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How Sea Ports can unlock the potential of Indian Economy?

How Sea Ports can unlock the potential of Indian Economy?

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Why in the news?

Ports can unlock the potential of Indian Economy

Ports Infrastructure in India:

  • Every country’s growth depends on its port infrastructure. India’s coastline stretches for almost 7,500 kilometers. Ports handle over 90% of India’s foreign trade in terms of volume and 70% in terms of value.
  • Crude petroleum, iron ore, coal, and other key commodities are imported via the maritime route. There are 12 major ports and 205 minor ports on India’s coast.

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Importance of Ports:

  • Transportation: Ports are one of the most important parts of the general transportation industry, and they are now tied to the growing global economy.
    • Ports are essentially a way of integrating into the worldwide economic system. The maritime sector encompasses a wide range of services, the most important of which is the transportation of goods and passengers.
  • Emergency Services: Other related services include pilotage, towing and tug assistance, emergency repairs, anchorage berth and berthing services, and auxiliary or supporting services (such as storage and warehousing, maritime cargo handling services, customs clearance services, etc.).
  • Cover wider range: Within the port region, a wide range of activities are carried out, including infrastructure services given by port authorities, cargo handling services offered by private enterprises in most ports, and other services such as mooring, towage, and so on.
  • Hinterlands and the rest of the world: They serve as vital links between the hinterlands and the rest of the world. Countries, on the other hand, require internal connectivity such as links to other ports, airports, and railway connections in order to perform their functions effectively.
  • Cost-effective: When it comes to fuel consumption and investment, sea transportation is the most cost-effective mode of transportation. When compared to other modes of transportation, train transportation consumes twice as much energy as road transportation and 10 times as much as sea transportation.
  • More environmental friendly: The globe has been increasingly ecologically conscious over the last few decades, and marine transportation is clearly more environmentally friendly than other modes of transportation due to its reduced energy use.
  • Ports are an important part of the logistics chain, and their operation has a direct impact on important economic factors like export competitiveness and ultimate import pricing, influencing economic development.

Other countries port:

  • Expansion of China: China has been expanding its ports for the past decade in order to become a more economically powerful country and a global leader in import and export. China is the most powerful country in the maritime world, with six of the top ten busiest ports on the planet and close economic ties to the remaining three – Singapore, Busan, and Hong Kong.
    • China has spent extensively in automation technologies in ports and terminals as part of its goal to become a trade and economic superpower, and it continues to do so.
  • Qingdao, Asia’s first completely automated port, holds the world record for operational efficiency, with each crane handling more than 30 containers per hour, allowing it to unload cargo ships faster than any other port on the planet.
  • Because the port is totally automated, it can operate at all hours of the day and night, maintaining its volume throughput levels.

Issues and challenges with Indian Ports:

  • Inadequate Infrastructure for Evacuation from Major and Minor Ports: A sub-optimal transport mode mix comes from insufficient infrastructure for evacuation from major and minor ports.
  • Inefficient Hinterland Connectivity: Inefficiency stems from poor hinterland connectivity by rail, road, highways, coastal shipping, and inland waterways. As a result, transportation and freight movement costs increase.
    • For instance, the Jawaharlal Nehru Port (JNP), once a jewel in India’s crown, is now constrained with low productivity and inefficiency due to inadequate infrastructure to handle a huge volume growth, which has gone up to 16 percent over the previous year, and frequent labor strikes.
  • Long turnaround times: Ship turnaround times at Indian ports are long. In Singapore, for example, the average ship turnaround time is less than one day. In India, though, it takes approximately two days.
  • Port congestion: Due to high container volumes, equipment shortages, and inefficient operations, port congestion is a severe issue. In the port of Nhava Sheva, for example.
  • Extensive inspection and scrutiny: While India’s customs processes are progressively becoming paperless and digital, cargo and other maritime activities are still subjected to extensive inspections and scrutiny.

About Sagarmala Project:

  • Sagarmala’s goals include port-led industrialisation, the establishment of world-class logistics institutions, and the development of coastal villages.
  • The growth of domestic carrying capacity would be aided by Sagarmala.
  • Shipbuilding, maintenance, and ownership are not popular in India, and the small ship-owning group prefers to use an international registry rather than an Indian one.
  • If this is to change, the mindsets of the government and the marine business sector must alter as well.
  • The Make in India initiative will result in a multi-fold rise in cargo growth in India, necessitating the use of ships to manage both domestic and international trade.
  • Sea and river voyages over short distances should be promoted. Shipbuilding and ownership should be encouraged by the Ministry.
  • The National Shipping Board, an independent advisory body for the Ministry of Shipping, includes the Directorate General of Shipping (DGS).
  • The NSB should be given permission to investigate the DGS’s operation, which is responsible for increasing the country’s carrying capacity.
  • Coastal communities should be given the chance to own ships, allowing commodities to be delivered along the coast and inland rivers by small ships with shallow draughts.
  • Sagarmala should concentrate on strengthening the coastal youth and encourage them to proudly contribute to the nation’s economy.

