Context: The recently released World Bank’s Logistic Performance Index (LPI) Report 2023 has brought encouraging news for Indian ports as well as for the country’s logistics sector. India has moved up to 22nd rank in the global rankings on the “International Shipments” category from the 44th position in 2014. Moreover, the country has also secured the 38th rank on the LPI score.
About India’s Port
- Ports are an essential part of the maritime environment and are like hubs that link sea routes with trade routes on land.
- There are 12 major ports and 200 non-major ports (minor ports) in the country. While the Major Ports are under the administrative control of the Ministry of Shipping, the non-major ports are under the jurisdiction of respective State Maritime Boards/ State Governments.
- All the 12 Major ports are functional. Out of the 200 non-major ports, around 65 ports are handling cargo and the others are “Port Limits” where no cargo is handled, these are used by fishing vessels and by small ferries to carry passengers across the creeks, etc.
- All the 12 Major Ports are governed under the Major Port Authorities Act, 2021.
- All the Non-Major Ports (minor ports) are governed under the Indian Ports Act of 1908 and regulates the berths, stations, anchoring, fastening, mooring, and unmooring of vessels.
- Major ports are included in the Indian Constitution’s Union list.
- The Government of India appoints a Board of Trustees to oversee each major port. Their responsibilities include port development, management, and operations.
- India’s key ports had a capacity of 1,598 million tonnes per annum (MTPA) in FY22.
- In FY22, major ports in India handled 720.29 million tonnes of cargo traffic, implying a Compounded annual growth rate of 2.89% in FY16-22.
- Non-major ports accounted for 45% of the total cargo traffic at Indian ports in FY22, due to a significant shift of traffic from the major ports to the non-major ports.
Significance of ports infrastructure
- Facilitating International Trade: Ports serve as vital gateways for international trade, enabling the movement of goods and commodities between countries. India’s major and minor ports handle about 95% of India’s international trade.
- Economic Impact: Ports create numerous economic opportunities, generating employment and attracting investments. The Government of India has allowed Foreign Direct Investment (FDI) of up to 100% under the automatic route for projects related to the construction and maintenance of ports and harbours
- Supply Chain Efficiency: It acts as critical node in global supply chains. They connect different modes of transportation and facilitate the smooth flow of goods from production centers to consumers.
- Trade Competitiveness: Well-developed ports enhance a country’s competitiveness in global markets.
- Revenue Generation: It is a 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.
- Environmental Considerations: Ports are increasingly focusing on sustainable practices and reducing their environmental impact. The focus on decarbonisation in the maritime sector along with the Panchamrit commitments of the government has been reflected in the port sector: There has been a 14-fold increase in the use of renewable energy in major ports over the last eight years. Four of the major ports now generate more renewable energy than their total energy needs.
Challenges in India’s port connectivity
- Prolonged ship turnaround times: India’s ports experience lengthy ship turnaround times. For instance, the normal ship turnaround time at Singapore is under a day. However, it takes more than two days in India.
- 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.
- Sub-optimal Transport Modal Mix: This is due to a lack of the infrastructure required for evacuation from both large and minor ports.
- 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.
- 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.
- Different administrations are in charge of major and minor ports. The regulatory framework is also rigid.
- Spills or leaks from cargo loading and unloading and pollution from oil spills are widespread during port operations due to a lack of respect for environmental rules and standards.
- The majority of port development and initiatives result in the displacement of people for example Mundra in Gujarat and Gangavaram Port in Andhra.
- 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.
- The 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.
- The Indian Vessels Act, 2021 which brings uniformity in law and standardised provisions across all inland waterways in the country.
- Maritime India Vision, 2030: It has identified initiatives such as developing world-class Mega Ports, transhipment hubs and infrastructure modernization 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 of the is to reduce logistics cost
- With the increasing participation of the private sector in the port sector,the share of minor ports has been increasing for example Mundra port is highest in terms of number of containers in handled annually. In this respect suitable policy changes is needed to Indian Ports Act of 1908 with present-day requirements.
- Providers of services such as operation and maintenance, pilotage and harboring and marine assets such as barges and dredgers are benefiting from these investments.
- 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 optimize operations and improve efficiency.
- Careful planning should be undertaken to ensure adequate connectivity with road and rail networks to facilitate seamless movement of goods.
- Coastal Economic Zones (CEZs) 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.
- Efforts should be made to improve connectivity between ports and the hinterland through efficient road and rail networks.
- India should continue its digital transformation efforts in the port sector. 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.
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.
About Logistics Performance Index
- It is an index compiled by World Bank to help countries identify challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance.
- 139 countries are ranked in the 2023 edition of LPI.
- 2023 edition of LPI only conducted survey on international component of LPI. Earlier editions of LPI, focused on both domestic & international surveys.
Rankings in Logistics Performance Index 2023:
- India’s ranking improved by 6 places to reach 38th place on the Logistics Performance Index 2023 as compared to the last edition in 2018.
India’s Improvement in Logistics Performance Index
- The substantial reduction in the dwell time (the amount of time vessels spend in port actively loading or unloading cargo) at Indian ports. This has reached an optimum level of about three days only as compared to four days in countries like the UAE and South Africa, seven days in the US, and 10 days in Germany.
- India has done well in another parameter that measures port operational efficiency: The country’s average turnaround time (TRT) of only 0.9 days is amongst the best in the world. In Belgium, Germany, the UAE, Singapore, Malaysia, Ireland, Indonesia, and New Zealand it is 1.4 days, in the US 1.5 days.
- This achievement is the result of large investments in the upgradation of infrastructure in the ports and shipping sector in the past few years. There has been a consistent focus on improvements in port efficiency and productivity through reforms, induction of new technologies, a greater thrust on public-private partnership and an overall commitment to the ease of doing business.
- The capacity at 12 major ports in the country has increased from 871 million metric tonnes (MMT) in 2015 to 1,617 MMT in 2023.
- The total capacity of Indian ports has gone up from about 1,560 MMT in 2015 to more than 2,600 MMT.
- There has also been a nearly 150 percent 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.
Read also: List of Major important ports in India