Marine terminal operator DP World plans to invest $2 billion to expand its India operations, company officials said. The Dubai-based company operates five ports on India’s west coast and manages an estimated 40% of the country’s container terminal operations, which are straining to meet the demands of India’s rapidly growing economy.
“Port investment is crucial for the growth of industries,” Ganesh Raj, DP World’s senior vice president and managing director, was quoted as saying by Indian media.
Bottlenecks at Indian ports due to capacity constraints have become a significant drag on commerce.
According to government figures, it takes an average of 85 hours to unload and reload a ship at India's major ports, 10 times longer than in Hong Kong and Singapore.
The government estimates that $320 billion will need to be spent over the next five years to upgrade India’s infrastructure, including $13.5 billion for its 12 key ports.
Last year, DP World gained control of three terminals in India through its $6.8 billion acquisition of U.K. ports operator Peninsular & Oriental. DP World is eager to gain a presence in eastern India.
Raj said the company has achieved significant growth in traffic at its Indian ports. Its container terminal in Chennai in the southern state of Tamil Nadu was growing throughput at a 9% annual rate before DP World took it over. Since then, it has averaged 22% growth.
India allows 100% foreign direct investment for port development projects. It plans to raise 64% of the proposed investments in ports from private companies. Container traffic is expected to clock growth rates of 15.5% in the next five years and cargo traffic 7.7%.
DP World operates terminals in 24 countries. The company says it has significant expansions under way in India and China.
In the U.S., DP World was forced to sell six ports it acquired in the P&O deal to AIG Global Investment Group in December due to political pressures, Forbes reported.