The Indian Ports Association (IPA) acts as a think tank to the Ministry of Shipping (MoS), working to transform Indian ports into world-class facilities to help the country emerge as a major player in world maritime trade. In an interview with Indian Infrastructure, DrAbhijit Singh, Executive Director, IPA, talks about the initiatives undertaken by the government to increase the competitiveness of Indian ports. Excerpts…
What are the major challenges faced by Indian ports in implementing ease of doing business initiatives?
As per the World Bank’s most recent report – Doing Business [DBR] 2020 – on the ease of doing business ranking, India ranked 63rd among 190 countries by improving its rank by 79th position in the last five years (2014-19). India has leapt 14 ranks over its rank of 77 in the DBR 2019. Ports have a huge role to play in improving the trading across borders ranking, thus impacting the overall ease of doing business ranking. Currently, India is ranked 68th on the trading across borders indicator.
The trading across borders indicator records the time and cost associated with the logistical process of exporting and importing goods. It measures the time and cost (excluding tariffs) associated with three sets of procedures – documentary compliance, border compliance and domestic transport – within the overall process of exporting or importing a shipment of goods. A number of modernisation, mechanisation and digital transformation measures such as direct port delivery, direct port entry, deployment of a port community system (PCS1x), installation of container scanners and radio frequency identification systems, doing away with manual forms, etc. have been taken to reduce the time and cost associated with export-import (exim) trade and improve ease of doing business.
The major ports are working vigorously towards implementing such high-tech digital solutions to ease the flow of cargo from ports. The key challenge is to get all the stakeholders on board to make the whole ecosystem work efficiently. We are continuously organising roadshows and stakeholder meetings and consultations to overcome this challenge so that each and every stakeholder understands the system and sees huge value in adopting it.
There is a lot of potential in domestic cruise tourism. Is the government taking any steps to rekindle this sector to tap its economic potential?
The MoS has turned its focus to maritime tourism to promote domestic and international tourism. Recent steps to rekindle the segment include:
- A national roadmap for the development of cruise tourism, developed by an internationally renowned consultant, has projected the possibility of phenomenal growth over 25 years in the number of passengers from 0.2 million in 2016 to 4 million in 2041, an increase in ship calls from 166 to 955, passengers per ship from 1,200 to 4,100, employment potential from the existing 5,000 persons to 250,000 persons and economic potential of Rs 355 billion as compared to Rs 7.12 billion in 2016.
- Currently, the ports of Mumbai, Goa, New Mangalore, Cochin and Chennai are primarily ports of call for cruise lines. However, the Costa Neo Classica cruise made Mumbai a home port in 2017-18 and 2018-19.
- In addition, domestic cruise ship Angriya, with best in-class amenities, has commenced operations between Mumbai and Goa on alternate days. So far, the vessel has made 64 calls at both the Mumbai and Goa ports and carried 55,798 passengers during 2018-19.
- A task force under the joint chairmanship of the Secretary, Ministry of Shipping, and the Secretary, Ministry of Tourism, was constituted in November 2015 for coordinated efforts to create an enabling ecosystem for the development of cruise tourism.
- Standard operating procedures (SOPs) have been formulated for the major ports. A monitoring committee has been constituted to ensure smooth implementation of the SOPs.
- Foreign flag cruise vessels have been allowed to call at Indian ports without obtaining a licence from the Directorate General of Shipping and this facility has been extended until February 5, 2024.
- To make India attractive to cruise passengers and to promote cruise tourism, the e-visa procedure has been streamlined for quick immigration clearance. Passengers arriving with e-visas have been exempted from biometrics requirements.
- Port charges have been rationalised at all the major ports to attract cruise ships.
- Port-level committees under the respective major ports’ chairpersons have been constituted to address manpower, coordination and logistics issues.
- Cruise terminals with modern facilities have been constructed or are being constructed at five major ports – Mumbai, Goa, New Mangalore, Cochin and Chennai.
For which aspect of a port’s working and development would the public-private partnership (PPP) model be unsustainable?
