National Maritime Development Programme

1. National Maritime Development Programme Ravi B. Budhiraja Chairman Indian Ports Association And Jawaharlal Nehru Port Navi Mumbai, India AIAI Seminar, Mumbai - April 18, 2006

2. Sections • Indian Economy • Indian Port Sector • Need for Development Plan • Guidelines for Privatization • Maritime Policy – Focus Areas • Recent Privatization Initiatives • NMDP (National Maritime Development Programme) • NMDP for Mumbai’s Ports • Sum up

3. Indian Economy: An overview

4. Potential: India • 7thlargest country in the world and 2ndlargest in Asia • World’s 4th largest economy in terms of Purchasing Power Parity (PPP) next only to United States, Japan and China • GDP growth 7.6%* during financial year 2005-06 • GDP-composition by sector: Agriculture-21%, Industry- 28%, Services-51% • Foreign Direct Investment (FDI) 2005-06: US$ 8 billion*. FDI shows 42.86% rise during 2005-06 compared to last year (2004-05 : US$ 5.6 billion) • Reserves of foreign exchange & gold 2005-06 : US$145 billion* * Provisional

5. Increasing Trade Volumes * Provisional

6. Foreign Direct Investment • Foreign Direct Investment (FDI) in India has grown 34 fold Source : RBI Report 2004-05 * Estimated : The Economic Times, April5, 2006

7. Indian Port Sector

8. TOTAL COASTAL LENGTH- 7,517 kms MAJOR PORTS – 12 NON MAJOR PORTS - 187 Overview

9. TRAFFIC AT INDIAN PORTS In Million Tonnes 576 522 458 419 384 369 • 1950-51 and 1980-81 (30 Years)+ 61 Million Tonnes • 1980-81 and 1990-91 (10 Years)+ 72 Million Tonnes • 1990-91 and 2000-2001 (10 Years ) + 217 Million Tonnes • 2000-01 and 2005-06(6 Years)+ 207 Million Tonnes

10. SHARE OF COMMODITIES- Major Ports : 2005-06 Source : IPA Report * Figures in brackets indicate Traffic in Million Tonnes

11. TRAFFIC vis-à-vis CAPACITY at MAJOR PORTS

12. Traffic Projections : Indian Ports In Million Tonnes 877 Overall CAGR : 7.70% Major Ports : 6.99% Non Major Ports : 9.55% (2004-05 onwards) 616 522 (#) CAGR = Compound Annual Growth Rate between 2000-01 and 2004-05 8.08 % for Major Ports, 10.59 % for Non-Major Ports and Overall 8.69%

13. Capacity Requirement (Major & Non Major Ports) In Million Tonnes Source : NMDP Report – March 2006

14. Need For Development Plan

15. National Maritime Policy • For the first time, a comprehensive Policy for the Maritime Sector is being formulated : • Policy on Ports Sector • Public Private Partnership (PPP) • Policy on Shipping Sector • Including Cruise Shipping, Coastal Shipping and Shipbuilding • Policy on Inland Waterways

16. Policy Vision • Modernizing the existing Portsand upgrading their facilities in order to bring them on par with leading ports of the world. • Developing New Portsin order to fully utilize the vast coastline of the country and the available draft for deriving maximum economic advantage. • Promoting Hinterland Connectivityto ensure least distance access of the country’s cargo to the ports and also offer choice of ports in the region and terminals inside the ports. • Fostering Port Specialization and Inter-Port Complementaritiesfor overall optimization of port facilities and efficiency at the ports.

17. Policy Objectives • To ensure Competition and enhance Productivity • Second Terminal facilities in the same Port will not be handed over to first Terminal Operator. However if there are two Terminal Operators both can bid for Third Terminal • Quay length of 1000 metres in a straight line will be considered wherever possible. • The functioning of TAMP would be strengthened so that uniform and transparent norms prevail in matters of tariff fixation • To ensure transparency • Generally Port Project will be awarded through tender route. However, captive facilities can be given on nomination basis

18. Policy Objectives Contd… • To augment capacity • Captive facilities for Break Bulk, Dry Bulk and Common User Terminal will be encouraged • Setting up of Container Freight Stations in identified areas will be encouraged • Possibility of extending financial support for the development of minor ports • To enhance connectivity • To augment evacuation and handling of cargo, Port Authority will be encouraged to participate in equity of SPVs/Joint Ventures formed to provide hinterland connectivity • Port Infrastructure Upgradation Fund to leverage port investment including viability gap funding

19. Policy Objectives Contd… • Participation in Risk Sharing • Revenue sharing will be preferred over royalty payment • The concerned port may decide whether Minimum Guaranteed Throughput (MGT) will be a pre-requisite • To Ensure Welfare • Strengthening of independent Traffic Regulator • In case of lease of existing facilities, it will be obligatory for lessee that surplus workers are taken over by successful bidder

20. Guidelines for Privatization

21. PRIVATE SECTOR PARTICIPATION - Guidelines • Guidelines formulated for Private Sector Participation, Joint Venture and Foreign Collaboration in the Major Ports which broadly include :- • Two Stage Bidding Process • Request for Qualification (RFQ) and • Request for Participation (RFP) • Automatic Approval up to 100% for FDI • Period of lease / BOT licence up to 30 years • Bidders to indicate percentage of revenue to be shared • Minimum Guaranteed Throughput not required.

