After suffering deep contractions due to the pandemic in fiscal year 2020-21, maritime trade has recovered smartly in 2021-22. By the next fiscal year, traffic is expected to exceed pre-Covid levels and, given a combination of policy initiatives, we could witness improved efficiencies alongside increased capacity in the port sector over the next few years.
Ambitious programmes such as Sagarmala and Gati Shakti are being backed up by legislative changes to the Major Ports Authority Act, the Customs Regulations and the acts governing Inland Water Traffic. Sagarmala will improve physical infrastructure and help leverage India’s long coastline, as well as improve road-rail connectivity to the hinterland and develop inland water channels to optimise the speed and efficiency of cargo movement. In addition, the creation of dry ports and inland container depots and container freight stations will help in decongestion. The Sagarmala Development Company, for example, has a broad brief – it can take equity stakes in a variety of projects.
Legislative changes give major ports more autonomy and, therefore, allow concessionaires at major ports to charge market tariffs by freeing them from the restrictive TAMP guidelines. This will make it easier for them to compete with private ports. The Inland Vessels Bill, 2021 creates a uniform regulatory framework for inland vessel navigation to support the operations of registered vessels. This will reduce internal barriers between states and should help to more than double cargo transportation by IWT by 2025.
Over 90 per cent of India’s international cargo moves through its ports, and smoothening out customs processes and inducting technology to make ports smarter and reduce red tape are key priorities. The creation of more customs data electronic interchange locations should help with the replacement of cumbersome manual processes, and also with the acquisition of data for more informed policy decisions in future.
If the combination of capacity enhancement, policy modifications and technology induction works as planned, there could be substantial logistics costs savings of up to Rs 400 billion by 2025. This is because it is low-hanging fruit – India’s port infrastructure and cargo evacuation processes are inefficient by global standards.
The Maritime India Vision 2030 identified 963 initiatives for implementation across major ports, with an estimated investment of Rs 6.78 trillion. As many as 208 initiatives with an estimated investment of Rs 444 billion have been completed. Another 504 initiatives with an estimated investment of Rs 482 billion are under implementation.
There would be plenty of investment opportunities. The private sector has played a crucial role so far and it will be a key participant in the future since private sector knowhow and capital will be required across the entire chain.
Given an enabling policy environment, the private sector can play an even larger role. For example, the revised model concession agreement for public-private participation projects in major ports provides more flexibility, and the new dispute redressal institutional mechanism should lead to quicker resolutions, saving huge amounts of time and money.
Plenty of challenges remain. Tardy land acquisition processes and slow statutory clearances are still stumbling blocks. Connectivity issues and inefficient coordination amongst government agencies and other stakeholders also result in frustrating delays in customs clearances. But things are improving at a steady pace and Indian ports should be well-placed to handle higher traffic volumes with improved efficiencies as the pandemic eases.