PORT INFRASTRUCTURE

MARKET OVERVIEW India has 12 major ports (controlled by the central government) and 187 minor ports (controlled by state governments) along its 7,517-km long coastline. The total volume of traffic handled by all ports in 2005-06 was 567 million tons, about 75% of which was handled by major ports. Cargo handling at major ports is projected to grow at 7.7% a year until 2010, reaching 877 million tons by 2011-12. Indias continuing economic growth and foreign trade policy, which envisages the doubling of Indias share of global exports in the next five years to $150 billion (with 95% by volume of trade and 70% by value through maritime route), mean this trend is likely to continue. Petroleum crude products have the largest share of total traffic handled at major ports at about 33%, iron ore is 20%, coal 14%, containers 14%, and the rest is general cargo. Since the early 1990s, the government has also sold the right to operate several ports and terminals, with the private operators collecting shipping fees and paying royalties to the government. The first private port to be set up was Pipavav in Gujarat. A number of international companies are participating in the sector, including P&O Nedlloyd, which operates one terminal in Bombays Nhava Sheva Port. The largest private port in India is Mundra (www.portofmundra.com) in Gujarat. OPPORTUNITIES Major Ports: The National Maritime Development Program was launched in December 2005 to double the capacity of major ports, increase shipping tonnage, and improve modal shares of coastal and inland waterways in cargo transportation. The government has identified 276 projects. It is estimated that US$13.5 billion will need to be invested over the next seven years. Areas opened to private investmentmainly on a BOT basis include construction of cargo handling berths, container terminals,

warehousing, dry-docks, and ship-repair facilities, and installation of cargo handling equipment. There will also be opportunities for private sector involvement in: procurement, replacement and upgrade of port equipment; deepening of channels; and, projects related to port connectivity. Details can be found at: http://shipping.nic.in/index1.asp?linkid=177&langid=1 A plan for improving rail-road connectivity of major ports has been finalized and is expected to be implemented within three years. Minor Ports: The maritime states have drawn up plans to expand port capacity substantially over the next five years. Of the 187 minor ports, only 60 are active. The government has estimated that US$4.5 billion in investment will be needed for their modernization/expansion. Of the 60 active ports, 35 are located in the states of Gujarat, Maharashtra and Andhra Pradesh. Gujarat is the only state where the development of minor ports has made headway. The state government has now given inprinciple approval to develop, upgrade and manage five ports with private participation. Four sites have also been identified for the development of ports or container terminals. Pondicherry has plans to develop Pondicherry and Karaikal ports, and Orissa to develop Gopalpur (to be developed into an all weather port by a consortium comprising Orissa Stevedores Ltd., Sara Intl, and Noble Group), Dhamra (awarded to a 50-50 joint venture between Tata Steel and Larsen & Toubro), and Jatadhari. Kerala is concentrating on Azhikal and Vizhinjam Ports, Tamil Nadu is focussing on developing Cuddalore, Colachel and Rameswaram Ports. Government Policies: 100% FDI permitted under the automatic route 100% income tax exemption available for a 10-year period Tariff Authority for Major Ports regulates ceiling for tariffs charged by ports/port operators (minor ports determine their own tariffs) The government is formulating a National Maritime Policy to set out its vision and strategy for sectors development until 2025.

Nodal Agencies: Department of Shipping http://shipping.nic.in Inland Waterways Authority of India http://iwai.gov.in/ Port Trusts: Kolkata Port Trust www.kolkataporttrust.gov.in Paradip Port Trust www.paradipport.gov.in Visakhapatnam Port Trust www.vizagport.com Chennai Port Trust www.chennaiport.gov.in Tuticorin Port Trust www.tuticorinport.gov.in Cochin Port Trust www.cochinport.com New Managlore Port Trust www.newmangalore-port.com Mormugao Port Trust www.mormugaoport.gov.in Mumbai Port Trust www.mumbaiporttrust.com Jawaharlal Nehru Port Trust www.jnport.gov.in Kandla Port Trust www.kandlaport.gov.in Ennore Port Ltd. www.ennoreport.gov.in Maharastra Maritime Board www.mmbmumbai.com

Gujarat Maritime Board www.gmbports.org Indian companies active in the sector: Adani Group www.adanigroup.com Tata Steel www.tatasteel.com Larsen & Toubro www.larsentoubro.com Dredging Corporation of India Gammon India Ltd. www.gammonindia.com Afcons Infrastructure Ltd. www.afconsindia.com Infrastructure Leasing & Financial Services www.ilfsindia.com