India's Maritime Sector

Table of Contents

Context: India’s maritime sector is expected to play a pivotal role in achieving a $20 trillion economy by 2047, with a 9% projected growth rate.

India’s Maritime Sector:

India is strategically located on the world’s shipping routes with a coastline of approximately 7,517 km.
The Indian Maritime Sector contributes to 95% of India’s trade by volume and 70% by value.
India is the 16th largest maritime country in the world and 3rd largest globally in terms of ship recycling by tonnage.
As of 2021, India owned over 30% global market share in the ship breaking industry and is home to the largest ship-breaking facility in the world.

Ports and Shipping Industry:

Ports play an important role in the overall economic development of a country.
Approximately 95% of India’s merchandise trade is done through sea ports.
The total cargo handling capacity of Indian ports is about 2400 mn tonnes per annum (MTPA).
India with its long coastline has 12 Major (under central Government administration) and 200 non-major ports (under state Government administration) and a vast network of navigable waterways.
These serve as a backbone for EXIM, international trade, coastal shipping and cruise shipping.
As India opened its economy towards liberalisation, privatisation and globalisation in the year 1991, government policies were formed to develop export potential and improve trade and commerce.
Development of Special Economic Zones (SEZ) and allowing foreign enterprise participation has helped India in achieving high trade growth over the period.
India’s top maritime export destinations are the US, UAE, Saudi Arabia, Hong Kong, China, Germany and Republic of Korea.
Key commodities handled at the Indian ports are petroleum products, coal, automobile, iron ore, engineering goods, chemicals and electronics.
India has a merchant fleet of 1491 seagoing ships with a total capacity of 13 Mn GT.

Major and Minor Ports:

Ports in India are classified as Major and Minor Ports according to the jurisdiction of the Central and State government as defined under the Indian Ports Act, 1908.

Major Ports:

Major ports include Deendayal (erstwhile Kandla), Mumbai, Jawaharlal Nehru Port Trust (JNPT), Marmugao, New Mangalore, Cochin, Chennai, Kamarajar (earlier Ennore), V O Chidambaranar, Visakhapatnam, Paradip and Kolkata (including Haldia).
All the 12 Major Ports are governed under the Major Port Trusts act, 1963 and are owned and managed by the Central Government.
- Each major port is governed by a Board of Trustees appointed by the Government of India.
- The Trusts operate on the basis of policy directives and orders from the Government of India.

Minor Ports:

All the Minor Ports are governed under the Indian Port Act, 1908 and are owned and managed by the State Governments.

Challenges faced by shipping industry In India:

Infrastructural Challenges: Capacities of all major and minor ports in India need to be increased urgently. Due to transhipment points in other countries, the cycle time of Indian cargoes has rendered them uncompetitive on a global scale. Besides this development of road network, electricity and overall infrastructural development is also the need of the hour.
Institutional Challenges: Lack of a single window clearance system has made it challenging for shipping companies in India.
Financial Challenges: The burden of taxes like Customs Duty on Bunkers, Landing Fees, Income Tax etc. without negligible exemptions have made it difficult for shipping companies to thrive.
Slow Process: The shipment procedures undertaken by shipping companies is quite cumbersome in comparison to other modes of transportation. This, in turn, wastes valuable shipping time and labour time which goes into the logistic process.
Vessel Size: The size of vessels are getting bigger owing to the rise in demand for shipping services. Many ports in India are still struggling to keep up, and many of these large vessels cannot be called on into most of the ports.
Lack of container: According to the Economic Survey, the lack of containers led to a rise in sea freight rates in the range of 300% to 350%.

Government Initiatives:

To promote India’s shipping and port industry, the government has also introduced various fiscal and non-fiscal incentives for enterprises that develop, maintain and operate ports, inland waterways and shipbuilding in India.

Foreign Direct Investment: It has allowed Foreign Direct Investment (FDI) of up to 100% under the automatic route for port and harbor construction and maintenance projects.
Tax Holiday: It has also facilitated a 10-year tax holiday to enterprises that develop, maintain, and operate ports, inland waterways, and inland ports.

To improve operational efficiency through mechanization, deepening the draft, and speedy evacuations,

Multi Modal Logistics Park (MMLP): The Ministry of Road Transport and Highways, the Ministry of Ports, Shipping & Waterways, and the Ministry of State for Road Transport & Highways, signed a tripartite agreement for the swift development of modern Multi Modal Logistics Park (MMLP) under Bharatmala Pariyojna across the country.
Draft Indian Ports Bill 2022: The bill aims to centralize the administration of minor ports that are currently managed by state governments.
Marine Aids to Navigation Bill 2021: The Marine Aids to Navigation Bill 2021 was passed by the Parliament, incorporating global best practices, technological developments, and India’s international obligations in this field.
The Maritime India Vision 2030: The Vision was launched in 2021. The vision serves as a blueprint to achieve an accelerated and coordinated development of India’s diverse maritime sector, comprehensively identifying over 150 initiatives covering all facets of the country’s maritime sector.
Sagar Mala Program: Launched in 2017, the government launched the ambitious Sagar Mala Program with the vision of port-led development and growth of logistics-intensive industries. Under the program, $123 Bn would be invested across 415 projects across the following identified components:
- Port Modernization and New Port Development
- Port Connectivity Enhancement
- Port-Linked Industrialization
- Coastal Community Development

Way Forward:

The Standing Committee on Transport, Tourism, and Culture made several recommendations in its report on the Promotion of Infrastructure in India’s Maritime Sector.

Increasing funds: Increase fund utilization to expedite project completion under the Sagarmala Programme.
Port Modernisation:
- Enhance the minimum draft of Indian ports through dredging to handle larger vessels.
- Implement modern cargo handling techniques at existing ports, especially for dry cargo, to increase capacity.
Connectivity to Ports:
- Ensure timely completion of all rail/road projects.
- Conduct environmental impact assessments before releasing funds for connectivity projects to prevent delays.
- Identify and address logistical bottlenecks in major and minor ports.
- Establish links between private ports and major/minor ports for faster goods movement.
Public Private Partnership (PPP) Projects:
- Rationalize taxes to attract foreign shipping companies.
- Provide financing to the private sector for modernization of non-major ports.
- Create a specialized maritime fund to support inland waterway operations and vessel financing through PPP mode.
- Set up a single window approval system for PPP projects.
Ship Repair Industry:
- Support indigenous manufacturers of shipbuilding parts under the Make in India campaign.
- Grant deemed export status to the ship repair industry.
- Develop programs to generate revenue and employment in the ship repair industry.
Promotion of Coastal Shipping:
- Develop dedicated coastal berths, fuel supply and storage facilities to promote coastal shipping.
- Enhance last-mile connectivity to ports to facilitate coastal shipping.
Maritime Training:
- Conduct a training needs analysis for employees, focusing on operating port equipment.
- Assess annual workforce requirements and formulate strategies to achieve desired levels.
- Establish Centers for Coastal and Inland Maritime Technology in collaboration with institutions like IITs, NITs, and IIMs to provide opportunities in applied research and development in maritime training.