Ajay Bhadoo, IAS, Vice Chairman and Chief Executive Officer, Gujarat Maritime Board
Globally, maritime trade has played an important role in improving trade competitiveness. The countries which are bestowed with long coastlines are usually found to be the most preferred locations for manufacturing-related activities. The benefits which long coastlines offer have evolved over time and have resulted in the concept of port and port-led development.
Globally, this concept has been adopted by competitive maritime economies. Realising the benefits which port and port-led development offer, the Government of India and maritime states in the country have started taking similar initiatives to propel economic growth through port-driven development.
If we look at the global maritime scenario, many prominent countries are making sustained efforts to implement their maritime policy or development plan diligently. Some countries such as China, Germany, the United Arab Emirates (UAE) and Sri Lanka, to name a few, are periodically monitoring maritime development and are customising and revising their policy decisions to maintain their market position. Further, countries like the UAE and Sri Lanka have been partnering strategically with other maritime countries for developing infrastructure and other allied facilities.
The first port policy in India, which was announced by Gujarat in 1995, was a path breaking initiative and it established Gujarat as a frontrunner among maritime states in the country. Subsequent to the announcement of the port policy by Gujarat, the country witnessed the development of maritime “masterpieces” such as the first private port at Pipavav, the largest private sector multi-purpose port at Mundra, and the first two operational liquefied natural gas terminals at Hazira and Dahej.
These are just a few noteworthy examples of port development, which set a benchmark for other maritime states. Inspired by the success of port development in Gujarat, other states too brought out their port policies, keeping its port policy as the base document.
Since the announcement of the Gujarat port policy in 1995, many developments have taken place nationally as well as internationally in the maritime space. A global report points towards a scenario wherein traditionally developed countries such as the US and Japan and those in Europe will gradually lose their economic dominance and the centre of the world economy will shift from the West towards the East in the next two decades.
The report goes on to say that in the future, global trade liberalisation and integration will accelerate economic growth. This will be dominated largely by three countries, namely, China, the US and India. Another interesting forecast made in this report is that India will join the top three countries in 2020s with trade growing to nearly three times the size of Japan and 80 per cent the size of the US by 2030.
Now with an over 30 per cent share of maritime trade and traffic of 340 million tonnes, Gujarat is committed to maintaining its dominance as the maritime leader in the country and will make all possible efforts in this direction.
Sensing the need of the hour, we are also reviewing and modifying the existing port policy. For this, as an initial effort we have made a preliminary study of policies that are followed by prominent maritime nations (obtained through secondary sources). A gist of interesting findings is presented here.
Case study: Singapore port
Singapore has seen a notable transformation from being a small regional shipping port to becoming a globally renowned maritime and offshore services destination. Post the formation of the Maritime Port Authority (MPA) in 1996, there has been holistic development of maritime infrastructure. The MPA has been working towards the vision of becoming “a leading maritime agency driving Singapore’s global maritime aspirations”.
The MPA is focusing on a number of the prominent initiatives:
- Approved International Shipping Enterprise (AIS) Scheme: Companies under the AIS scheme enjoy tax exemption on qualifying shipping income for 10 years, which can be renewed subject to terms and conditions. Withholding tax on charter hire payments to non-tax residents of Singapore is also exempt under this scheme, giving companies the flexibility of chartering additional vessels to supplement the existing fleet.
- Maritime Cluster Fund: This fund focuses on developing Singapore’s maritime cluster by supporting the industry’s manpower development, business development efforts and productivity improvement initiatives. Rec-ently, the MPA allocated $12 million to attract, develop and retain local talent in the maritime sector.
- Maritime Innovation and Technology Fund: The MPA created this fund to improve research and development (R&D) and to promote innovation and technology in the maritime sector. This initiative was taken in 2003 with the MPA earmarking $100 million to aid R&D as well as to develop maritime technologies by setting up institutes of higher learning and research. In 2013, the fund was allocated an additional $50 million with the effective duration extended up to 2018. More than 290 R&D projects in areas such as port automation, marine environment and navigation safety have been co-funded under this initiative since its launch.
- Green Initiative for Maritime Development: The MPA has also been taking various initiatives to reduce the environmental impact of shipping and related activities to promote clean and green shipping in Singapore. In 2011, the authority pledged to invest up to $100 million over five years for the initiative which comprises the Green Ship Program, the Green Port Program and the Green Technology Program.
Learnings from Singapore
- Attracting global capital and talent in order to create a global shipping hub
- Striking a balance between growth and environmental sustainability
- Improving customer satisfaction and investing in a quality maritime workforce
- Matching the ever-growing cargo traffic by creating additional port capacity, keeping the future in mind
- Collaborating with other maritime giants for knowledge transfer and research
- Adopting or investing in technology improvement and upgradation.
Case study: UAE ports
In the UAE, the maritime sector is regulated by the Ministry of Public Works and sector development is entrusted to state-level authorities. In terms of maritime sector development, there are two important strategic documents that have been formulated by the Dubai Maritime City Authority and the Abu Dhabi Urban Planning Council. Both the documents have been prepared with the aim of promoting maritime trade by implementing various sector development initiatives.
The Abu Dhabi Urban Planning Council has formulated a Maritime Strategy 2030 document with the vision of attaining a safe, secure and sustainable maritime domain.
Abu Dhabi Maritime Strategy 2030
The strategy document is drafted with the following objectives:
- Sustainable use: Create a spatial planning framework for marine and coastal development in order to ensure systematic utilisation of the coastal space. Achieve sustainable fisheries and protect, restore and enhance water quality.
- Maritime transportation system safety: Integrate freight transportation and passenger vessels with the emirate’s overall surface transport system and ensure that all ships sailing in UAE waters meet appropriate safety, ship health and environment protection standards.
- Crisis management, emergency response and restoration: Prepare and maintain integrated, all-hazard, maritime contingency plans that address major risks for the UAE’s maritime domain. Establish an effective marine accident investigation and analysis capability.
- Science, technology and information management: Develop and implement a maritime information framework to support coordinated, intelligence-led, risk-informed maritime security operations. Establish an ocean observing system that enables marine data collection, integration and sharing. Ensure efficient knowledge management through the development and use of a maritime information portal.
- Governance and coordination: Ensure coordinated governance of coastal development and management through an integrated coastal zone management process.
- Strategic partnering: Engage and seek alliances with local, national, regional and international partners to contribute to a maritime strategy.
Learnings from the UAE
- Create a friendly business environment by promoting the concept of free zones, providing incentives like 100 per cent ownership, 100 per cent tax exemption, quick approval procedures, extended leases, repatriation of capital and profits and the provision of quality infrastructure
- Focus on ensuring safety and sustainability in maritime activities
- Emphasise the need for emergency response and crisis management systems to deal with maritime contingency situations
- Introduce arbitration centres for the maritime industry to set up a strong legal framework to resolve maritime issues smoothly.
Key takeaways for Gujarat ports
If Gujarat’s ports have to find a prominent place in the international maritime fraternity, and if our country has to be recognised as an important maritime destination, certain themes, which comes across very profoundly in all international maritime regions are:
- Undertake and promote research, technology and innovation.
- Attract and retain global capital and world-class talent by creating a suitable ecosystem for maritime services with a global outlook and reach.
- Align Indian ports with global trade flows and develop global cargo hubs where most modern ships can be handled efficiently and safely.
- Ensure safety, sustainability and quick emergency response
- Conserve the environment and resources
- Provide customer satisfaction and a quality workforce.
Expressed above are just thoughts on areas which, in addition to other issues, would be explored while undertaking the revision of the existing port policy of Gujarat.