"sysinstall" utility gives you an option to install "ports" from "local filesystem" in addition to "CD/DVD ROM" along with many network installation methods.

I copied all the ports in one folder and while installing the ports I specified the respective local directory but it threw an "index" error. How do I need to copy the ports on local filesystem?

Also is there any "yum" like utility available in FreeBSD where in I can have one centralized repository in which I can place all the ports and use it to install the ports along with the required dependencies.

Let me rephrase it....What I want to do is that I want to place the ports present in "All" folder of all the 3 Disks of FreeBSD in one place: It can be either Local filesystem or remote location like FTP server.

And I should be able to install the ports in following manner:
#pkg_add <local-filesystem>/port.tbz

e.g. #pkg_add /exports/ports/All/xyz-port.tbz

OR

e.g #pkg_add ftp://exports/ports/All/xyz-port.tbz

Also what option do I need to give with "pkg_add" to make it resolve the dependencies required by the ports as well.

Why would you want to do this? It's a pretty big waste of space. If you have them on the installation CD, just mount the cdrom (most depends are on the same CD as the program you want). But, even that is probably not worth it to me.

If you have a decent internet connection (basically anything but dialup), just use "pkg_add -r vim" or whatever program you want. This will use the project's repositories (which have all the programs and not just the ones on the CD) and will use the most current version of the program.

Also, pkg_add automatically resolves dependancies.

Edit: if you insist on doing it this way... just copy the ports from each CD into that location. But you're going to be wasting a lot of disk space on ports you won't be using and which will soon be out of date.

I completely agree with you. Actually I am running FreeBSD on VMware and also Internet connection doesn't have that lightning speed and on VMware it starts crawling. Hence I wanted to go for local FTP Server.

"pkg_add -r <pkg-name>" works with no issue but it's just bit slow on my machine.

Also I copied all the ports on my local ftp server and following did work:
But following doesn't works:
Any idea?

Uhh, that doesn't look like you're specifying a package... you can't just add a directory as a package.