In an age when being healthy is wealthy, the Indian government comes up with a plan to turn robust. The Shipping Ministry announces an agenda to get in shape within a decade. With a plan in place, it’s time to get set, go – to remove the flab, be fit and win the global race.
by Radhika Rani G.
The epicentre of maritime trade has touched India and the country’s economic growth is set to inch up the curve the coming three decades. It is reason enough for both the government and the industry to be proactive with policies, plans and projects to make the best of the opportunities calling on our ports and shipping. As the clock ticks with athletic precision, it is time to be fit lest we miss the bus.
Given this thought, the Maritime Agenda 2010-2020 unveiled recently in New Delhi comes as the big plan ever to make Indian ports and shipping sectors competitive as trade enablers. The ambitious agenda focuses on all the key sectors, from port capacities to international cooperation, that need to evolve with growing exim and environment demands.
The government believes the economic upsurge will be one of the important drivers for the growth of Indian ports. Also, technological changes in shipping and information technology will trigger growth and provide stimulus for cargo handling.
The Agenda therefore, says the Union Shipping Minister, will bring Indian ports on par with the best international ports in terms of performance and capacity. It will also increase coastal shipping and facilitate hassle-free multimodal transport besides promoting inland water ways for cargo movement. The ministry sounds keen to walk the talk. “We will bring out an annual report card on the maritime agenda every May up to 2020,” G K Vasan announces.
The action plan mainly calls for an investment of Rs 5 lakh crore to create port capacity of 3200 million tonnes by the end of the decade and increase Indian tonnage besides size up coastal shipping, inland waterways, shipbuilding and strengthen human resources. “We do not need high amount of government support but there is a need for private investment,” the minister reiterates.
Of the projected outlay, a major chunk will come from the private sector, says Shipping Secretary K Mohandas. While Rs 3 lakh crore will be spent on improving cargo handling capacities in ports, the remaining Rs 2 lakh crore will be used for increasing tonnage under the Indian flag and control. This in a nutshell is the plan to meet India’s export potential and import dependence through maritime muscle and to thrive healthy and happening.
Of the projected outlay, a major chunk will come from the private sector, says Shipping Secretary K Mohandas. While Rs 3 lakh crore will be spent on improving cargo handling capacities in ports, the remaining Rs 2 lakh crore will be used for increasing tonnage under the Indian flag and control. This in a nutshell is the plan to meet India’s export potential and import dependence through maritime muscle and to thrive healthy and happening.
The need for one
Policies and norms concerning port and shipping operations have been discussed for quite some time in various forums to let wider participation of players in Indian ports and shipping. Experts and advisers have felt the need for the government to revisit the dated practices, reform the existing ones and restructure those for the future. And the last two years saw the reforms process gather momentum and come out with a few statements on industry- and investment-friendly policies.
To make the process of private investment hassle-free, the ministry has reformed and standardised several norms. The process however needs continuous review and improvement, the ministry admits.
In the wake of ports growing in number, size and spread, the policy on the monopoly in the ports sector too has come in for review and so did the land policy and the issue of port management or corporatisation.
As national security, quality of service and quantity of tariff are being discussed, the ministry is reviewing the proposal for renewed norms and standards to bring in a uniform regulatory regime. “All the ports should be left free to fix their tariff, depending upon inter-play of market forces. The regulator can be entrusted with the responsibility of dispute resolution as appropriate,” Vasan says. Also, a near future development could be the merging of the Indian Ports Act 1908 and the Major Ports Trust Act 1963 into India Ports Bill to simplify port regulation.
In the wake of ports growing in number, size and spread, the policy on the monopoly in the ports sector too has come in for review and so did the land policy and the issue of port management or corporatisation.
As national security, quality of service and quantity of tariff are being discussed, the ministry is reviewing the proposal for renewed norms and standards to bring in a uniform regulatory regime. “All the ports should be left free to fix their tariff, depending upon inter-play of market forces. The regulator can be entrusted with the responsibility of dispute resolution as appropriate,” Vasan says. Also, a near future development could be the merging of the Indian Ports Act 1908 and the Major Ports Trust Act 1963 into India Ports Bill to simplify port regulation.
There are again several other areas where reforms are being sought, such as coastal shipping, Cabotage law, Shipping Trade Practices Bill, shipbuilding, shipbreaking, environment and so on. “We are working on them in a steady manner,” informs Mohandas.
The ministry will be drafting a coastal shipping policy and a transshipment policy to relax Cabotage laws for promoting transshipment ports. Currently, work on the International Container Transshipment Terminal in Vallarpadam, Kochi is going on. “The port will be inaugurated by the Prime Minister in the second week of February 2011,” the minister notes.
