. That’s more than the total EU greenhouse gas reduction commitment under the Kyoto accord.

Environmental Impact Assessment, or EIA, is the new Green Matrix to calculate the probable impact that a proposed project may have on the natural environment. A team of researchers from the Polytechnic University of Catalonia (UPC), in Spain has developed a method to evaluate the probable environmental impacts caused by a proposed project well in advance. With just the project data, the new method can calculate and predict up to 37 environmental impacts, which could help improve environmental management in the construction processes, the authors claim.

Although EIA is now a standard process in most projects at the initial concept and design stage, the construction company is often caught amidst conflicting priorities which take into account facade, console, ease of construction, maintenance expenditures, principal costs, etc. Amidst all these viability variables environmental impact is a very supplementary variable. Also, a few site control measures for the duration of construction can lessen the environmental impacts and also keep the neighbourhood at ease from annoyance at the construction site. Most importantly it is possible to amalgamate environmental considerations in the design process itself without incurring additional costs.

 

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Shoring up Efficiencies

Ports_CBTProjected cargo traffic to be handled by Indian ports by 2021-22 is 1,695 million metric tonne, according to a report of the National Transport Development Policy Committee. 2,422 million metric tonnes of cargo handling capacity will be required in Indian ports by 2021-22. For this, additional cargo handling capacity of 901 million metric tonnes is required to be created in Indian Ports in the next 6 to 7 years. Port Projects involving investment of over US $ 10 billion have been identified for award during the next five years. New construction opportunities abound, but existing ports need to shore up their efficiencies to attract more business.

The government's port led development augurs well for Indian ports but it needs to focus more on multi modal connectivity of existing ports rather than focus on developing new green field ports because India's individual major and non-major ports on India's west coast and east coast are already saturated with port capacity and there's intense competition among them to attract business. Under the circumstances existing ports need a two pronged strategy to become competitive and attract more business. First is to improve their road and rail connectivity and access to logistics infrastructure. The other thrust should be on developing port real estate in the form of SEZs (Special Economic Zones), and logistics and distribution parks.

 

Multi-modal connectivity

Underlining the importance of port connectivity to logistics infrastructure like road and rail connectivity, Vijay Kalantri, Chairman & Managing Director, Dighi Port Ltd, says, "We are setting up the first private port in the public private space near Mumbai and also establishing a Special Economic Zone around the port with modern infrastructure. The port is equipped with state-of-the-art facilities and forms an integral part of the Delhi-Mumbai Industrial Corridor (DMIC) and will have access to the Delhi Freight Corridor (DFC). The company’s growth prospects hinges on sound infrastructure policy supported by pragmatic investment policy. The speedy infrastructure development in the country in terms of roads , railways , ports , power and telecommunications will provide the necessary impetus to Dighi Port and enable the company to improve the overall economy of the region. Dighi will thus become a key catalyst in the growth and development of a vast stretch of the region it serves." A deep water, all-weather green field port in the Raigad district of Maharashtra, Dighi Port recently signed a 50 year "Build, Own, Operate, Share & Transfer (BOOST)" Concession Agreement with the Maharashtra Maritime Board (MMB), and the Ministry of Railways has approved a Dighi Port – Roha Rail connectivity project whose implementation will be through a JV route between Rail Vikas Nigam Limited (RVNL) and Dighi Port Limited (DPL). The railway line will be constructed as a feeder route to the Dedicated Freight Corridor linking JN Port to Ludhiana. It will have provision for running of double stack container trains and heavy freight trains.

Adani Ports and Special Economic Zone Ltd, (APSEZ), India’s largest port developer and part of the Adani Group, is another example of focusing on port real estate. Last year it formally began development of India’s first ever international transshipment project in Vizhinjam, Kerala, which is expected to be completed within the stipulated time period of four years. The project will be Kerala’s first ever deep water container transshipment port. Gautam Adani, Chairman, Adani Group, says, “We are honored by the trust bestowed on us by the Government of Kerala. Developing India’s first international deepwater seaport project in a record time of just one thousand days is another opportunity for us to fulfill our commitment to Nation Building. Given Vizhinjam’s access to prominent international waterways, the project will be a significant catalyst in positioning India strategically as a global transshipment hub. It will also help us in accelerating our journey towards achieving our vision of annually handling 200 million tons of cargo by 2020.” APSEZ is the country’s largest port company with footprint across the Indian seashore. It has proven expertise in building, operating and maintaining world class port infrastructure. The company currently operates ports in Mundra, Hazira, Tuna-Tekra (Kandla) and Dahej, in Gujarat, Dhamra in Odisha, and operates specialized coal handling facilities in Mormugao in Goa, and Visakhapatnam in Andhra Pradesh. It is currently setting up a container terminal at Ennore in Tamil Nadu. Just to underline the potential of port real estate like transshipment hubs, currently more than one million TEUs (twenty-foot equivalent units) of Indian cargo gets transshipped annually through foreign ports, such as Colombo in nearby Sri Lanka.

