INDIA’S PORTS AND SHIPPING

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Context

• Adani Ports and Special Economic Zone Ltd (APSEZ)’s flagship Mundra Port set a milestone by welcoming MSC Anna, the largest container ship ever to call at an Indian port.

Mundra Port:

• India's first private port, largest container port, and largest commercial port.
• Located on the northern shores of the Gulf of Kutch near Mundra, Kutch district, Gujarat.
• Formerly operated by Mundra Port and Special Economic Zone Limited (MPSEZ) owned by Adani Group, now part of Adani Ports & SEZ Limited (APSEZ) managing several ports.
• Currently handles over 155 MT (highest in India), constituting nearly 11% of India’s maritime cargo.
• Handles nearly 33% of India’s container traffic.

History:

• The Port of Mundra is a private port and also a special economic zone.
• Incorporated in 1998 as Gujarat Adani Port Limited (GAPL), operations commenced in 2001.
• Renamed Mundra Port and Special Economic Zone Limited after merging with another entity.

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SAGARMALA PROJECT: https://www.iasgyan.in/daily-current-affairs/sagarmala-project-17#:~:text=Under%20the%20Sagarmala%20Programme%2C%20the,and%20more%20under%20their%20governance.

MAJOR PORTS IN INDIA: https://www.iasgyan.in/blogs/major-sea-ports-in-india

India’s Maritime Sector and Shipping Industry

• The maritime sector accounts for 95% of India’s trade by volume and 65% by value.

Challenges in the Functioning of Major Ports in India

Challenge	Details
Inadequate Depths	Major ports in India faced limitations in their available depths, making them unsuitable for various international vessels.
Dredging Challenges	Dredging efforts by these ports proved ineffective, resulting in substantial discrepancies between the drafts in access channels and berths.
Extended Ship Turnaround	India’s ports encountered extended ship turnaround times, contrasting with Singapore where this process takes less than a day.
Inefficient Cargo Handling	Cargo handling services at ports were inefficient, with many berths lacking dedicated facilities necessary for swift processing of key cargo types.
Obsolete Equipment	Over half of the port equipment exceeded their economic lifespans, leading to low utilization, as users preferred modern privately-owned equipment.
Storage Shortages	Ports experienced issues related to storage space and connectivity, crucial for seamless accumulation and distribution of cargo.
Connectivity Challenges	Connectivity infrastructure deficiencies hindered efficient cargo evacuation, including narrow last-mile links, daytime truck movement restrictions, and lack of dedicated port roads connecting to highways.
Lengthy Inspections and Scrutiny	Despite advancements in digitization and paperless customs procedures, maritime operations and cargo remained subject to prolonged inspections and scrutiny.
Environmental Non-Compliance	Port operations often resulted in spills, leaks during cargo operations, and oil spills, as they failed to adhere to environmental regulations and standards.
High Turnaround Times	Ports in India suffer from high turnaround times for ships. For example, in Singapore, the average ship turnaround time is less than a day, whereas in India, it is over two days.
Port Congestion	Port congestion due to container volume, shortage of handling equipment, and inefficient operations is a major concern. Example: In Nhava Sheva port.
Sub-optimal Transport Modal Mix	Lack of requisite infrastructure for evacuation from major and non-major ports leads to sub-optimal transport modal mix.
Limited Hinterland Linkages	Poor hinterland connectivity through rail, road, highways, coastal shipping, and inland waterways increases the cost of transportation and cargo movement.
Lengthy Inspection and Scrutiny	Despite the shift to digital customs operations, inspections and scrutiny continue to be lengthy for cargo and other shipping operations.
Inadequate Infrastructure and Technology Issues	Lack of adequate berthing facilities, material handling equipment, navigational aids, and IT systems pose operational challenges at non-major ports.
Issues with Regulations	Regulatory disparities between major and non-major ports, rigid frameworks, and restrictions on foreign-flagged vessels contribute to regulatory challenges.
Issues with PPP Model	Port PPPs impose restrictions on private operators, tariff regulation issues, and the absence of dispute resolution mechanisms, hampering operational flexibility.
Environmental Impact	Poor adherence to environmental laws leads to spillage, pollution, and dredging-related environmental problems, threatening marine ecosystems.
Social Impacts of Port Development	Port projects often result in community displacement, restrictions on fishing grounds, and other social concerns among affected populations.
Manpower and Labour Issues	Lack of training, declining manpower quality, and resistance to reform pose challenges to port labor management.
Unhealthy Competition	Development of multiple ports handling similar cargo in close vicinity may lead to unhealthy competition for cargo arrivals.

