Container volume growth in India seen at 8% in FY26

CareEdge Ratings, in an analysis, estimates container volume growth in India at 8% in FY26, at ~380 MMT, supported by capacity expansion, rising transhipment activity and slated completion of the entire Western Dedicated Freight Corridor. Nonetheless, rising insurance costs, shipping rates owing to volatility in the Shanghai Containerised Freight Index (SCFI) and transit times are weighing on the sector’s growth trajectory.

It further elaborated:

Global trade activity gets impacted by geopolitical and trade disruptions, and Indian ports are no exception. Cargo volumes on Gujarat’s coast fell 6% in May 2025 due to India-Pakistan tensions. Additionally, the United States (US) has imposed a 50% tariff on Indian imports, adversely impacting key export sectors like home textiles, gems, shrimp, engineering components, and speciality chemicals. While the US accounts for 20% of India’s exports, its share in sea-based trade (excluding electronic items) is barely 5%, implying a moderate direct impact on port volume.

Rising geopolitical events cause trade and cargo volatility 

The performance of the ports and shipping sector is intrinsically linked to cargo volumes, which rely on a country’s EXIM trade and remain highly susceptible to both global and domestic economic cycles and trade policies. In the last three years ending March 2025, the sector has faced multiple disruptions — from the Russia-Ukraine war and water-level-induced delays at the Panama Canal, to the prolonged crisis in the Red Sea. During FY25, new geopolitical flashpoints such as the Iran-Israel conflict and Operation Sindoor have further strained commercial shipping operations. Rising disputes between India and Pakistan led to 6% decline in cargo volumes at ports along Gujarat’s coast in May 2025. Compounding these challenges, the recent US trade tariffs are expected to disrupt further global trade flows and consequently the sector’s growth metrics.

Moderate direct impact of US trade tariffs on India’s port volume 

On July 31, 2025, the US government announced the imposition of a 25% tariff on goods imported from India, set to take effect from August 7, 2025, while an additional 25% penalty tariff for engaging in trades with Russia will take effect from August 27, 2025. The tariff rates applicable for India are notably higher than those of other Asian countries such as Vietnam (20%), Indonesia (19%), and Japan (15%). CareEdge Ratings expects a significant impact on segments such as home textiles and readymade garments, gems and jewellery, shrimp products, automobile and engineering components and speciality chemicals based on their export exposure to the US and comparative tariff structure with other Asian countries. India’s total merchandise exports for FY25 stood at USD 437 billion, with the US accounting for 20% of the exports. While exclusively on the sea trade front, the US accounts for 17% of India’s merchandise sea trade exports by value. It is pertinent to note that on excluding electronic goods—which currently face no tariff—India’s sea-based merchandise exports to the US are estimated to represent around 5% of the total sea trade, indicating a moderate direct impact on overall cargo volumes.

India’s container cargo had achieved a robust annual growth of 11% in FY25, with handling of 351 MMT, exceeding CareEdge Ratings estimates. The compounded annual growth rate (CAGR) in the last three years ended FY25 remained healthy at 8%. Buoyant demand, adequate inventory rebuilding amid geopolitical tension and increased cargo containerisation were the prominent factors contributing to the spurt in EXIM trade volumes. The momentum remained unfazed amid disruption across major sea routes of the Panama Canal and the Red Sea crisis.

In H2FY25, additional container capacity was commissioned on India’s west coast, including 2.4 million TEUs at Jawaharlal Nehru Port Authority (JNPA) and 1 million TEUs at Vizhinjam Port, a transhipment hub. These developments are expected to drive container cargo growth in FY26. Further capacity expansion is anticipated through terminal upgrades, and the expected completion of full connectivity of the Dedicated Freight Corridor (DFC) to JNPA by December 2025. Nonetheless, rising insurance costs, shipping rates owing to volatility in the SCFI and transit times are weighing on the sector’s growth trajectory. Container volume growth in FY26 is estimated to moderate by 100-150 bps with the underlying assumption of one-third impact of US tariff on export volumes of affected sectors, compensated mainly by capacity additions and increased transhipment activity.

CareEdge Ratings anticipates a minor moderation in container volumes growth to 8% in FY26 to 380 MMT, over FY25. In the future, the impact of various geopolitical factors on India’s container cargo is a key monitorable.

Coal handling

India’s coal production increased by 5% to 1,048 MMT in FY25, accompanied by a steady rise in the share of renewable energy in electricity generation—from 11% in FY22 to 14% in FY25. This shift has reduced dependence on imported coal, resulting in an approximate 8% decline in coal imports in FY25. Nevertheless, capacity additions on the eastern coast and increasing coastal coal volume thereof led to a healthy CAGR of 20% over FY22-FY25. This has partially offset the impact of the decline in coal imports. Consequently, coal volumes throughput witnessed a 3% year-on-year decline, reaching 388 MMT in FY25.

In the future, with a domestic coal production target of 1,150 MMT and the continued growth in renewable energy’s share in the power generation mix, imported coal volumes are expected to fall further by 10% in FY26. The said impact shall be partially offset by expected growth in coastal coal volumes by 10% in the same period. Overall coal volumes at ports are projected to fall further by ~3% in FY26.

3Cs dominate the cargo mix at Indian ports i.e. Crude Oil [termed as Petroleum Oil Lubricants (POL)], Coal and Containers. These three commodities represent 74%-75% of total cargo throughput handled. Container-led growth has resulted in overall ports’ volume CAGR of 5% over FY23-25. CareEdge Ratings expects port volume growth to ease around 2% in FY26 on account of a 100-150 bps impact on container volumes due to ongoing geopolitical instability, as well as US tariffs and a decline in coal imports.

CareEdge Ratings’ view 

“The Indian ports sector continues to navigate a complex global landscape marked by geopolitical conflicts and trade disruptions driven by US tariffs. According to CareEdge Ratings, the United States accounts for only about 5% of India’s sea-based trade (excluding electronics). Consequently, container volume growth in FY26 is estimated to moderate by 100-150 bps due to the impact of the US tariff on export volumes of affected sectors like home textiles, gems, shrimp, engineering components and speciality chemicals. CareEdge Ratings estimates container volume growth in India at 8% in FY26, at ~380 MMT, supported by capacity expansion, rising transhipment activity and slated completion of the entire Western Dedicated Freight Corridor. Nonetheless, rising insurance costs, shipping rates owing to volatility in the SCFI and transit times are weighing on the sector’s growth trajectory,” said Maulesh Desai, Director at CareEdge Ratings.

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