PM Modi Resolves Funding Issues For Port Development, Approves Rs 25,000 Crore Investment Through Maritime Fund

The Prime Minister's Office has greenlit a comprehensive three-pronged strategy aimed at advancing India's maritime sector, with a cornerstone initiative of channeling at least Rs 25,000 crore from the Maritime Development Fund (MDF) into port development.

The responsibility of expanding port capacities has been assigned to the Sagarmala Development Company Limited (SDCL), which will transition into a Non-Banking Financial Company (NBFC) by 2025 to better facilitate these investments. 

This funding will enable the construction of new terminals, breakwaters, and dredging of shallow channels, along with backend infrastructure to improve access for freight trains and trucks.

A Ministry of Ports, Shipping, and Waterways official emphasised that the substantial financial boost to SDCL for domestic port investments stands out as a critical step forward. Currently, the 12 major ports face two primary issues: financial constraints and limited physical space.

According to a 2023 Crisil report, establishing a container terminal with a capacity of one million TEUs demands an investment between Rs 10 billion and Rs 15 billion. The scale of this capital requirement often deters private sector involvement at the initial stage.

While freight traffic through both government and private Indian ports surged by 46 per cent from FY15 to FY24, this growth has been concentrated primarily at a few key locations: Jawaharlal Nehru Port Authority (JNPA), Deendayal, Paradeep, and the Adani-operated Mundra ports.

A proposed solution involves constructing new ports in less congested, outlying areas near existing facilities, allowing the older ports to scale down over time. "The additional capital allocation to SDCL will thus be crucial," noted an industry official

India's "major ports," managed by the central government, are all in urgent need of funding to manage the expected growth in ocean-going traffic, which is anticipated to rise at an annual CAGR of nearly 5 per cent. In the first half of FY25 alone, traffic expanded by 4.6 per cent, underlining the need for accelerated investment.

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