Indian shipping experts have long recognized that building terminals and shipping infrastructure is key to India’s foreign trade; they are convinced that logistics constitutes the backbone of a nation’s economic activity. India’s Commerce and Industry Minister Suresh Prabhu, who has been saying that India is headed to become a $ 5 trillion economy, underscored during a recent event in New Delhi that the Indian Government’s policy of making the logistics sector as part of a comprehensive plan – a “proper integrated plan”, as he put it – will boost exports.
Indian states are, meanwhile, scrambling to improve their existing shipping infrastructure by either modernizing or expanding the existing facilities. Gujarat, in Western India, is already leading the Logistics Ease Across Different States (LEADS) Index, which serves as a logistics chart and indicates the efficiency of logistical services needed for encouraging exports and economic growth. Other Indian states that closely follow Gujarat are Punjab (2), Andhra Pradesh (3), Karnataka (4) and Maharashtra (5).
The setting up of LNG terminals does make business sense, considering that India is the world’s fourth-largest LNG importer. While the 19.22 million tonnes purchased in 2017 were a mere 1.3% increase over the previous year’s total, import volumes in 2018 have again risen sharply.
Imports for April-July 2018 reached 7.46 million tonnes, a 20.3% jump on the same period a year earlier. Indeed, Dahej, the largest of the country’s four import terminals with an annual LNG 15 million tonnes capacity, has been running at over 100% so far in 2018.
Though the four receiving terminals are located on India’s west coast, the country will have at least half a dozen new import terminals over the next few years.
The 5 million tonne per year Mundra terminal is Gujarat’s third LNG receiving facility. The Gujarat State Petroleum Corp (GSPC) presently owns a 75% stake in the project and the private Adani Group 25%. GSPC is reportedly interested in selling a part of its stake.
Besides the new LNG terminal and the facilities for handling just about every other conceivable type of cargo, Mundra is also set to commission a new liquefied propane gas (LPG) import terminal before the year end with an annual capacity of 1.35 million tonnes.
Mundra port is located in the Northern Gulf of Kutch, and connected with major maritime routes and also with rail, road, air and pipelines. This makes it a preferred gateway for west-bound cargo. The port has been designed to handle all types of cargo, including containers, dry bulk, break bulk, liquid cargo and automobiles.
Mundra Port has a capacity to handle 338 million metric tonnes (MMT) of cargo per annum – the largest amongst all operational ports in India.
Arvind Agarwal, the additional chief secretary (finance) in the Gujarat state government, who recently led a business delegation to the U.S. to court investors and also seek partnerships between U.S. companies and Gujarat based corporations, said in an interview with the American Journal of Transportation at the Indian consulate general in New York, that Gujarat accounted for 17% of India’s industrial output though it had only 5% of India’s population.
“Gujarat has become India’s automobile hub … indeed, it (Gujarat) is the leading state for the manufacture of a range of products, including biopharma, gems, textiles, machinery and, of course, automobiles and other sophisticated products,” Agarwal maintained, adding the growing exports of these products was propelling the maritime trade. Much of India’s maritime trade passes through Gujarat,” he said.
Gujarat is organizing the “Vibrant Gujarat 2019 - 9th Global Summit” from January 18 to 20, 2019 in Gandhinagar, emphasizing trade and business with India. “The event will be attended by (Indian) Prime Minister Narendra Modi. The focus will be on industry, trade and business, and also building up an efficiently-run infrastructure,” Agarwal said.
John Chambers, Chairman of US-India Strategic and Partnership Forum (USISPF), is reportedly leading a high-level delegation of top corporate representatives to the summit. The U.S. was a “partner country” in the 2005 and 2017 summits.
According to a report called “Ports & Maritime Industry of Gujarat – the Gateway to India”, Indian ports currently have capacity of 1359 million metric tonnes per annum, which, according to government projects, will increase to 3130 million metric tonnes per annum by 2020. Total investment in Indian ports is expected to reach US$43.03 billion by 2020.
Until the fiscal year 2016-17, India’s seaborne cargo traffic grew at an average rate of 5.7% in last ten years. Dry cargo contributed to major share of traffic handled. Ports and maritime sector received cumulative foreign direct investment of US$ 1.64 billion.
Gujarat, which was the first Indian state to invite the private sector to participate in port development, was also the first Indian state to set up a dedicated chemical terminal – Dahej – while its Mundra port has the highest throughput in the country. Ports in Gujarat collectively handled around 40% of the total Indian maritime cargo, Gujarat Government sources claim.
According to Agarwal, the Gujarat Government attaches the “high priority” to port infrastructure development since the state’s foreign sea trade is “poised to grow further” in the future. He also referred to the Sagarmala Program, India’s gigantic transport and logistics project with a whopping investment of some US$ 120 billion earmarked for creating new mega ports, modernization of India’s existing ports, development of 14 coastal employment zones (CEZs) and coast employment units, enhancement of port connectivity through road, rail, multi-modal logistics parks, pipelines and waterways, including establishing port terminals. The Indian Government believes that the program would increase exports by US$ 110 billion.
“The Indian Government’s Sagarmala program is of vital importance for Gujarat because the state has the largest coastline … it has major ports such as Kandla, Mundhra, Pipavav, Dahej, Hazira, etc. Gujarat also has a large number of jetties (private ports). We already have three LNG terminals and a fourth one will be coming …” Agarwal said.
adding that Gujarat is “very clear” about developing its shipping infrastructure because that is the “backbone of foreign trade”.
