East India Ports Prosper

India and China are getting cozy when it comes to trade. Both of the nations are boasting huge growth numbers, not just in their GDP’s but in port and container traffic as well. Up until recently, the West coast ports were the one’s getting all the business. As trade with China increases, the trend of West Coast dominance is quickly eroding.

Ports of IndiaHere Comes the East

Since China overtook the US as India’s largest trading partner last year the Eastern ports are getting busier.

Ports on the west coast have traditionally handled at least twice the container traffic of their eastern brothers. That trend is reversing as India’s merchandise trade with Asian nations grows faster than that with the West. The eastern ports are closer to where the action in Asia and therefore are facilitating their growth.

Western ports’ share of capacity is estimated to drop to 66% in the year 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%.

It is likely that the west coast/east coast shift will also help ease congestion at western ports. With increased container traffic, comes increased business opportunities in all sectors of the economy. Development of these eastern ports and the surrounding cities will get a huge dose of economic benefits.

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.

Hard Assets for Infrastructure

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.

Benefits Abound

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 fiscal year ending March 31st 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.”

As these countries and more of the developing one’s of Asia quickly climb up the ladder of economic activity, India’s Eastern ports and cities will continue to thrive.

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.

In the Heart of Asia

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Image: IndiaEducation

Source: Hellenic Shipping


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