Media reports say that Indian ports, including major ports, face dredging problems. Many  of  India’s State-run ports are struggling to honour commitments given to private cargo handlers to deepen and maintain channels for ships to dock. It is not something port authorities can control. They have to rely on private dredgers to undertake the work and cannot be faulted if the contractors fail to perform.    The dispute between port authorities and dredging contractors, though, has a bearing on cargo handling projects built by private firms. India’s dredging market is estimated to be worth about Rs 20,000 crore over the next five years. India’s ports accumulate silt quickly and require dredging throughout the year to maintain navigable depth.    

Ship sizes are also getting bigger as owners and shippers chase economies of scale so that larger quantities of goods can be transported at a time to save freight costs. This requires deepening the channels and berths to accommodate bigger ships.    

Dredging ships do this work. The Indian government has decided to create a minimum depth of 14 m at all the 12 ports it owns, where depths range from 9-12 m. The global average is 12-23 m, enabling the latest generation container, tanker and dry bulk ships to come calling. New firms have entered the dredging sector, buying cheap Chinese dredgers for their own use to cut costs and rent them out to third parties.    

They are attracted by the huge potential and also because dredgers are covered under the tonnage tax scheme—a levy based on the cargo-carrying capacity of ships that lowers tax outgo of firms compared with the typical corporate tax.