Modernization of Ports in India and Its Impact on Indian GDP: Anchoring Growth through Maritime Infrastructure
India, with its long 7,517-kilometer-long sea coastline, has always been blessed with a seafaring strategic position. Ports are a major driving influence in the economic growth of India, contributing around 95% of India’s volume trade and 68% value trade. Being a key part of India’s vision to become a $5 trillion economy, port infrastructure modernization has become a key component of economic policy with immediate impacts on trade efficiency, industrial production, the creation of employment opportunities, and finally the Gross Domestic Product (GDP). The Government of India has developed large-scale port modernisation schemes under the banner programmes like the Sagarmala Programme and PM Gati Shakti in the past ten years, which have given transformational outcomes to India’s logistics and economic infrastructure. The Sagarmala Programme initiated in 2015 is India’s shipping masterplan for port-led development.
The program targets the upgrading of existing ports, greenfield development of new ports, creation of best-in-class logistics chains, and enhancing connectivity with coastal and inland waterways. In accordance with the Ministry of Ports, Shipping and Waterways, up to 2023, over 802 projects worth ₹5.5 lakh crore were identified under Sagarmala, out of which 228 projects worth ₹1.15 lakh crore are completed. This includes draught deepening to facilitate the entry of larger vessels, mechanization of berths, and computerization for improved customs clearance, all of which result in fewer dwell days and greater cargo handling efficiency. One of the most glaring advantages of port modernization has been increased cargo handling capacity.
India’s 12 major government-operated ports collectively had a total cargo handling capacity of 1,597 million tonnes annually (MTPA) as of FY 2023 from just 871 MTPA in FY 2014 and are expanding at an 83% rate over a period of ten years. The state-owned and private sector non-major ports too have had their growth rate catch up big time, led by Gujarat, Maharashtra, and Andhra Pradesh. Ports such as Mundra, Krishnapatnam, and Ennore have emerged as cargo hubs, led by technology-driven container terminals and multi-modal connectivity. Working efficiency and port capacity have gone hand in hand in fostering competitiveness in trade.
Turnaround time (TAT)—perhaps the most critical measure of port efficiency—has shown considerable improvement. Average TAT at major Indian ports, for instance, has come down to 48 hours in 2023 from 82 hours in 2016 as per Indian Ports Association (IPA). This has also decreased logistics cost, enhanced the utilization of ships, as well as inventory holding costs for import and export businesses. India’s cost of logistics, hitherto at 14% of GDP, is now to be reduced to 8–10% as more and more infrastructure development continues, thereby enhancing the competitiveness of the nation in international trade. This has also led to the phenomenon of containerization, an indicator of successful international trade.
Indian container volumes at ports grew from 10.7 million TEUs in 2014 to over 17.6 million TEUs in 2023. Ports such as Jawaharlal Nehru Port (JNPT), India’s largest container port, have digital platforms and port community systems (PCS) to facilitate automated billing, tracking of cargo, and gate operations. JNPT Container Terminal Automation Project, for example, increased yard productivity by over 25%, decongested the area, and speeded up the flow of goods. Economic spillover from port upgradation is evident in port-based industrial clusters developing.
Maritime clusters, Coastal Economic Zones (CEZs), and logistics parks are coming up to increase manufacturing around ports. NITI Aayog suggests that CEZs would add up to $200 billion to GDP in 2025 in sectors ranging from petrochemicals to automobiles, steel, food processing, and electronics. These clusters attract FDI and also help in the creation of jobs. By 2035, port-led development can generate up to 10 million direct and indirect jobs. Furthermore, port modernization encourages the growth of coastal and inland water transport with environmentally sustainable and cost-effective solutions for road and rail logistics.
India’s National Waterways are being constructed to de-congest highway-centric highways. National Waterway 1 (Ganga-Bhagirathi-Hooghly river system), for instance, offers an inland hinterland-to-Haldia port connectivity for smooth cargo movement. Inland freight haulage increased from 3.4 million tonnes in 2014 to more than 108 million tonnes in 2023, increasing at an exponential rate with development of port-related waterways. Macro-level correlation between port development and GDP also exists.
As per the Economic Survey of India 2022–23, every 1% port throughput contributes to around 0.5% GDP growth, through multiplier effects on trade, manufacturing, and services. Merchandise exports of India have surpassed $770 billion in FY 2022–23, and most of this is processed through upgraded ports. Indian exports have also gained competitiveness with the improved infrastructure, especially for industry segments like textiles, pharma, engineering goods, and electronics. Foreign direct investment is also on the rise in Indian ports with the PPP model and liberalized FDI policies.
The sector experienced over $3 billion of FDI between 2014-2023. Foreign captains such as DP World, APM Terminals, and Adani Ports have invested heavily in Indian terminals, not only enhancing infrastructure but also safety, sustainability, and technology best practices globally. Adani Ports and SEZ Limited (APSEZ), for example, owns India’s largest port network and handles over 6% of India’s seaborne cargo throughput, signaling the increasingly important position of the private sector in GDP-connected port development. Sustainability has joined the list of issues in port modernization as well.
Green practices like the use of renewable energy, electrically powered cargo handling equipment, and shore power for vessels are already being adopted by major ports. The Government of India has committed to achieving a 50% green share of energy used in ports by 2030, aligning with India’s country Paris Agreement on climate actions. Green operations not only reduce the environmental footprint but also enhance India’s international reputation, especially for trade with the EU and other climate-conscious markets. Much, however, remains to be done.
Most small ports lack mechanized handling facilities and are draft-restricted. Regulatory barriers, land acquisition delay, and lack of good last-mile connectivity can water down the returns on investments in ports. In addition, port-rail and road corridor coordination will have to be much more integrated to enable end-to-end supply chain efficiency. These are the things which need to be rectified through inter-ministerial coordination and additional digital integration if the full economic potential of port modernization is to be realized. Ultimately, India’s port modernization is not only an infrastructure improvement but a strategic economic enabler.
It boosts the efficiency of trade, stimulates industrial growth, attracts investment, and generates employment—all contributing to India’s GDP. With India looking to become a world economic leader, its ports must become smart, efficient, and sustainable growth centers. With gathering pace of initiatives like Sagarmala and Gati Shakti, the Indian shipping sector is poised to become one of the leading drivers of the nation’s GDP, cementing prosperity for centuries to come.
Prepared by
Sureshkumar Mandala
Assistant Professor, School of CS&AI,
SR University, Warangal, Telangana 506371
m.suresh@sru.edu.in