In the wake of investor-interest, the government hopes to persist with a transparent and well-defined process. While the National Maritime Development Policy encouraged private investments in port projects to meet medium and long-term objectives besides meeting service quality and competitiveness, its timeline expires in 2012. The agenda is therefore the new avatar designed to meet the ‘one-size fits-all’ bill.
What’s in it
Well, like any comprehensive document with a vision and strategy, the agenda underlines the fillip that key segments need. At the outset, the minister spells out the goal targeted for the end of 2020:
- Create port capacity of 3200 MT for handling 2500 MT of cargo (Rs 3 lakh crore investment)
- Increase tonnage under Indian flag and Indian control (Rs 1.2 lakh crore)
- Increase India’s share in global ship building to 5 per cent
- Increase the strength of Indian seafarers to 9 per cent of the global strength by 2015 and sustain above this level.
These well-intended aspirations could make the sector a name to reckon with in the global scenario. However, speed is a challenge at this juncture when several NMDP projects are yet to materialise. The Shipping Secretary, in his recent interview to Maritime Gateway, admits quick action is indeed a matter of concern. “We have been working to do things fast. But all said and done, what is important is that the delivery of service has to keep pace with the requirement,” he stresses.
Experts too, while supporting the government initiatives, are apprehensive of projects overshooting timelines. Indian maritime sector, says iMaritime report, has all the ingredients to become competitive in the global market place. “However, it requires vision, determination, innovation, and above all considerable planned diligence – to achieve this competitiveness in its entirety.”
While the present policies are dynamic and investor-friendly, more path-breaking initiatives are required to boost the ports sector to the anticipated levels of growth in terms of traffic as well as capacity, the ministry notes in the vision document. “It is necessary to review the policies periodically, say once in three years, to keep them relevant in changing times.”
Although the minister is practical enough in announcing a score card on the agenda every year, one hopes the review process does not remain mere wishful thinking given the inertia of projects. According to Union Minister of Commerce & Industry Anand Sharma, the country's foreign direct investment inflows were in excess of US$ 100 billion during the last three years and hopes they will touch US$ 250 billion in the next five years.
“In the next decade, India is set to absorb an investment of over US$ 1.7 trillion in infrastructure alone,” he announces.
Despite fund flows into various projects, including ports and captive industries around them, apprehensions stem from the past profile of project development in India and the dissatisfaction voiced by investors on the pace of projects. There have been instances of investors backing out of projects that remained a non-starter. As experts rightly point out, periods of rising interest rates have made it difficult for infrastructure developers to raise funding capital.
Let’s do it
While the concern is about the value for money and effort lost in dilemmas and delays, it is time for some real action – for people involved in planning and execution to get their act right.
For instance, though the Korean Steel major POSCO’s proposed project in Orissa hangs in the air for want of environmental clearance, the commerce minister backs such project and other highest-quality missions on the belief that bilateral trade and thereby investments form the corner stone of India's development policy.
The POSCO Project, he informs, will not only produce 12 million tonnes of steel, bringing in an FDI of over US$ 12 billion, but will also create nearly 50,000 direct and indirect jobs in the long term. Such a project will also have considerable spinoff for large-scale mineral development, infrastructure development through captive port, road hubs, downstream activities in automobile and construction, the minister adds.
With the power, roads and telecommunications sectors showing a promising growth over the next seven years, the government could open itself for discussion and debate with stakeholders for scripting a successful India Inc story.
According to analyst Susanta Mazumdar, macro concerns remain, particularly as to the Indian fiscal situation and inflation. “But infrastructure assets tend to offer relatively high pricing power, and assets with pricing power and stable regulatory regimes also typically exhibit high inflation protection.” The Indian focus on infrastructure is very much a long-term-growth theme, which is only at the beginning of a long and sustainable cycle, Susanta adds.
The zest is evident from the government’s eagerness to welcome multinationals to invest in fast-paced infrastructure projects like dedicated freight corridors, subway lines and SEZs under a public-private partnership model. For instance, the Consulate General of India in Shanghai has invited Chinese investors to ‘go-global’ with India.
“With a combination of factors such as macro-economic stability, consistent growth, abundant skilled manpower, well-developed banking and judicial system, vibrant capital market and its large-scale investment absorption capacity, India offers attractive returns to prospective investors," Consul General Riva Ganguly Das promised a keen audience.
The maritime agenda therefore comes at an opportune time and the ministry hopes to allay any fear and come clear on taking the cause of maritime development forward. A sense of partisanship and openness can unite the stakeholders on to a common cause and result in fruitful action and accountability. So, it’s time for all the players concerned to pull up socks and sprint together towards the finish line.
