Increased trade with Pakistan to transform Gujarat Ports?

A report quotes industry experts saying that the likely Pakistani granting of the Most Favoured Nation status to India next year may turn out to be a "game changer" for ports in Gujarat as trade increases exponentially between the two countries from the present $3 billion per annum- according to UN trade data- to cross $5 billion in the next few years.  

The Pakistani government's announcement to the effect last month is thus being seen as resulting in a major peace dividend for the State. Much of the trade between the two countries is presently routed through Dubai and even Singapore; direct movement of goods will bring down costs and time significantly, analysts say.  

Within Gujarat, minor ports could benefit more. "Gujarat, which handles more than 26% of the country’s port traffic, could be the biggest beneficiary when there is a significant boost in trade," the Times report claims. “There are many issues that need to be sorted out before the trade pattern achieves its full potential. Customs hassles and procedural issues may act as a hindrance to cross-border trade, but in all likelihood, the minor ports in Gujarat, with their better infrastructure, will benefit if a direct sea route between India and Pakistan starts”, says economist Bibek Debroy. Other analysts warn, in addition, that the process may be slow and circumspect, especially since there is a long list of 'banned for trade' goods between both the countries.

Regardless, the Gujarat Maritime Board (GMB) seems to be well aware of the possibilities for the future. The State has the largest number of minor ports- besides two major private sector ports at Pipavav and Mundra. Both the government and the private players have been expanding capacities. “We are currently studying the prospects of trade. The government is keeping in mind the importance of the port sector and the potential trade that could emerge between both the countries,” CEO of GMB Pankaj Kumar told the Economic Times. 

Unfortunately, domestic shipping companies may not benefit as much as one would have thought. Analysts say that the many foreign ships that call both the countries will mean that freight rates will remain low. “Freight rates need not necessarily see a surge as connectivity matters the most,” says Abhishek Tandon from Drewry Maritime Services in the report.