India mulls foreign borrowings to develop major ports: minister
India may consider raising foreign currency denominated debt for development of its ports and inland waterways as part of its plans to lower transportation costs, generate employment and accelerate economic growth, the country’s Minister for Road Transport, Highways and Shipping said.
Since the Indian ports earn profits in US dollar denomination, they are authorized to raise debt in foreign currency as well, Nitin Gadkari said.
“In the past, we have raised such debt and have a choice to exercise it again. We are in a mood” to do such borrowing again, he said addressing a function organized by Nomura Singapore.
Gadkari is in Singapore as part of a roadshow by National Highways Authority of India, or NHAI to sell their masala bonds, aiming to raise close to Rupee 50 billion ($778 million). Masala bonds are denominated in Indian rupees but offered outside the country.
Nomura, along with AXIS Bank, SBICAP and Standard Chartered Bank are joint bookrunners and lead managers of the NHAI masala bonds issue.
Unlike NHAI, which does not have earnings in US dollars, Indian ports do so and therefore have the option of raising money in the same denomination.
In the past, Jawaharlal Nehru Port Trust or JNPT has raised such capital overseas, Gadkari said.
Gadkari’s comments for possibility of foreign borrowings is significant as India needs large-scale investments amid authorities of major ports being directed to develop inland waterways along rivers in their region. In one such case, JNPT will develop inland waterways in the western state of Maharashtra, the minister said.
He said India is planning to set up at least six new major ports entailing an investment of billions of rupees to keep pace with the country’s rapid economic development and growth. These includes Wadhwan and Colachel. India has not developed a major port since Kandla on the west coast in the 1950s.
The minister said India is developing 111 inland waterways to reduce the cost of moving goods and passengers within the country. In areas where draft is shallow, dredging is being undertaken and the sand obtained will be supplied to NHAI for building roads.
A 1,620 kilometer Varanasi-Haldia inland waterway is being developed along the river Ganges and a similar project is also on along the Brahmaputra, he said. The Brahmaputra river alone has close to 40 river ports in India and an agreement has also been inked with neighboring Bangladesh to facilitate supply of products such as cement, fertilizer and steel to the northeast Indian region via jetties along inland waterways that crisscross the two countries, the minister said.
Coal from Talcher in eastern state of Odisha can be moved along Brahmani river to Paradip and Dhamra ports, which will reduce the cost of electricity, Gadkari said.
“There is a potential to develop 2,000 river ports along the banks of 20,000 kilometers of river length,” he said.
In another major initiative, road expressways and railroads are being linked to ports for quicker movement of goods, the minister added.
Gadkari said his ministry has also proposed earmarking Rupee 25 billion from the Central Road Fund for the development of inland waterways.