June 2018

EDITOR Devangshu Datta

The maritime sector’s fortunes ebb and surge with trade activity. Global trade has been slow for the past several years and that has adversely affected growth. The Indian ports and shipping sector has seen slow growth as a result, and the shipping industry in particular has suffered quite a bit of stress during this period.

There are hopes of revival and growth acceleration driven by a combination of several factors. Among these, there is the policy emphasis on developing coastal trade and cruise tourism, and other policy measures to increase capacity and improve efficiencies in the sector. Apart from that, there is hope that there will be a revival in iron ore exports, as well as an increase in the import of crude and related products.

One positive development has been the increase in private investment. There are 18 proposals to establish new private ports as well as  ports under private-public partnership in various stages of planning and development. There are several such ports already operational. As many as 43 new PPP projects are under planning at major ports and close to 30 per cent of cargo volume at major ports is already being handled through PPPs.

Amendments in the MCA for PPP projects should lead to further interest in these projects. One of the important amendments is the creation of the Society for Affordable Redressal of Disputes-Ports as a dispute resolution mechanism.

There have also been substantial improvements in parameters such as turnaround time, which help ports process more cargo. Financial performance has also improved at major ports. In terms of multimodal linkages, the creation of dedicated freight corridors, coastal economic zones, and road and rail connectivity will all help in terms of logistics. These are all work in progress and the sooner they are completed, the easier it will become to move cargo by water.

Policy changes to allow more relaxed coastal movement of export-import transshipment containers and empty containers have also been made to aid coastal trade. On the legislative side, the draft Indian Ports Bill, 2018, is being prepared for presentation.

Capacity is expected to ramp up rapidly as these projects fructify. Taking private and major port projects together, over 900 mtpa of new capacity is due to be added. However, there have been the usual delays due to tardy clearances. The typical lag of two years between project award and commencement of construction has to be reduced.

In the meantime, the shipping industry is struggling to survive the slowdown. Several shipyards are on the verge of bankruptcy. Urgent policy action is required to shore up these industries until such time as the trade cycle turns positive. The maritime industry typically has long cycles; good planning can help it tide over the slack period and prepare it to take better advantage of the next upturn.

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