Moneycontrol
Oct 14, 2016 09:17 PM IST IST | Source: PTI

Cargo growth to be subdued in near to medium term: Icra

It expects an increase in iron ore volume due to scrapping of export duty on low grades of the ore and resumption of mining in Goa.


Ratings agency Icra expects the growth in cargo to be subdued in the near to medium term on account of stifled rise in coal shipments, among other factors.


However, it expects an increase in iron ore volume due to scrapping of export duty on low grades of the ore and resumption of mining in Goa.


"The near to medium term outlook of cargo growth remains subdued with uncertainty associated with particular cargo categories like imported coal due to narrowing domestic demand-supply gap following the increase in coal production by Coal India, and containers, due to the relatively weak global environment affecting exim trade," it said in a statement.


However, iron ore export volumes could improve to some extent, on low base, due to export contract of state-run miner NMDC, elimination of export duty on low grade iron ore and restarting of mining operations in Goa, it added.


Over the medium to long term, outlook for cargo growth continues to be strong, driven by domestic requirements of coal and crude oil for power and other sectors, Icra said.


On regulatory front, the draft Central Port Authorities Act is likely to usher in the changes that would allow incumbents to take investment decisions at major ports with more clarity, it said.


The Ministry of Shipping has chalked out a road map over the next 5-10 years, wherein significant investments would be made in the sector to boost trade and development, it added.


"In the long run, Icra believes the implementation of the project could lead to increased cargo for the ports, however, several challenges remain given the vast scale of the project and significant funding resources and PPP participation required to make the targets a reality," it said.

Icra said the actual materialisation of the plans could take significant time given the time consuming legislative framework required for efficient collaboration between the central and state governments, it added.

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