Potential Benefits of Sagarmala Project:

  • States and union territories: Under this port-led economic strategy, the government hopes to treble cargo flow in the next five years. It will benefit at least 13 states and union territories, assisting roughly 14% of the country’s overall population.
  • Combine the coastal economy: The initiative will combine the coastal economy with the ports by establishing Coastal Economic Regions and projects with synergy to coastal Industrial Corridors.
  • Port-based smart cities: The plan will lead to the creation of port-based smart cities and other urban infrastructure to improve living circumstances.
  • Skill development: The Sagamala project will conduct skill development/livelihood generation activities for coastal community development.
  • Existing ports will be upgraded and capacity enhanced, as well as new Greenfield ports, minimising bottlenecks for future expansion.
  • Improving port evacuation (road, rail, and inland waterways) as well as logistics infrastructure will reduce total logistics costs and increase cargo movement to and from the hinterland.
  • Expansion of the maritime industry: The project will aid in the expansion of the maritime industry, resulting in increased economic activity in the region – for example, the Shipbuilding and Repair Cluster.
  • Improving policy and institutional bottlenecks for project approvals, finance, and implementation partners will aid in project implementation and monitoring.
  • Additional advantages include:
    • It will make doing business much easier.
    • It will reduce the amount of time it takes for products and raw materials to travel from farm to factory.
    • It will lead to the creation of new jobs.
    • In the future, India could become an important destination for port-led trade between major economies in the east and west.

Government Initiatives:

  • On May 10, 2021, JNPT and New Mangalore Port handled 120 tonnes of medical oxygen on an emergency basis due to the COVID-19 pandemic.
  • India planned to begin full operations in Iran’s Chabahar Port by the end of May 2021. India will build and operate two terminals at the port for a ten-year period.
  • The Union Budget 2020-21 allocated Rs. 1,702.35 crore (US$ 233.48 million) to the Ministry of Shipping.
  • The major ports are expected to finish seven public-private partnership projects worth more over Rs. 2,000 crore (US$ 274.31 million) in FY22. Private sector investments in ports have steadily increased over the last five years, reaching an all-time high of US$ 2.35 billion by 2020.
  • India’s Finance Minister proposed raising ship recycling capacity to 4.5 million light displacement tonnes (LDT) by 2024, resulting in an additional 1.5 lakh jobs.
  • In the Union Budget 2021, the government offered subsidised support for Indian maritime enterprises worth Rs. 1,624 crore (US$ 222.74 million) to encourage merchant ship flagging in the country.
  • In February 2021, the Indian Parliament passed the Major Port Authorities Bill, 2020. The bill aims to decentralise decision-making and strengthen major port governance.

Suggestions:

  • Choosing smaller ports is a positive start; for the time being, rail and road transit networks are sufficient.
  • Projects like Sagarmala, which aspires to establish a network of ports around India’s coastline to protect marine interests, should be revived.
  • Indian ports require physical modernization, but their low performance could also be attributable to administrative concerns. Institutional reform is both a necessity and one of the most significant benefits of privatisation.
  • Overmanning and restrictive labour policies are the main causes of low productivity in Indian ports. There have been suggestions for a reform programme to stimulate investment in innovative freight handling systems.
  • India faces a number of issues as it transitions to a landlord port system. The construction of ‘centres of excellence,’ which are contemporary, integrated terminals run under licence by the private sector, will speed port modernisation due to the demonstration effect.

Road ahead:

  • India’s ports business has a bright future because to increased investment and container traffic. These investments benefit companies that provide services like operation and maintenance (O&M), pilotage and harboring, and maritime assets like barges and dredgers.
  • From now until 2022, port capacity expansion is expected to grow at a CAGR of 5% to 6%, adding 275-325 MT of capacity.
  • Freight transportation by rivers in the United States has proven to be both cost-effective and environmentally benign. The government plans to have 23 canals operational by 2030.
  • Between 2015 and 2035, more than 574 projects worth Rs. 6 lakh crore (US$ 82 billion) have been proposed as part of the Sagarmala initiative.
  • In the Maritime India Summit 2021, the Ministry of Ports, Shipping and Waterways selected 400 projects with a combined investment potential of Rs. 2.25 lakh crore (US$ 31 billion).
  • India’s cargo volume handled through ports is expected to exceed 1,695 million metric tonnes by 2021-22, according to study by the National Transport Development Policy Committee.

Mains oriented question:

The port industry in India is essential to the country’s sustained trade and commerce progress. What challenges does India’s port sector face? What actions have been taken to address them? Examine. (250 words)