New Delhi : Following a significant slump in volumes of iron-ore due to mining restrictions and policy issues, cargo growth at Indian ports was subdued in 2011-12 with total throughput registering 5% year-on-year increase to 930 million tonnes, said ICRA, the leading credit rating agency of the country.

Major ports experienced a 2% reduction in cargo handling to 560 million tonnes in Fiscal Year (FY) 2012 mainly due to their higher exposure to iron ore; while the non major ports by virtue of a more diversified cargo mix and higher efficiency standards gained 18% in terms of cargo volumes year on year. As a result, in market share terms, major ports accounted for 60% of total throughput in FY 12 compared to 64% in FY 11 while the share of non major ports was up at 40% in FY 12 from 36% a year back.

The long-term growth outlook for the Indian port sector continues to be strong over the medium to long term driven by the domestic requirements of coal for power and other sectors; crude oil for meeting domestic petroleum requirements and; containers given the cost and logistical advantages associated with containerization. Some near term uncertainty may however be associated with particular cargo categories like imported coal due to international pricing related issues and domestic tariff revision related uncertainties for the power sector; iron ore due to unresolved policy issues and containers due to the weak global environment.

Given that no near term resolution of these structural problems appears to be in sight, the capacity addition at Indian ports is likely to fall short of envisaged targets and demand requirements. As a fallout, the major ports, most of which, are already operating at peak capacity are likely to continue facing capacity and efficiency constraints while the incumbent non major ports by virtue of their superior cargo handling infrastructure; investment in large capacity creation and high operating efficiency would be well placed to divert traffic from major ports as well as garner a larger proportion of the incremental cargo generation.