Economic Boom Puts Pressure on India’s Ports

Economic Boom Puts Pressure on India's Ports

India’s economic growth looks set to surpass China’s for the first time in 2016, lending support to both east and westbound container trade expansion, according to Drewry Maritime Research.

However, the predicted uptick in Indian container trade depends on the ability of the new government to deliver on promises. India is currently struggling to realise its full potential, with port infrastructure shortcomings and a creaking inland transportation sector. Both of these issues have so far frustrated attempts to boost its global manufacturing presence. While money has been committed to port projects to remove congestion, more private investment is needed, according to Drewry.

India has cemented its position for significant trade growth in the medium term, which will feed growth in Europe-Middle East/South Asia routes, Drewry reports. After a 20 year hiatus, free trade agreement talks are back on the table between Europe and India as the latter strives to boost business flows between the two countries.

Eastbound Europe to Middle East/South Asia container traffic had already recorded year-on-year growth of 18.3% by November; with trade relations improving this growth is expected to continue, says Drewry. Westbound traffic rose by 6.6% y/y over the same period.

Middle Eastern trade is also positive with Europe to Middle East and westbound movements up, but the Middle East may not share the Indian wave of progress for long as the current strength of the Middle East-Europe trade is under pressure from weaker prices for oil and other commodities, which are suppressing growth prospects, Drewry reports. Ongoing political turmoil in the region is also keeping an upbeat outlook in check.

Drewry says that the fundamentals supporting India trade growth are clearly there and continue to support this route. However, the current changeable state of the Middle East region will make it harder for this route to nurture container trade growth.

Source: Drewry; Image: Mumbai Port Trust



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