Another major player in the private sector is Essar Ports, which is already running ports across India. “The company has achieved another quarter of consistently strong performance. We are quite bullish at the moment with a few of our projects expected to start operations during this year. There is significant opportunity for the Indian port sector to multiply capacity and traffic over the next few years, which is being further strengthened through the government’s focus on the ‘Make in India’ campaign. We are well positioned to capture the growth,” says Rajiv Agarwal, Managing Director, Essar Ports Limited.

 

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Breeding Innovation

tech

The Indian market for ECE is now poised to become the test bed for setting up global benchmarks in technology for construction equipment. With major global brands available in the market, customers have become very demanding on both fronts - cost and quality. This is breeding tough competition and OEMs have to offer cutting edge technology in order to survive. The new Thumb Rule is, 'if a machine thrives in the Indian market, it will sell well in the global market.' 

 

India is emerging the biggest market for construction equipment in the world. Consequently most global OEMs in all segments of Earthmoving Construction Equipment (ECE) are present in this market. On the manufacturing side, India has a fully developed manufacturing ecology which is backed by a well incubated manufacturing base comprising Tier II and Tier III vendors of ancillaries and components available for OEM companies. It has end-to-end expertise starting from design and development of products, to validating them, to expert manufacturing execution systems, to aftermarket services like MRO and spare parts supply which are fully automated in many of these OEMs. Also the new focus on timely project execution (loaded with stiff penalties for time and cost overruns) has prompted a shift in customer preference to the TCO concept while purchasing an equipment. And their new demands are automation to speed up work cycle times, remote monitoring of equipment to ensure minimum downtime, and MRO analytics to ensure optimum equipment lifecycle management. Manufacturers are offering their latest innovations, which range from GPS and telematics for remote monitoring and maintenance to smart controls for ease of handling machines and better operator control. The other important tech trend is fuel efficient green machines with low emissions. And above all this, the 'Customer is King' now, who now wants the best quality at a reasonable price. The new shift to Total Cost of Ownership (TCO) means now Indian clients are willing to pay a price for good quality products backed by efficient MRO and aftermarket services. All they want is ease of maintenance and minimum downtime to speed up their project execution. To provide these needs of EPC contractors, most major OEMs in India are providing innovative and distinguishing feature on their machines.

With global OEMs playing in the Indian market, some technology-driven product features have become standard, such as; remote access devices, automatic controls to maneuver machines, more efficient (Tier III) engines, and cabin air-conditioning. These are gaining popularity among customers. Some recent product launches in excavators and backhoe loaders feature several additional functionalities, including service enablers such as the capability to send problem logs by sms to the nearest service point, and downloading historical data regarding engine status, hydraulic systems, fuel consumption, and the expected life of critical components. There are already numerous examples of very smart machines that can produce incredible results from graders that can self level a runway perfectly based on data being fed from readers at the front the machine, processed and sent as instructions to the back of the machine before it reaches the same patch of ground, to agricultural machinery that can deliver precise amounts of fertilizer and pesticide to every square meter of a field based on satellite data and ground testing.
We review cutting edge technology offered by some global majors in India:

JCB's ecoMAX and Livelink are a robust fuel saving engine and advanced telematics, respectively. The ecoMAX engine is available in the range of 76hp to 175hp, and is environment-friendly with low noise and vibration. The Livelink operates on the SOS principle - Service, Operation and Security. Currently available in the variants of backhoe loader – 3DX Xtra, 3DX Super and 4DX, Livelink will change the way companies operate loaders.

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The Road to Prosperity

road prosperity 500

Road stocks are getting as bullish as the accelerated pace of road construction. And NHAI, along with its new buddy NHIDCL, are doing a splendid job. From road contractors to OMTs, all are revving up for the great road race. However, the road ahead is still full of potholes, and quite a few speed breakers on the operational and Policy front. And only clever fiscal juggling will keep contractors out of the Cash Flow vortex.

