Introduction:
The maritime transport facilities at ports account for over 95% of India’s trade by volume and 65% by value. In FY22, key ports in India boasted a capacity of 1,598 million tonnes per annum (MTPA). Given India’s global engagement aspirations and the imperative for maritime security, upgrading port infrastructure becomes crucial for operational efficiency.
Body:
The Significance of Developed Port Infrastructure for India:
- Facilitation of International Trade: In FY 2020-21, major Indian ports managed 704.8 million tonnes of cargo, including coal, crude oil, iron ore, and containers.
- Employment Generation: A study by the National Council of Applied Economic Research (NCAER) anticipates around 40 million direct and indirect jobs in India’s port sector by 2025.
- Reduction of Logistics Costs: Enhancing coastal shipping and inland waterways, which are 60 to 80% more cost-effective, can lower the current logistics cost of 14% of GDP, boosting trade competitiveness, supply chain efficiency, and economic growth.
- Boost to Blue Economy: Developed port infrastructure can amplify the export of marine products, given India’s position as one of the world’s top five fish producers.
- Strengthening of National Security: Properly developed port infrastructure ensures the security of strategic installations near ports, including naval bases, nuclear power plants, and satellite and missile launching ranges.
- Emergence of India as a Net Security Provider: Indian Port Development can counter the coercive nature of the Chinese Belt and Road Initiative (BRI) by serving as a hub-and-spoke model for the coastal development of other South Asian countries.
- Environmental Considerations: Port infrastructure development becomes essential to address challenges such as overfishing, coastal degradation, marine pollution, and rising sea levels.
- Development of Coastal Communities: Sustainable livelihood development in the fisheries sector promotes the inclusive development of coastal communities.
Challenges with India’s Port Infrastructure:
- High Turnaround Time: Despite improvements, Indian ports have a turnaround time of 62.16 hours, considerably poorer than global standards.
- Underdeveloped Port Infrastructure: Capacity utilization of major ports was around 65% in 2019, with various infrastructural challenges affecting the sector.
- Land Acquisition Issues: Significant challenges in acquiring land for port development have led to project delays.
- Complex Customs Procedures: Cumbersome customs procedures and lengthy documentation processes contribute to delays and increased transportation costs.
- Regulatory Issues: Lack of a unified regulatory body and overlapping jurisdictions among different agencies create regulatory uncertainty in the port sector.
- PPP Model Challenges: Issues with tariff regulation, dispute settlement processes, and strict regulations on private players’ scope affect the PPP model in port operations.
- Environmental Challenges: Port development operations, such as oil spills and dredging, pose threats to the marine environment and ecology.
- Social Impacts: Port development initiatives often result in the displacement of indigenous coastal populations.
Government Initiatives for Port Infrastructure Development:
- Sagarmala Project: Aiming to promote port-led development by leveraging India’s coastline, waterways, and strategic location on international trade routes.
- Project UNNATI: Focused on benchmarking the operational and financial performance of major ports for identifying improvement areas.
- 100% FDI for Port Construction: Liberalization of FDI has attracted substantial investment, with cumulative inflows reaching US$1.63 billion.
- Major Port Authorities Act 2021: Decentralizing decision-making and reinforcing excellence in major port governance.
- Marine Aids to Navigation Act 2021: Enhancing safety and efficiency in vessel traffic services and training at international standards.
- The Indian Vessels Act 2021: Ensuring uniformity in law and standardized provisions across all inland waterways.
- Tax Holiday for Private Port Development Players: A 10-year tax holiday for enterprises involved in port, inland waterway, and inland port development.
Conclusion:
In conclusion, ensuring maritime security and robust port infrastructure is pivotal for achieving economic growth and strategic dominance in the Indian Ocean Region. Government support for world-class port development is imperative to enhance global competitiveness and safeguard India’s strategic interests.
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