Setting up a ‘SAFE’ model for growth

By: | Published: November 2, 2017 5:05 AM

Growth can be accelerated through better security, advancement, facilitation and efficiency of ports.

The International Maritime Organisation (IMT), a specialised agency of the United Nations, recently celebrated the World Maritime Day.

The International Maritime Organisation (IMT), a specialised agency of the United Nations, recently celebrated the World Maritime Day. IMT’s mission is to promote safe and sustainable shipping and this year they chose ‘Connecting Ships, Ports and People’ as the theme. India joined IMT in 1959 and is currently the 16th largest maritime country in the world. India has 12 major and 200 notified non-major and intermediate ports spread across its vast coastline of 7,517 km. Approximately 90% of India’s trade by volume and 70% by value moves through maritime transport and this highlights how important the sector’s contributions are for the growth of the Indian economy. Ports and shipping has become crucial for the economy with increasing global trade linkages. The cargo traffic is expected to increase by 643 million metric tonne in 2021-22 from 2014-15. The question is: Are we ready to handle such high traffic? What are the steps that India needs to take for further growth of the sector. A vibrant domestic shipbuilding industry and world-class port facilities can act as effective enablers for maritime services. A well-considered long-term vision sustained by policy enablers would be imperative to capitalise on this growth potential.

Growth in maritime sector also boost business opportunities for ancillary service providers such as operations and maintenance (O&M), pilotage and harbouring, container freight stations, inland container depots, and logistics and marine assets such as barges and dredgers. The government has been taking many steps to integrate and develop the maritime sector, like the Sagar Mala project, inland waterways development, port lead cluster development, coastal economic zones (CEZ), etc. The shipping ministry has taken many initiatives—rebate of service tax on coastal shipping has been hiked to 70%, and tax exemptions have been granted on inputs used in shipbuilding and Indian Port Rail Corporation for last-mile port connectivity.

There are a few challenges, which, if addressed timely, can establish India as a global leader and generate immense employment. The average turnaround time—the duration taken to load or unload a vessel—at major Indian ports has seen a gradual decline over the years. But, at 5-6 days, it still remains above the average time taken by some of the top ports globally (48 hours). Further, Indian ports naturally have shallow draft, incapable of handling large vessels requiring draft of 20 metres and above, thereby are unable to handle transshipment cargo. However, with the direct port delivery initiative by JNPT, PPP in port development, and enhanced focus on mechanisation and digitisation of ports and operations, the sector is getting ready to serve the global trade in the next decade.

Sagar Mala

To augment port-lead development and provide infrastructural facilities as part of its strategy to enhance India’s cargo handling capacity, a major initiative is Sagar Mala, under which 415 projects at an investment of Rs 8 trillion have been identified across port modernisation and new port development, port connectivity enhancement, port-linked industrialisation, and coastal community development for phase-wise implementation over the period 2015 to 2035.

Port-led development: Development of CEZ with port-based industrialisation, coastal tourism, logistics parks, warehousing and fisheries development;

Port infrastructure enhancement: Transformation of existing ports into world-class ports by developing deeper drafts, mechanisation of existing berths, creation of new capacity and greenfield mega ports and transshipment ports;

Efficient evacuation: Enhancement and increase of rail/road network and inland waterways connected to ports and identification of congested routes. Implementation of projects will be taken up through private sector or PPP route. In the last four years, the government has approved 118 projects involving $7.73 billion, and $2.69 billion has been invested in the last three years in ports and shipping sector. The growth can be accelerated through four key tenets of the SAFE model—security, advancement, facilitation and efficiency.

S: Sustainability and security

Maritime security is of paramount importance towards achieving a sustainable connection between ships, ports and people. A balanced, well-coordinated and risk-based preventive strategy among various nations is fundamental towards achieving flourishing international maritime trade.

A: Advancement and development

Advancement and upgrade of shipping and ports is imperative for enhancing maritime trade. The starting point could be corporatisation of major ports. On the periphery of ports, we should promote port-based industries by encouraging captive jetties to handle third-party cargo, revamp last-mile road and rail connectivity of ports as envisioned in Sagar Mala, develop 2-3 ports as mega projects—greenfield or brownfield—on East and West coasts, develop smart cities in line with Sagar Mala concept of cluster-based ports. It is important that ship maintenance and repair hubs are set up in major ports and select non-major ports. To manage all of these and port tariff, a National Maritime Regulatory Authority should be set up.

F: Facilitating maritime traffic

Focused initiatives like last-mile connectivity, port modernisation, inland waterways infrastructure, etc, are needed to ensure that maximum trade is undertaken through sea route, thereby reducing logistics cost and enhancing quick turnaround for all the stakeholders. To facilitate maritime traffic, all departments must work together and policies should be aligned.

E: Enhancing efficiency

Ships are subject to a wide range of government controls upon arrival and departure, which results in time delays and increase in ocean freight costs in the form of higher mooring costs, higher demurrage and increasing turnaround time at ports. Though these checks and balances are required, a streamlined single-window clearance mechanism and increased cooperation through real-time information exchange between the customs and maritime department through use of electronic medium will speed up the entire value chain and enhance efficiency. Increasing cross-border integration along with major agreements on international trade will lead to rise in India’s seaborne export-import trade and increase cargo traffic significantly.

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