22. Maritime Policy : Focus Areas

23. Port Sector • Boost to Private Sector Participation • Private Sector investment leading to efficiency, competition and cost reduction to users • Coastal Shipping to increase from 7% to 15% by 2025 • Inland Water Traffic to increase from 0.15% to 2% by 2025 • Promoting Cruise Shipping • Private Sector Participation in areas like construction of Breakwater, operation of Berths / Terminals • Identifying Projects for Development of Ports with 8 years’ time horizon

24. Ship Building • Two Public Sector Shipyards • Capacity limited • Augmentation of existing shipyards underway • Two international size shipyards planned • Likely investment of Rs. 7,195 Crores • FDI preferred – PPP second option

25. Inland Water Transport • 14,500 kms navigable waterways • Only 18 Million Tonnes being carried • Three National Waterways • Proposal to develop three new National Waterways • NMDP envisages investment of Rs. 10,500 Crores

26. Recent Initiatives …

27. Private Sector Participation - Success so far • 17 Private or Captive Projects involving private investments worth Rs. 6,130 Crores have been approved. • 13 projects involving investments of about Rs. 2,596 Croresare operational • 4 projects involving about Rs. 3,534 Croresare in different phases of implementation. • Presence of renowned International Operators • P&O Ports (DP World) • PSA Corporation • Dubai Ports International • Maersk A/S

28. Recent Initiatives Includes….. • Manpower rationalized gradually during last few years from 102,000 in 1999-2000 to 69,000 as on March 31, 2005 at Major Ports. • Govt. has approved the proposal for award of contract for Development of International Container Transhipment Terminal at Cochin on BOT. The foundation stone was laid by Hon’ble Prime Minister on Feb. 16, 2005 • Govt. has approved Sethusamundram Ship Channel Project at an estimated cost of Rs. 2,427.40 Crores. This will result in saving of upto 424 nautical miles distance and time upto 30 hours • Third Container Terminal Gateway Terminals India Pvt. Ltd. (GTIPL) at JN Port has started operations on trail basis from March 14, 2006. GTIPL will be operational fully by August 2006. Process has also been initiated of developing Fourth Container Terminal at JN Port • First port based Special Economic Zone (SEZ) at Cochin given ‘in principle’ approval through Ministry of Commerce. • Feasibility study for a World class Container Terminal at Ennore Port has been completed . Further action in this regard is being taken by the port authorities. Ennore Port is also set to enter Chemical handling operation through private sector participation • A project on Deepening for Approach Channel upto 18.7 meters a Paradip Port has been approved

29. National Maritime Development Programme (NMDP)

30. National Maritime Development Programme (NMDP) • NMDP Includes projects which are under implementation as on 1st April 2005 or are likely to start till 31st March 2012. The Programme has further been divided into two phases. • Phase-I : Comprises of projects • Plan works under implementation as on 1st April 2005 • Plan work expected to be started from 1st April 2005 to 31st March 2007 • Works which though likely to start after 31st March 2007, but are expected to be completed by 31st March 2009 • Phase-II : All other projects will be included in Phase-II

31. Port Sector- Focus Areas • Capacity • Draft • Hinterland connectivity • Productivity NMDP has agenda for each one

32. NMDP requires huge investment- Ways to invite • Investment policy liberalized • Private Participation welcomed • Public Private Partnership (PPP) in key areas • Selective Budgetary Support

33. Public Private Partnership (PPP)

34. Scheme of PPP • 100% FDI permitted in Port development. • Private investment in Infrastructure/ commercial activities like Berths, Terminals, Equipments, etc. • Public / Private investment in common user facilities like Dredging, Break-waters, Hinterland Connectivity, etc.

35. NATIONAL MARITIME DEVELOPMENT PROGRAMME -- Overview Indian Major Ports : Proposed Investments – Phase I & II (Rs. In Crores)

36. Portwise Status Of NMDP Projects

37. NMDP for Mumbai’s Ports

38. NATIONAL MARITIME DEVELOPMENT PROGRAMME : MUMBAI’s PORTS

39. Compounded Annual Rate Of Growth - Mumbai’s Ports In million tonnes • *Compounded Annual Rate of Growth (CAGR) between 2004-05 and 2011-12 • # Actual traffic handled during year 2005-06

40. Important Projects Under NMDP : Mumbai’s Ports

41. To sum up • Port Capacities as well as supporting Infrastructure in and around Major Ports in India developing rapidly with Private Investment and SPVs • We welcome investment in Port Sector • Procedure for Private Sector Participation simplified • Opportunities for investment in Port Sector are plenty • Indian Ports are ready to take Challenges and committed to provide seamless service with adequate Infrastructure in the years to come

42. Thank You