Indian ports struggle to cope with economy's surge

By Saikat Chatterjee and Arpan Mukherjee

MUMBAI (Reuters) - A $12.4 billion plan to upgrade India's ports to keep pace with economic expansion promised much, but in three years there has been little progress beyond initial announcements and private firms are opting to build their own.

It takes India's state-run ports four times as long as rivals elsewhere in Asia to unload and reload container ships, and improvements are being held back by poor planning, red tape and bureaucracy.

Bids for an offshore container terminal for Mumbai Port, for example, were submitted in 2005 but the project only got the go-ahead in August. There is no completion date.

"If this is the pace of creating the infrastructure, then we are definitely going to face a situation where trade will have to suffer, or will suffer on account of non-availability of infrastructure," said Atul Kulkarni, senior manager at consulting firm Deloitte Touche Tohmatsu India.

India's ports are already at breaking point -- port officials say capacity needs to be increased by 130 percent to meet an expected doubling in shipments to 1.2 billion tonnes over the next five years -- and delays could put a brake on economic growth, which has averaged 8.6 percent over the past three years.

Citigroup estimates the volume of shipments at the 12 main ports, which handle about 75 percent of cargo shipments, has grown 9.5 percent a year over the past three years.

Those 12 government ports handled 464 million tonnes of cargo in the fiscal year to end-March -- the same as Singapore. Ships at the ports have to wait one day before berthing and it then takes 3.5 days to unload and load them, Citigroup says.

There are about 60 other active ports in India, which handled about 150 million tonnes of cargo in 2006/07.