Indian port operators are betting big on transportation of cars by sea, encouraged by the government’s push on coastal shipping and the significant fillip to the automotive sector from GST.
Gujarat Pipavav Port plans to triple its annual handling of automotive cargo via RoRo (roll on roll off) vessels to 300,000 cars by 2020, Keld Pederson, the managing director of the port owned by Netherlandsbased APM Terminals, told ET in an interview.
RoRo ships are vessels designed to carry wheeled cargo such as cars and trucks, which are driven on and off the ship on their own wheels or using a platform vehicle. Mumbai Port Trust handled the biggest chunk of exported cars via Ro-Ro in the fiscal year ended March 2017. At more than 2 lakh units, the volume was 20% more than the previous year.
Mumbai’s Jawaharlal Nehru Port Trust, India’s biggest container port, would look at setting up a RoRo facility for vehicles at a satellite port it is planning to build at Wadhwan with an investment of Rs 10,000 crore, its deputy chairman said.
Krishnapatnam Port in Andhra Pradesh may also plan such a facility, to get business from Kia Motors, South Korea’s second-biggest automaker which plans to open a plant at Anantapur in 2019, said a person in the know.
Kia’s parent Hyundai Motor, India’s second biggest passenger carmaker and biggest exporter, ships 70% of its cars via a RoRo facility at Chennai Port Trust, said a person in the know. The recent historic tax overhaul by unifying several indirect levies under GST has cut away cascading tax costs and led to benefits of up to 12% for automakers. As a result, carmakers are slashing prices, which they expect to lead a big demand spurt unless states raise road tax on vehicles to offset their revenue loss from GST.
Ferrying of cars by sea gains traction as the Narendra Modi government increases its focus on transporting incremental cargo via sea. Last year, shipping minister Nitin Gadkari unveiled the Sagarmala Project, which seeks to develop 7,500 kilometres of India’s coastline.
There are investments totalling Rs 12 lakh crore envisaged on ports, allied infrastructure and industrial clusters which, if implemented, would mean a massive push for India’s export-import trade. Newer segments such as RoRo are also meant to offset to some extent the weakness in core shipping segments such as bulk cargo.