Port Economy will drive India’s growth

Context: Recently, the Prime Minister of India commissioned the ₹8800-crore Vizhinjam International Deepwater Multipurpose Seaport, India’s first dedicated container transshipment port, in Kerala.

Vizhinjam International Deepwater Multipurpose Seaport:

• India’s first dedicated container transshipment port.
• Developed by: Adani Ports and Special Economic Zone Ltd, through a public-private partnership with the Kerala government.
• It has a natural deep draft of nearly 20 metres and is located near one of the world’s busiest sea trade routes.
• It is expected to strengthen India’s position in global trade, enhancing logistics efficiency, and reducing reliance on foreign ports for cargo transshipment

India’s Ports

• Port Infrastructure: 13 major ports and over 200 notified minor and intermediate ports. 
• India is the 16^th largest maritime nation in the world. Most cargo ships traveling between East Asia and destinations like America, Europe, and Africa traverse Indian waters, highlighting India’s strategic importance.
• Major Ports are under the administrative control of the Ministry of Shipping and are governed under the Major Port Authorities Act, 2021. The Government of India appoints a Board of Trustees to oversee each major port. Their responsibilities include port development, management, and operations.
• All the Non-Major Ports (minor ports) are governed under the Indian Ports Act of 1908. The Act regulates the berths, stations, anchoring, fastening, mooring, and unmooring of vessels. They come under the jurisdiction of respective State Maritime Boards/ State Governments.

Significance of Ports Infrastructure: 

• Vital gateways for international trade: Enable the movement of goods and commodities between countries. India’s major and minor ports handle about 95% of India’s international trade.
• Create numerous economic opportunities, generating employment and attracting investments. The government has allowed up to 100% Foreign Direct Investment (FDI) under the automatic route for projects related to the construction and maintenance of ports and harbours. 
• Critical node in global supply chains: connect different modes of transportation and facilitate the smooth flow of goods from production centres to consumers.
• Significant source of revenue for governments through tariffs, customs duties, and other fees levied on cargo handling and related services.
• Connectivity and Regional Integration: They facilitate trade between neighbouring countries, promote cross-border cooperation, and support the development of economic zones and industrial clusters. Well-developed ports enhance a country's competitiveness in global markets.

India's Improvement in the Port Sector

• Increased Port Capacity:
  • India’s major ports are handling 820 MMT of cargo annually, which is a 47% growth since 2014. 
  • The overall port capacity has doubled to 1,630 MMT during the same period.
  • India’s port capacity is expected to increase six-folds to 10,000 MT per annum by 2047. This would make India one of the top 10 maritime countries in the world.
• Mega Ports:
  • Jawaharlal Nehru Port, India’s largest shipping facility, has crossed 10 million TEUs (twenty-foot equivalent units) container handling capacity. 
  • Vadhavan Port in Maharashtra is set to become India’s largest container facility.
  • The proposed International Container Transshipment Port at Galathea Bay, Great Nicobar would capture transshipment trade along key global routes.
• Efficiency Gains:
  • According to the World Bank’s Logistic Performance Index (LPI) Report 2023, India is ranked 22nd in the “International Shipments” category, from the 44th position in 2018.
  • Operational Efficiency: Container dwelling time has now reduced to three days. Vessel turnaround time has improved to 0.9 days.
  • Nine Indian ports feature in the World Bank’s Container Port Performance Index 2023. Visakhapatnam ranks among the top 20 globally.
• Enhanced Public-Private Partnerships: There has also been a nearly 150% increase in the value of operationalisation of PPP projects in the major ports from about Rs 16,000 crore in 2015 to more than Rs 40,000 crore in 2022-23. 

Associated Challenges

• Issues with technology and inadequate infrastructure are present in non-major ports, where there aren't enough berths or ones that are long enough for vessels to berth properly.
• Port Congestion: The number of containers, the lack of equipment for managing them, and ineffective operations all contribute to port congestion, which is a major problem. Consider the port of Nhava Sheva as an illustration.
• Protracted Inspections and Scrutiny: Despite India’s customs processes rapidly moving towards paperlessness and digitisation, cargo and other maritime activities are nevertheless the subject of protracted inspections and scrutiny.
• Management Issues: Different administrations are in charge of major and minor ports. Their regulatory framework is also rigid.
• Dredging: Some Indian ports particularly those on the east coast and near the Gulf of Mannar are prone to excessive siltation which reduces their capacity.

Government Initiatives

• Harit Sagar Green Port guidelines: It aims to bring about a paradigm shift towards safe, efficient, and sustainable ports while implementing sound environmental practices among all stakeholders.
• National Logistics Portal (Marine): It is a single-window digital platform for all stakeholders including those engaged in cargo services, carrier services, banking and financial services, and government and regulatory agencies. 
• Sagar Setu App: It facilitates seamless movement of goods and services in ports while substantially enhancing the ease of doing business.
• Major Port Authorities Act, 2021 which grants greater autonomy to major ports. 
• Marine Aids to Navigation Act 2021 that provides for increased safety and efficiency in vessel traffic services and training and certification at par with international standards.
• Indian Vessels Act 2021 which brings uniformity in law and standardised provisions across all inland waterways in the country. 
• Maritime India Vision 2030: Accelerate growth of India’s maritime sector by developing world-class Mega Ports, transhipment hubs and infrastructure modernisation of ports. 
• 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 is to reduce logistics cost. 

Way Forward

• Promoting Private Sector Participation: With the increasing participation of the private sector in the port sector, the share of minor ports has been increasing. In this respect suitable policy changes are needed to the Indian Ports Act of 1908 with present-day requirements.
• Infrastructure Development: Expansion and modernisation by increasing the capacity of ports to handle larger volumes of cargo, improving berthing facilities, and upgrading storage and handling capabilities. The use of advanced technologies such as automated cranes, robotic systems, and smart port management systems should be explored to optimise operations and improve efficiency.
• Improve Port Connectivity: Efforts should be made to improve connectivity between ports and the hinterland through efficient road and rail networks.
• Establishing Coastal Economic Zones (CEZs): To provide a conducive business environment, streamlined regulatory processes, and infrastructure support, which can attract manufacturing units, logistics companies, and other industries to set up operations near ports.
• Digitisation of Port Operations: Implementing technologies such as blockchain, Internet of Things (IoT), and data analytics can enhance transparency, efficiency, and security in port operations. Automation of processes, such as electronic documentation, container tracking, and cargo clearance, can help reduce paperwork, delays, and human errors.
• Reducing Regulatory Burden: Simplifying and streamlining regulatory processes, permits, and clearances related to port infrastructure development can attract investments and expedite project implementation. An efficient regulatory framework can provide certainty to investors and promote ease of doing business in the port sector.

The port economy reaches its full potential when infrastructure and the ease of doing business are promoted together. Through public-private partnerships (PPP) over the past 10 years, the government has undertaken efforts through policy reforms and induction of new technologies to upgrade India’s ports to global standards.