Meanwhile, the Modi government has approved setting up of a third trans-shipment port at Enayam, near Colachel in Tamil Nadu.
Indian vessels could find it difficult to match rates of foreign ships.
India already has one trans-shipment port in Cochin (Vallapadam) and another coming up in Trivandrum (Vizhinjam).
Trans-shipment cargo at Vallarpadam was just 6% of the total 5.5 lakh TEUs in overall cargo that it handled in 2017-18.
According to logistics experts, high port tariffs are a serious hurdle to India becoming a trans-shipment hub.
Trans-shipment traffic is the cargo that is transported between an Indian port and an international hub port.
Even worse, the third trans-shipment port is just 36 km from the Vizhinjam trans-shipment port being built by Adani Ports and Special Economic Zone Ltd.
However, data shows and experts say that Indian port tariffs are too high to compete with Sri Lanka and Singapore, the two popular ports that attract bulk of Indian trans-shipment cargo. Even as India’s chances of becoming a trans-shipment hub on par with Sri Lanka and Singapore are dim, there is a frenzied rush for building such ports here.
In such a scenario, foreign players could resort to predatory pricing to undercut local competition, triggering a shift in the transportation of export-import cargo away from Indian vessels, said experts.
The Modi government’s move to allow foreign vessels to call at any Indian port and carry domestic cargo could hit revenues of local shipping lines.
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