According to an Indian Express investigation, at least three top government officials have expressed concerns over the growing presence of the Adani Group in the Indian port sector, which is considered a pivotal infrastructure area.

The Adani Group”s dominance in the port sector is unequivocal, as it holds 14 ports and terminals, handling a quarter of all cargo passing through the country”s ports. This is a significant rise, given that in 2001, the Adani Group operated just one big port, Mundra.

The Adani Group has expanded its empire through six acquisitions in the last 10 years. Its dominance has raised concerns of market concentration in the crucial sector.

The Indian Express report also revealed that along India”s 5,422-kilometer coastline, Adani holds every 500 kilometers on average.

In 10 years, the total cargo handled by Adani ports has reached 337 million tonnes in FY23, a nearly four-fold jump with a compounded annual growth rate of 14 percent. However, industry growth is at a CAGR rate of just 4 percent. The figure falls to barely 2.7 percent without adding Adani”s share.

In the total cargo scenario, the Adani Group holds a 24 percent market share in 2023, an around 9 percent rise from 2013. Meanwhile, central government-controlled ports dipped to around 54.5 percent from 58.5 percent in 2013.

Among the private ports, Adani”s market share has surpassed the 50 percent mark. The central government currently manages 12 ports. Therefore, the report claims that the rise in the Adani Group”s market share is at the cost of the central government-governed ports, where cargo operation has dropped.

“This is a concern,” a top economic ministry official told The Indian Express. Adani”s total cargo volumes have jumped at a compounded annual growth rate of 14 percent between FY13 and FY23. In FY23, it was 337 million tonnes. However, the cargo volumes compiling all other ports put together rose at a CAGR of just 2.7 percent over the period from 842.66 million tonnes in FY13 to 1,096.39 million tonnes in FY23.

A section of government officials and regulators are particularly concerned about the in-organic route that the Adani Group has undertaken to achieve growth.

The Indian Express claims that the Adani Group has acquired more than a third of the total cargo volumes (123.7 million tonnes of 337 million tonnes, or 37 percent) handled by the company through ports acquired over the last decade. This growth model has raised concerns about the growing concentration risk, as per an official quoted in the report.

According to a report by The Indian Express, Adani’s ports have an average turnaround time of around 0.7 days, which is much lower than the central government-controlled ports’ average turnaround time of around 2 days. However, the increasing presence of one player across the coastline — west to east — does potentially mean a gradual erosion of bargaining power of shipping companies, especially in specific geographies.

A senior official with the shipping ministry has raised concerns about the high market concentration of Adani ports, which could lead to low competition, high entry barriers for newer and smaller players, high dependencies on dominant players, and higher chances of abuse of dominant position.

Another senior official from an economic ministry has also expressed anxiety over this market concentration in a strategic sector like shipping, especially in light of allegations of accounting fraud and stock manipulation against the Adani Group.

According to a report by The Indian Express, the Adani Group has denied allegations of accounting fraud and called them motivated.