As India's trillion dollar budget begins to modernize its infrastructure to global standards, it's the road sector that will get maximum allocation of funds. And yet due to the sheer size of India's road network what is being allocated is not enough to modernize the entire network. Although the focus to achieve this should be on networking rural India which is a geographical challenge (especially in the North-East and other hill sates) it is the freight routes of commercial value which need to be modernized, widened, and upgraded. The government has targeted awarding 8,500 km per year over the next two years, of which 10,000 km of roads will be awarded in the current financial year. However, the most critical issue of funding these road projects needs to be looked into immediately. The government might have underestimated how much money is needed to build that many kilometers. Just planned road projects alone will cost $17 billion this year compared with a budget allocation of about $7 billion. To bridge this gap, the Road Ministry plans to raise a $7 billion loan. Also, the highways sector saw a 48 per cent increase in outlay at Rs 42,913 crore in the Union Budget 2015-16. The planned allocation for the Ministry of Road and Highways has increased significantly to Rs 42,913 crore for the year 2015-16, compared to Rs 28,881 crore allocated in 2014-15. For 2015-16, the increased provisions have been made for the development of national highways, including projects relating to expressways and six-laning of crowded stretches of Golden Quadrilateral and two-laning of highways works under National Highways Development Project. Despite doubling this budgetary allocation of funds, they are still far short of the total amount of funds required to finance road projects currently on the anvil. Therefore there's an urgent need to attract private equity in the road sector, and currently few road contractors have shown any interest in a sector plagued with stalled projects and pending arbitrations.

Building risk appetite
Right now the balance sheet of road contractors are weighed down with heavy debt, having posted their worst results in the last five years. Their finances are so strained that most of them have a liquidity crunch and severe cash-flow problems are making them averse to bidding for new projects, especially big-ticket projects. For example, Delhi's Eastern Peripheral Expressway is part of a six-lane ring-road for the Capital. The project was first mooted nine years ago but failed to attract private bidders. Unwilling to wait any longer, the Road Ministry now intends spending almost $1 billion building the 135 km loop.

To attract private equity in road construction, the government recently took a series of important measures. The Cabinet recently approved a policy that will provide private developers with a $470 million bailout in order to complete 16 highways. The government will also provide $3 billion in seed capital for a new infrastructure fund, with the hope of attracting up to $30 billion of private equity. Also in future, public tenders will only be launched after all approvals have been secured, eliminating major hurdles like environmental clearance and land acquisition which stalled many road projects in the past. But the most important is reform is that some rules have been eased for the private sector, and financially stressed companies will now be allowed to exit projects, unlocking scarce capital for new projects. But the most important reform needed to attract private equity in the road sector is tweaking the business model for EPC road contractors and minor fine tuning the BOT and OMT models to make them more lucrative for road contractors. In fact a clear and consistent policy on tolls needs to be put in place for the private sector to become more active by creating an environment where investors and lenders are assured of consistent returns on their investment.

Plenty of opportunities will be generated in road construction in the near future. According to available data the value of roads and bridges infrastructure in India is projected to grow at a compound annual growth rate (CAGR) of 17.4 per cent over FY12–17, and is expected to touch $19.2 billion by 2017. The financial outlay for road transport and highways grew at a CAGR of 19.4 per cent in the period FY09-14. For FY14, India’s Planning Commission provided an outlay of $6.9 billion for the roads segment.

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Global Focal Point But Turnaround A Tough Vortex

Construction Equipment 600At a time when growth in major developed markets is saturated and China, the world's biggest market is headed for a slowdown, the global market for ECE is looking at India to generate new business. But competition will be tough with Indian OEMs fighting hard for market share with entrenched global majors.

After enduring stagnant demand for Earthmoving and Construction Equipment (ECE), last few years, the Indian market is now seeing buoyant demand. There are two major growth drivers for ECE in India now; adoption of modern construction methods, and the focus on modernizing India's creaking infrastructure to global norms. And both these factors are underpinned by the current economic turnaround, which is providing the powerful impetus required to sustain this boom in demand. After a prolonged recession ECE OEMs in the construction sector will finally expect robust demand in the near future for machines across product verticals and the price spectrum. The strategic differentiator for winning players will be aftermarket services like MRO, rentals, and equipment finance.

