Ports face inadequate capacity, efficiency and competitiveness in a developing country: case of India

Abstract

India on a high economic growth path faces a sharp increase in cargo throughput at the ports. Indian ports handled about 818.7 Million Metric Tons (MMT) of cargo in 2009 to 2010, and the cargo volumes are growing very fast. The Government of India (GoI) is making efforts to increase the capacity of Indian ports to meet the growing demand, as the Indian exports/imports are typically carried through transhipment centres in Colombo, Singapore and Dubai. The Indian major ports typically function under a common decision maker, i.e. the Ministry of Shipping, Roads, Transport and Highways, Department of Shipping, Government of India (GoI), in a noncompetitive manner. Though, major programmes and measures have been initiated to increase the capacity of ports, but the immediate need to increase the efficiency in port operations is lacking. Indian ports need to enhance their efficiencies at par with their international counterparts on all the parameters. This article highlights how the ports in a developing country should consider and define capacity, and increase from effective capacity to potential capacity and further to absolute capacity. This article develops an Efficiency Index for Indian ports and recommends institutional cooperation among ports to achieve^potential capacity and learn from the best international practices to achieve absolute capacity.