INTERVIEW-India's Krishnapatnam port to invest $1.6 bln by 2011

By Jan Dahinten

SINGAPORE, April 5 (Reuters) - Krishnapatnam Port Co., a family-owned start-up on India's east coast, will invest $1.6 billion in a new container and bulk port to profit from the growing trade between Asia's economic giants China and India.

The port, close to the sea trade lanes linking Asia to the Persian Gulf and Europe, is due to open for container ships in June 2008 and will be completed by 2011.

It will have an initial annual capacity of 1 million twenty-foot containers, Mahesh Goel, the head of Krishnapatnam Port Company's container business, told Reuters in an interview.

Singapore, the world's busiest port, moved nearly 24 million boxes at its terminals last year, while India's biggest port, Mumbai, handles around 2 million twenty-foot containers a year.

"We are also looking into opening two more ports on India's east coast and one on the west coast," he said but declined to give details because the projects are still at an early stage.

Krishnapatnam Port Co. is owned by Hyderabad-based businessman CV Rao and his sons. The family also owns the Navayuga Group, a holding company with interests in marine construction and information technology.

Congested ports and other creaky transport infrastructure have become a growing problem for Asia's third-largest economy and the world's second-fastest growing large economy after China.