Robust demand

Till recently construction activity in India used traditional methods which were slow and archaic. Now, gearing up to the new reality of timely project execution, which is emerging a major imperative loaded with stiff penalties, there is an increasing adoption of modernized, mechanized, methods of construction to ensure timely delivery of a project. There is also a new emphasis on quality of construction. All these imperatives require use of modern machines, and in ECE there is a wide spectrum of product verticals which will see huge demand now. These range from off-highway vehicles, to lifting equipment like cranes-hoists-AWPs, to crushing and screening plants, excavators, drilling and piling rigs, all types of batching plants, road equipment like compact vibratory rollers, pavers, asphalting machines, etc. Major demand for machines will be driven by three sectors; construction, infrastructure, and mining.

According to a report 'Building India's Earthmoving and Construction Equipment Industry' published by Consultant AT Kearney, commissioned by the ICEMA (Indian Construction Equipment Manufacturers Association), India's infrastructure spending could result in a $ 16-21 billion ECE industry by 2020. The Indian market for ECE will grow at a substantial CAGR of 20-25 per cent over the next few years, from FY13-14 levels of about 48,000 units.

According to Planning Commission estimates, India's mining sector will see about $ 15 billion invested up to FY 17. Consequently it has projected mining equipment demand of about $ 600 million by FY 17. Mining equipment encompasses a large gamut of equipment such as rope shovels, motor graders, rotary drills, large excavators, surface miners, long wall equipment, dragliners, continuous miners, dumpers, dozers, etc. According to a report by Research & Markets, 'Strategic Outlook for Construction and Mining Equipment Market in India,' the total demand for select construction and mining equipment market in India was found to be 105,811 units in FY2013. The market for new ECE is likely to grow at a CAGR of 9.6 per cent to 166,876 units in FY2018. Large allocations by government to public projects such as NHDP, Metro, and BRTS in India and strong emphasis on construction and real estate are likely to push demand for construction and mining equipment. Government projects would account for 80 per cent of the total demand, the report says.

Earthmoving equipment is the biggest segment value wise within the ECE group, and the single biggest share therein is of excavators, followed by backhoe loaders, wheeled loaders, skid steer loaders, dumpers-tippers, etc. According to research consultancy Off-Highway Research, "Within the Indian construction equipment industry, the crawler excavator segment is the largest by value and the second largest in terms of number of units sold after the backhoe loaders." It is also projected to be the fastest growing equipment type in the future. Major players in the excavator and loaders segment include Caterpillar, JCB, Volvo CE, Hyundai, Komatsu, Kobelco, Kubota, Sany, Liugong, Doosan Infracore, Terex, Leyland Deere, etc. Among Indian companies major players include, Bharat Earth Movers Ltd, Escorts Construction Equipment Ltd., etc. However Tata Hitachi dominates the excavator segment. In the dumper and tipper truck segment major players include, Daimler India Commercial Vehicles (DICV), Volvo Trucks, Scania, Mahindra & Mahindra Ltd, Tata Motors, AMW, etc.

Lifting equipment is another major segment which is quite mature on both sides, Demand and Supply. As end users demand equipment for niche applications in newer areas manufacturers are offering them customized end-to-end solutions. Also the demand for most capacities will grow since the demand ranges from residential construction sites which need small capacities, to bigger sizes being demanded by infrastructure mega projects like power plants, dams, irrigation, road and rail transport etc. However, the biggest demand driver for lifting equipment -- lifts, hoists, and cranes, is the increasing pace of mechanization in all areas of construction in India, where the speed of construction has become a pressing need to ensure timely project execution. Major global brands include Liebherr, Manitowoc, JCB, Terex-Genie, Houlette, Sany, Hyundai, etc. Among Indian companies, ElectroMech is a major player, other entrenched players include, Escorts Construction Equipment, Spartan, ACE, etc.

Batching plants are another segment where demand will be robust, which include concrete and asphalt batching plants. Demand for both these types will be fuelled majorly by road construction projects, infra projects, and real estate projects. Global players like Linnhoff, Wirtgen, and Amman Apollo, offer the entire range of plants. And the latter two offer the whole range of machines for the road construction sector. Among Indian companies major players include Cosmos Construction Machineries & Equipment, Akona Engineering, Aquarius Engineers , Universal Construction Machinery & Equipment, KYB-CONMAT etc. Demand will be buoyant for both, stationary and mobile plants.

