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Dubai Ports World to expand India ops, sees potential in minor ports

Dubai Ports World, which operates container terminals at major ports in India, is now eyeing minor ports in the country as part of its expansion strategy, as policy hurdles continue to haunt major port projects.

, ET Bureau|
Updated: Mar 14, 2012, 04.06 AM IST
MUMBAI: Global maritime terminal developer Dubai Ports World, which operates container terminals at major ports in India, is now eyeing minor ports in the country as part of its expansion strategy, as policy hurdles continue to haunt major port projects.

The company, promoted by the government of UAE and which currently has an operational terminal at one minor port at Mundra in Gujarat, is scouting for operating terminals and allied business across minor ports in India. Currently, the company operates container terminals at JNPT and Chennai port. It also operates the country's first transshipment hub in Cochin.

"We see huge potential in minor ports category as they are expected to grow further at a time when some of the major ports are choked in terms of capacity," said Anil Singh, managing director of DP World (subcontinent).

Tariffs at minor ports are fixed by the state government since they come under the purview of the state government while the Tariff Authority for Major Ports (TAMP) decides the rates for the 13 major ports.

The move to diversify into minor ports and allied services come at a time when the company is trying to negotiate with the government to allow foreign vessels to dock at the International Transshipment hub in Cochin where the project is yet to break even.

The project was planned as the only transshipment hub in the country, but strict navigation rules have led to lesser number of vessels arriving at the transshipment hub.

The move to invest in minor ports is also provoked by TAMP's decision to reduce tariff at its facility at JNPT by more than 27%. While the company is fighting a legal battle with the authority to stay the decision, the reduced tariffs have made the Indian subsidiary into a loss-making company.

"As far as tariff rates are concerned, somebody has to look at the fundamental of pricing. You cannot reduce prices to a level when the operators start losing money," said Singh.

Analysts said minor ports have been witnessing a double-digit growth in recent times, while major ports could only grow by a meagre 0.38% in April-December. India currently has 187 minor ports and 13 major ports. The company, which operates more than 60 container terminals across the world, will also invest in setting up container freight stations and inland container depots in India.

"We will look at CFS's and ICD's as part of our growth plans in the country," Singh said. Container freight stations are licensed by the customs department to help decongest a port by shifting containerised cargo and customs-related activities outside the port area, but remain close to the port.

Inland container depots are common user facility with public authority status offering services for handling and temporary storage of import or export laden cargo and are usually located on land locked areas, unlike CFS facilities which are set up near ports. International companies such as Maersk and domestic logistics players such as Allcargo and Gateway Distriparks are active in the ancillary services sector and many of them have their facilities set up at ports across India.

"It is a good initiative by DP World to enter into this segment. CFS's and ICDs are crucial for the success of port projects in the country and since DP World has a global expertise, it should help them," said Arif A Siddiqui, founder of Coign Consulting and a logistics expert.

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