In a nutshell, Existing ports face numerous shortcomings, such as outdated designs unfit for modern demands, inadequate infrastructure, poor connectivity, insufficient dredging capacity, and a lack of technical expertise and equipment.

Silver Lining: Industry Scenario

Cargo Traffic on the rise

• India has 12 major and 200 non-major/intermediate ports (under state government administration).
• Jawaharlal Nehru Port Trust is the largest major port in India, while Mudra is the largest private port.
• Jawaharlal Nehru Port becomes first 100% Landlord Major Port. Moreover, India is one of the world's top 5 ship recycling countries. 
• Amongst the Major Ports, Deendayal Port handled the maximum Cargo of 137.56 Mn Tonnes with a share of 17.6% followed by Paradip Port (17.3%), JNPA (10.7%), Visakhapatnam Port(9.4%), Mumbai Port(8.1%), Chennai Port(6.2%), SMP Haldia (6.2%), Kamarajar Port (5.6%), NMPA (5.3%), VOC Port (4.8%), Cochin Port (4.5%), Mormugao Port (2.2%) and SMP Kolkata (2.1%) during Apr-Mar, 2022-23.
• Under public-private partnerships (PPP), there are 58 projects worth ~$5 Bn (INR 40,000 Cr.) under various stages of implementation.
• The Global Maritime India Summit, 2023, one of the largest maritime summits in the world, anchored INR 10 Lakh Cr of investment making a significant stride towards achievement of ‘Amrit Kaal Vision 2047’ of INR 80 Tn investment.

Performance

• Enormous progress has been made.
• In the “major ports” capacity has more than doubled in the past decade from 745m tonnes to over 1,600m.
• Traffic at these ports, which handle more than half of India’s trade, jumped by 46% to 795m tonnes in the ten years to 2023.
• Turnaround time, or the number of hours between the arrival and departure of a cargo ship, has plummeted from 127 hours in 2010-11 to 53 hours ten years later.
• India rose from 54th in the World Bank’s “logistics performance index” a decade ago to 38th last year.

Turnaround Time

• The average turnaround time at major ports has fallen from 127 hours in 2010-11 to 53 hours as of 2021-22.
• It was nearly 200 hours in the early 1990s.

• Kolkata port’s turnaround time improved from 149 hours in 2010-11 to 83 hours in 2021-22.
• Turnaround time has more than halved in Haldia, to 51 hours. Chennai is at 53 hours.
• The Jawaharlal Nehru Port in Navi Mumbai had the fastest turnaround, of 28 hours, in 2021-22. It was at 63 hours in 2010-11, and has improved in the decade since 

Port Traffic

• Port traffic has increased in recent years.
• Major ports have added more than 100 million tonnes in additional traffic since 2014-15 to mark a 24 per cent increase.
• Port capacity has done even better by growing 83 per cent or more than 700 million tonnes (chart 3).

Government Initiatives and Policies

• The Indian government has launched initiatives like the Maritime Agenda, aiming to enhance port performance and capacity to match international standards.
• Proposed policies include setting up a Major Ports Regulatory Authority, implementing captive port policies, and encouraging public-private partnerships (PPP) through tax incentives and foreign investment.
• The Sagarmala programme seeks to bring down logistics costs by improving coastal shipping.
• The government noted that water-borne transport accounted for around six per cent of India’s transport mix.
• It is 12 per cent in the US, 34 per cent in Japan and 47 per cent in China.
• Waterways transport is cheaper than road and rail.