Crushing & Screening plants will also see a rise in demand concomitant to the demand for aggregates, which will be fuelled by almost all demand verticals ranging from roads and rail, to EPC projects to the real estate sector. Global players in India include Wirtgen's Kleemann range of crushing and screening equipment, Powerscreen, Sandvik, etc.
Concreting equipment is another segment where demand will rise in proportion to rapid urbanization across India in Tier II and Tier III cities. Most of it will comprise of mobile batching plants, transit mixers ,and concrete boom pumps. Liebherr, Ajax Fiori, Schwing Stetter, etc are present in the first two product verticals and Putzmeister has niche competence in the pumps and placement booms segment.

Apart from these major equipment verticals there will be plenty of demand for other types of equipment like making ACC products, and also prefab segment in the real estate sector will generate major demand for prefab manufacturing plants producing prefabricated concrete products. 

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Sailing on the Turnaround Tide

portInstalled cargo handling capacity at Indian ports is slightly higher than the total cargo handled as of early last year. However, now as the economy sails full steam ahead there's going to be substantial rise in India's exim trade. Indian ports, both major and non-major, need to expand their capacity, mechanise operations, and develop port related logistics infrastructure to global norms.

As the much awaited Turnaround gathers momentum India's transport infrastructure will have to match its capacity to transport cargo rapidly, otherwise it will be a critical bottleneck to economic growth. Ports and shipping are an important link in this infrastructure to ensure speedy movement of cargo. The cargo traffic includes coastal trade as well as exim trade. While the number of ports are just about adequate to handle India's projected cargo traffic the most critical need is intermodal transport, excellent road and rail connectivity for these ports to the hinterland. Nitin Gadkari, Union Minister of Road Transport, Highways & Shipping has announced plans to set up a Railway Corporation, which can be important for connectivity of ports. Latest in this context is the Rail Vikas Nigam Ltd (RVNL) and Dighi Port Ltd (DPL) signing an MoU to build a railway line connecting Dighi to Roha, integrating Dighi port with the DMIC. Part of this connectivity is the need to develop logistics hubs, or dry ports, alongside major rail and road networks. There's also an urgent need to mechanise cargo movement from ship to port in order to speed up cargo throughput.


Sagar Mala

The Prime Minister Narendra Modi's strategy of 'Port led development' augurs well for India's maritime trade, and it gels with his concept of the 'Sagar Mala.' He says, “The prime objective of the Sagar Mala project is to promote port-led direct and indirect development and to provide infrastructure to transport goods to and from ports quickly, efficiently and cost-effectively. Therefore, the Sagar Mala Project shall, inter alia, aim to develop access to new development regions with intermodal solutions and promotion of the optimum modal split, enhanced connectivity with main economic centers and beyond through expansion of rail, inland water, coastal and road services.”

The Sagar Mala initiative will address challenges by focusing on three pillars of development, namely:

  1. Supporting and enabling Port-led Development through appropriate policy and institutional interventions and providing for an institutional framework for ensuring inter-agency and ministries/departments/states’ collaboration for integrated development
  2. Port Infrastructure enhancement, including modernization and setting up of new ports
  3. Efficient evacuation to and from hinterland.


To implement the Sagar Mala project the government is currently drafting a National Perspective Plan (NPP) for the entire coastline to be prepared within six months. It will identify potential geographical regions to be called Coastal Economic Zones (CEZs). While preparing the NPP, synergy and integration with planned Industrial Corridors, Dedicated Freight Corridors, National Highway Development Programme, Industrial Clusters and SEZs would be ensured. Detailed Master Plans will be prepared for identified Coastal Economic Zones leading to identification of projects and preparation of their detailed project reports.

India currently ranks 16th among maritime countries, with a coastline of about 7,517 km. Around 95 per cent of India's trade by volume and 70 per cent by value passes through its ports which add up to 13 major ports and about 200 non-major ports. Cargo traffic is projected to reach 1,758 MMT by 2017. To develop port infrastructure to global standards the government has allowed 100 per cent FDI cent under the automatic route for projects regarding construction and maintenance of ports and harbours. The government has also granted a 10-year tax holiday to enterprises engaged in developing, maintaining, and operating ports, inland waterways and inland ports. The Maritime Agenda (2010-2020), has estimated traffic projections and capacity additions at the ports upto the year 2020. Based on the estimated growth, it has projected capacity of 3,130 MT by 2019-20.

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