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India to expand ports on East coast to cater to trade with China

August 5, 2011

With India-China bilateral trade jumping ahead year on year leaping towards the targeted US$100 billion mark by 2015, India is also stepping up expansion plans of ports on its Eastern coast. A very short, much more convenient route than across the Himalaya’s and far cheaper than air, traders are keen to accelerate the shipment of goods from India’s East coast to China’s South Western coast.  The shift is expected to further spur allied activities in the logistics sector, boost industry and increase employment in East India.

The share of capacity of Western ports’ which have traditionally handled the bulk of Indian trade to the middle east and beyond is estimated to drop to 66 percent in the year to March 2014 from 77 percent 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 percent in the same period to 34 percent. The growing share of India’s Eastern sea ports is attributed to her increased trade with China and the rest of South East Asia.

India currently has six major ports on its East Coast (see pic) – Tuticorin (Tamil Nadu), Chennai (Tamil Nadu), Ennore (Tamil Nadu), Visakhapatnam (Andhra Pradesh), Paradip (Orissa) and Kolkata, Haldia (West Bengal), in addition to 30 minor ports.

India’s exports surpassed all targets in 2010-11 and grew 37.5 percent to US$245.9 million. It is further expected to grow at an average of 25 percent over the next few years and easily surpass US$300 billion in 2011-12. An emboldened government has further set an export target of US$450 billion for 2013-14, doubling current exports.

Minister of State for Commerce and Industry Jyotiraditya Scindia, further expects trade ties between India and Malaysia, Thailand, Philippines, Indonesia, Taiwan and South Korea in Asia, Egypt and South Africa in the African continent and Argentina, Brazil, Chile, Colombia, Mexico and Uruguay in South America to improve substantially.

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, shipping secretary K. Mohandas told Mint. 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.

Additionally, 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. As India’s trade with Singapore, Australia and South Korea countries with whom India didn’t have major trade links rises, the need for convenient alternative capacity generation will be needed.

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