[Yojana October 2023 Summary]-Port Infrastructure in India- Explained Pointwise

Introduction

A highly developed Port infrastructure is necessary for the economic development and progress of a nation. Development of Port infrastructure has been a core focus area of India since Independence. In recent years, there has been further strong push from the Indian government for ‘Port led Development‘.

What is the Current Status of Port Infrastructure in India?

India’s large coastline, which spans for over 7500 kms, is dotted with 13 Major Ports and 200 Minor Ports.

Major Ports- Represented on the Map

Institutional arrangement governing port Infrastructure in India

Status of Trade Handling by the Port Infrastructure in India

(1) Over 95% of India’s trade by volume and 65% by value is done using maritime transport facilities at ports. (2) India’s key ports had a capacity of 1,598 million tonnes per annum (MTPA) in FY22. (3) Turnaround time( time that is taken between the arrival of a vessel and its departure) has reduced to 62.16 hours in FY21 from 82.32 hours in FY17. (4) Non-major ports accounted for 45% of the total cargo traffic at Indian ports in FY22. There has been a significant shift of traffic from the major ports to the non-major ports.

What is the significance of developed port infrastructure for India?

1. Facilitates International Trade- In FY 2020-21, the major ports in India handled 704.8 million tonnes of cargo which comprised a wide range of commodities such as coal, crude oil, iron ore and containers.

2. Employment generation- According to a study by the National Council of Applied Economic Research (NCAER), the port sector has the potential to create around 40 million direct and indirect jobs in India by 2025.

3. Reduction of logistics cost- Growth of coastal shipping and inland waterways, which are 60 to 80% less expensive, will help in bring down the logistics cost which is currently 14% of the GDP. This will increase the trade competitiveness, improve supply chain efficiency and boost economic growth.

4. Boost to Blue Economy- India is one of the world’s top five producers of fish in the world. Developed port infrastructure can boost the export of marine products.

5. Strengthening of National Security- Developed port infrastructure ensures the security of strategic installations which are located near the ports like naval bases, nuclear power plants, and satellite and missile launching ranges. Illegal practices like drug trafficking, maritime piracy can be controlled by properly developed port infrastructure.

6. Emergence of India as a net security provider in the Indian Ocean Region- Indian Port Development can serve as a hub and spoke model for the coastal development of other South Asian Countries. This will help in countering the Chinese BRI project which is coercive in nature.

7. Environment- Development of port infrastructure is necessary to counter the challenges of overfishing, coastal degradation, marine pollution and rising sea levels.

8. Development of Coastal Communities- Sustainable livelihood development of the fisheries sector promotes the inclusive development of coastal communities.

What are the challenges with the port infrastructure of India?

1. High Turnaround time- Although the turnaround time of Indian ports has improved to 62.16 hours, it is still poor compared to global standards e.g., Japan (8.16 hours), Taiwan (10.56 hours), Hong Kong (12.48 hours). High turn around time has made the Indian ports less competitive.

2. Under developed Port Infrastructure- According to a report by the National Transport Development Policy Committee, the capacity utilization of major ports in India was around 65% in 2019. Insufficient container tonnage, lack of handling equipments, lack of proper berthing facilities, lack of navigational facilities, IT systems and poor road and rail connectivity to and from ports etc. are some of the infrastructural challenges plaguing the port sector.

3. Issues with the acquisition of Land for Port Expansion- According to a report by the Parliamentary Standing Committee on Transport, Tourism, and Culture, land acquisition for port development in India has been a significant challenge. This has led to delays in several projects.

4. Complex custom procedures and lengthy documentation process- In some major ports like Singapore, modernized custom administrations have adopted a highly selective procedure for examinations of containers and about 95% of containers are allowed clearance without any physical examinations. In India, rules require 10% of the contents of each box to be checked and verified. It causes delay and adds a high transportation costs.

5. Issues with Regulations- Major and minor ports are governed by distinct authorities. According to a report by the World Bank, the lack of a unified regulatory body and overlapping jurisdictions among different agencies has led to regulatory uncertainty in the port sector.

6. Issues with the PPP model of operations of the ports- Tariff regulation, lack of a dispute settlement process and strict regulation on the scope of private players work are some of the issues with the PPP model of port operations.

7.Environmental Challenges- Oil Spills, ballast water discharge and the dredging operations for port development harm the marine environment and ecology.

8. Social impacts of Port Development- The majority of port development and initiatives result in displacement of indigenous coastal populations (such as Gangavaram Port in Andhra and Mundra in Gujarat).

What are the government Initiatives for Development of Port Infrastructure in India?

1. Sagarmala Project- To promote port-led development in the country through harnessing India’s 7,500 km long coastline, 14,500 km of potentially navigable waterways and strategic location on key international maritime trade routes. The main vision of the project is to reduce logistics cost.

2. Project UNNATI- It has been launched to benchmark operational and financial performance of the 12 major ports with selected Indian private ports and best-in-class international ports for identifying improvement areas.

3. 100 % FDI under the automatic route for construction and maintenance of India Ports- Due to this FDI liberalisation, Indian ports have received cumulative FDI inflow worth US$1.63 billion between April 2000 and June 2021.

4. Passage of Major Port Authorities Act 2021- The Act aims to decentralise decision-making and reinforce excellence in major port governance.

5. Marine Aids to Navigation Act 2021- The Act provides for increased safety and efficiency in vessel traffic services and training and certification at par with international standards.

6. The Indian Vessels Act 2021- The Act aims to bring uniformity in law and standardised provisions across all inland waterways in the country.

7. Tax Holiday for private port development players- A 10-year tax holiday has been provided to enterprises engaged in the business of developing, maintaining and operating ports, inland waterways and inland ports.

Read More- Sagarmala Project

What Should be the way forward?

Suggestions have been provided in the report titled “Promotion of Infrastructure in India’s Maritime Sector” by the Ministry of Ports, Shipping & Waterways, to improve the port infrastructure and efficiency.

1. Formulate policies for generation of employment opportunities- Creation of Coastal Economic Zones (CEZs), Coastal Economic Units (CEUs), Port-Linked Industrial & Maritime Clusters and Smart Industrial Port cities would generate employment opportunities.

2. Link Private Ports with the Major and Minor Ports of the country- To cater to the growing requirement for import/ export of manufactured goods/ raw materials.

3. Close coordination between stakeholders- Ministry of Ports should work in close coordination with the Ministry of Road Transport and Highways, NHAI, and Ministry of Environment to address the delays in projects due to land acquisition and environmental clearances.

4. Implementation of smart port technologies and solutions- Implementing technologies such as blockchain, Internet of Things (IoT) and data analytics can enhance transparency, efficiency and security in port operations.

5. Focus on Green port development- The Ministry of port should formulate proper guidelines and conduct an environmental impact assessment before releasing funds for any port connectivity project.

India must implement the Maritime India Vision 2030 and take initiatives such as developing world-class Mega Ports, transhipment hubs and infrastructure modernization of ports.