Roadmap for Improving Efficiency of Major Ports in India

Draft Facility Maintenance

• Ensure consistent maintenance of a minimum draft availability of 14 meters, as advised by the Inter-Ministerial Group, to accommodate larger vessels and increase port efficiency.

Dredging Policy

• Establish a clear dredging policy emphasizing competitive bidding to ensure quality assurance and efficient management of dredging requirements. Conduct long-term planning and comprehensive surveys in collaboration with specialized organizations.

Connectivity Enhancement

• Implement four-lane roads and double-line rail connectivity as recommended by the Committee on Infrastructure for swift and efficient transportation.
• Standardize and implement environmental clearances, tariff norms, and land acquisition processes to attract foreign investments.

Operational Efficiency Improvement

• Focus on expanding port capacity and enhancing operational efficiency.
• Invest in advanced cargo handling processes, mechanization of port operations, and scalability in processes to accommodate increasing volumes.

Technology Integration

• Utilize technologies like big data and advanced GPS navigation systems to optimize port operations and improve overall efficiency.

Simplification of Regulatory Regime

• Streamline the regulatory regime to make it less complex and rigid.
• Encourage vertical integration among stakeholders such as environmental agencies, rail/road transport authorities, etc., for holistic port development.

Review of Tariff Authority and Regulatory Bodies

• Review the role and necessity of Tariff Authority for Major Ports (TAMP) and other regulatory bodies to ensure competitiveness and efficiency.
• Quicken clearances, rationalize leases, and stamp duties to facilitate smoother operations.

Leverage  Sagarmala Project

• Leverage the Sagarmala project to modernize existing ports, develop new ports, enhance port connectivity, and promote port-linked industrialization and coastal community development.
• This initiative can significantly reduce transportation and logistics costs while boosting export competitiveness.

Recommendations by Niti Aayog

• Implement recommendations from Niti Aayog's Three Year Action Agenda, including-

Easing Cabotage Restrictions

• Introduce measures to ease cabotage regulations to encourage competition.
• Allow foreign vessels greater access to domestic coastal trade routes.

Eliminating Discriminatory Provisions

• Remove discriminatory provisions favoring Indian vessels over foreign vessels.
• Ensure fair competition and equal opportunities for all players in the maritime sector.

Exploring Deep-water Ports and Barges

• Explore the establishment of deep-water ports to accommodate larger vessels.
• Consider alternative options like barges to facilitate cargo movement in ports with low drafts.

Facilitating Connectivity with Hinterland Areas

• Improve connectivity between minor and non-major ports and hinterland regions.
• Enhance infrastructure and logistics networks to streamline cargo movement from ports to inland areas.
•  These measures will further enhance efficiency and competitiveness in the port sector.

Closing Remarks

• India’s maritime industry still punches below its weight globally.
• Despite some 7,500km of coastline and over 200 ports, the country accounted for only 2.4% of global container traffic in 2021.
• That is about the same as the United Arab Emirates (2.3%) and far less than Singapore (4.5%). These are not manufacturing superpowers, but they are major hubs for trans-shipment.
• India is planning a big hub at Galathea Bay in the Nicobar Islands, located near one of the world’s most important shipping routes.
• The government has also outlined its ambitions for the maritime sector by 2047. These include quadrupling overall port capacity to 10bn tonnes, becoming a leading shipbuilder and creating two new trans-shipment hubs.
• India’s trade infrastructure could improve. Its ports are not very prominent on global shipping routes.
• It also needs deeper ports to cater to bigger vessels.

PRACTICE QUESTION Q. Evaluate the current status, challenges, and future prospects of India's ports and shipping industry. Discuss key policy reforms needed to enhance efficiency and competitiveness. Assess the impact of initiatives like the Sagarmala project and public-private partnerships on the sector's development goals.