Friday, 13 March 2009

Industry Snapshots

World Bank says Indian ports not favoured destinations for foreign investment because of bureaucratic hurdles and red tape. The Wall Street Journal quotes George Tharakan, lead transport specialist of World Bank for South Asia saying, "Unless conditions for private investment change radically and planning capacity at these ports improve, this level of investment is unlikely to materialise in the timeframe envisaged”. Other reasons cited for investors shying away from investing in the Indian port sector include lack of non uniformity and clarity in regulations, overlapping areas of operations between private and public berths and lopsided labour laws. The comments come even as the GOI finalises plans to improve the infrastructure at around 200 ports in India at a cost of $ 20 billion to meet the projected doubling of cargo movement in the next five years: the 12 major ports and around 190 minor ports earmarked handle about three quarters of the country’s trade. Mr. Tharakan says that the rate of capacity increase of Indian ports is slowing as the country struggles to attract investments here. One case in point, the fourth terminal at Jawaharlal Nehru Port, the contract for which has not been awarded since 2005 when the project was first cleared. Other issues include slow operations and inadequate draft availability at Indian ports: for example, operations are four times slower than other ports in Asia. "Given the challenges facing the port sector with regard to the rapidly expanding demand, this slowing capacity growth is worrisome," Mr. Tharakan said.

The Indian Navy to form Sagar Prahari Bal (SPB) and take complete charge of coastal security, says Defence Minister AK Antony. Speaking in Cochin, he said that the SPB would have a thousand personnel and 80 interception boats for patrolling. Citing security failures during the Mumbai terror attacks, including a lack of coordination between the
Navy and the Coast Guard as reasons for this move, Antony told reporters, “This eliminates the possibility of any blame game such as the one witnessed between the Navy and the Coast Guard after 26/11”. He added that joint operations centres would be set up in Mumbai, Vishakhapatnam, Kochi and Port Blair. Analysis of the Mumbai attacks underlined the fact that there were too many agencies involved in coastal security. The government is also increasing manpower and logistical support here, including sanctioning dedicated men and material to protect India’s coastline. There will be more ships, aircraft and helicopters provided. Antony said that nine additional Coast Guard stations have been mooted, and will be located at Karwar, Ratnagiri, Vadinar, Gopalpur, Minicoy, Androth, Karaikal, Hutbay and Nizampatnam. A new regional headquarters would also be set up in Gujarat under the newly created post of Commandant, Coast Guard (North West). This, to particularly guard against threats from Pakistan. The naval commanders in chief would be now designated as Commanders in Chief of Coastal Defence, Antony said, speaking at a ceremony where he laid the keel of India’s first indigenous aircraft carrier being built at the Cochin Shipyard. Other changes: AIS systems on boats and coastal radar chains.

More VLCCs being used for crude oil storage. Media reports confirm that around 45 VLCCs with 80 million barrels of crude oil are now being used for storage purposes. Speculators are said to be buying crude oil at low prices, storing it on mammoth tankers in expectation of quick profits after prices rise. The VLCCs are ‘parked’ in the US and Persian Gulf regions on short term charters. It is estimated that around ten percent of the world’s VLCC fleet is being used for this purpose. This has resulted in a situation where the reduced supply of tankers has supported freight rates. Analysts feel that this trend is worth watching, as it has direct implications on the crude freight market.

Honda joins the boat race, soon after Mahindra and Mahindra announces its own foray into the Indian boat manufacturing business. Honda Siel India Limited, the Indian subsidiary of the Japanese automobile giant, is conducting a feasibility study and analysing the market, revealed HSIL President and CEO Takedagawa. Honda will sell boat engines in India at first, though it intends to use the expertise of Honda Marine, its boat building subsidiary, to penetrate the Indian market soon. Meanwhile, Honda will sell imported boat engines, and is expected later to offer stiff competition to Mahindra Odyssea, which announced plans to manufacture fibreglass and other boats in India recently.


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