Over the years, to make the PPP model sustainable for ports, the government has been continuously reforming policies and guidelines in consultation with all stakeholders and has been very empathic to the needs and demands of the private sector. Approved by the union cabinet in January 2018, the model concession agreement (MCA) was amended with a view to obviate the problems being faced in the execution of PPP projects on account of certain provisions of the earlier MCA. Meanwhile, the government is drafting guidelines for dealing with stressed PPP projects at the major ports.
What are the factors that will enhance global exim trade through Indian ports?
Bilateral and multilateral free trade agreements can boost exim trade through Indian ports. As a result of such agreements, India is exporting a huge number of automobiles to Africa and Latin America. China’s increasing labour costs and growing trade frictions with the US can lead to shifting of manufacturing facilities of global manufacturing players to India, and this can enhance exports through Indian ports.
Growth in container traffic, penetration of containerisation and further development of the hub and feeder service structure are drivers of container market growth. Further, technological measures taken for improving efficiency and reducing the time to export can boost trade through Indian ports. Rationalising tariff structures and discount methods at the major ports can also have a huge impact on the growth of exim trade at ports.
With a view to promote the expansion of port infrastructure and facilitate trade and commerce, Major Port Authorities Bill, 2020, was introduced in the LokSabha recently. The Bill aims at decentralising decision making and to infuse professionalism in governance of major ports. It would help to impart faster and transparent decision making, thus benefiting the stakeholders, and better project execution capability. The Bill is aimed at reorienting the governance model in central ports to landlord port model in line with the successful global practice. This will also help in bringing transparency in operations of major ports.
How is the Ship Recycling Act expected to increase the brand value of the recycling yards located at Alang, Mumbai, Kolkata and Azhikkal?
The Ship Recycling Act, 2019, ensures environment-friendly recycling of ships and adequate safety of yard workers. This act paves the way for more global ships to enter Indian shipyards for recycling, thereby boosting employment and business opportunities. As per the act, the ships to be recycled in India will need to obtain a “ready for recycling” certificate in accordance with the Hong Kong Convention. Hoping for increased business, a large number of recycling plots, especially at Alang, Gujarat, are also gearing up and obtaining a statement of compliance with the Hong Kong Convention. India is a leader in the ship recycling industry with a share of over 30 per cent of the global market. With this act, the share is expected to grow to up to 60 per cent as countries which earlier did not send their ships to India for recycling, citing environmental and safety concerns, will start doing so now. Thus, the act will definitely increase the brand value of Indian ship recycling yards.
What are the activities currently in the pipeline to push the idea of port-led development?
There are a slew of projects in the pipeline under the SagarmalaProgramme to promote port-led development. Some of these are as follows:
- More than 600 projects involving an investment of Rs 8.5 trillion are at different stages of implementation across the four pillars of Sagarmala.
- Of this, more than 90 projects worth about Rs 150 billion have already been completed and the remaining projects are expected to be completed by 2035.
- A world-class, deep draught container port is being developed at Vadhavan. The port will involve the development of 15 berths with a total length of 8,680 metres and two single-point moorings.
- A number of projects are being implemented at Paradip port – development of cargo berths at the Western Dock with deep draught (20-22.5 metres) for handling dry bulk Capsize vessels (0.18-0.2 million deadweight tonnage), and the development of two new berths and mechanisation of three berths at a cumulative cost of Rs 28 billion.
- The government is reorienting ports such as Mumbai, Goa and Chennai from cargo handling ports to cruise and recreational tourism hubs.
- What kind of support is expected from the government to ensure overall growth and development of ports?
The government’s priority is to expedite the ongoing projects and bring in more investments. Also, the major ports are taking a huge leap in digitalisation and automation transformation. These measures will help the ports compete with global ports and facilitate both exim and domestic trade.
To ensure efficient and expeditious working of the major ports, it is essential to overhaul the administrative set-up of the port trusts. The government is pushing for a new Major Port Authorities Bill to modernise the institutional structure of the major ports to improve their efficiency levels and provide greater autonomy. Further, the government needs to come up with a coherent policy for expediting long-pending environmental clearances for projects. Delays in such clearances not only affect project implementation but also dampen investor confidence.