The maiden Maritime India Summit 2016 (MIS 2016), held during April 14-1,6 resulted in investment commitments of more than Rs 800 billion, giving the maritime sector a big boost. During the summit, the government also released the National Perspective Plan (NPP) describing the contours of its flagship Sagar Mala programme.
With a 7,500 km coastline, 14,000 km of navigable waterways and 200 ports, India presents huge investment opportunities in the maritime sector. Overall, the government is looking to mobilise Rs 1 trillion worth of investments to more than double port capacity to 3,000 million tonnes (mt) by 2025 from the present 1,400 mt.
Highlights of MIS 2016…
The summit witnessed the signing of 141 MoUs and business agreements by various players. These players include major ports, state maritime boards, and public sector undertakings like Shipping Corporation of India Limited, Cochin Shipyard Limited, the Inland Waterways Authority of India, etc. The agreements covered a wide spectrum of activities, such as modernisation of existing ports and development of new ones, development and extension of inland waterways, enhancement of cargo handling capacity of ports, improvement in hinterland connectivity of ports through road and rail networks, and upgradation of educational and training facilities for the maritime sector.
Release of the National Perspective Plan
The NPP of the government’s big-ticket Sagar Mala programme was also released at the summit. As part of the plan, more than 150 projects have been identified in the areas of port modernisation and new port development, port connectivity enhancement, port-led industrial development, and coastal community development. According to the ministry, the programme can lead to annual logistics cost savings of close to Rs 350 billion, and boost India’s merchandise exports to $110 billion by 2025.
The plan identifies specific opportunities for transportation of commodities such as coal, fertilisers, foodgrains, cement and steel by coastal shipping and inland waterways.
Project implementation will be taken up by the relevant ports, central government ministries, state governments and state maritime boards preferably through private financing or the public-private partnership route. The Sagarmala Development Company will provide equity support for project special purpose vehicles (SPVs) (set up with the central government, state government or ports) and take up residual projects that cannot be funded by any other means. Detailed project reports are being drafted for some of the new ports identified in the plan as well as for connectivity projects like the heavy-haul rail corridor. Preparation of a separate perspective plan for coastal economic zones and a detailed master plan for major ports is also under way.
The way forward
Going forward, the easy availability of funds for developers along with timely execution of projects is important to reap the benefits of the untapped coastline potential. To improve long-term financing in the maritime sector, Rana Kapoor, managing director and chief executive officer, YES Bank, and chairman, YES Institute, recommends, “Awarding long-term contracts to port developers/ship owners, developing the corporate bond market and credit enhancement schemes to increase availability of alternative funds, creating a shipping bank/institution for easier access to credit, facilitating low-cost foreign currency debt, addressing the issue of high hedging costs, and classifying shipping under infrastructure to provide longer term financing options will all go a long way in addressing the issues in the sector.”
To conclude, the summit has undoubtedly restored the confidence of global as well as local investors in the maritime sector. With huge capacity augmentation plans on the anvil, the sector presents significant opportunities to all stakeholders. The success lies in the effective and timely execution of projects.