Daily Current Affairs – 16th April, 2016DEVENDRA VISHWAKARMA
Maritime India Summit 2016: Taking initiatives to push maritime trade
- Recent inaugural of the Maritime India Summit 2016 in Mumbai, Maharashtra is India’s first ever Maritime Summit and the flagship event organized by Union Ministry of Shipping.
- The main focus of summit is to give impetus to Make In India and blue economy under the Union Government’s ambitious Sagarmala Project emphasizing on port-led development
Current status of Maritime trade:
- Skewed pattern of trade:
- Goods imports are 50 per cent bigger than exports, so ships that bring goods to Indian ports often have no return cargo
- In the case of some ports, the import-export ratio is as skewed as 90:10
- Freight rates are high
- Lack of port-based development as an industrial strategy.
Importance of Maritime sector:
- The maritime sector has a vital role to play in India’s growth story. As India enjoys long coastal boundary it is of paramount importance to revitalize the ports and the shipping sector to increase capacity and efficiency.
- India’s marine export-import trade has been growing at a rate of 4.5 per cent annually and accounts for 95 per cent of total exim trade volume for India.
- A three-pronged plan consisting of a workable policy, fiscal incentives and infrastructure would ensure development of India’s coastal shipping sector and strong growth.
- Apart from having a multiplier effect on the economy, the maritime sector itself has the potential to significantly contribute to GDP.
- India’s main trade commodities are crude and petroleum products, bulk commodities such as coal, iron ore and containerized cargo. Trade growth is expected to remain strong, at 5-10 per cent, for most commodities over the next 10 years representing massive opportunity.
Ocean of opportunity:
The biggest benefit from a robust shipping sector will be massive cost-saving:
- The cost for coastal shipping is Rs. 0.15-0.2 per tonne/km compared to Rs. 1.5 for railways and Rs. 2.5 for road. This represents the potential to lower logistics cost by Rs. 21,000-27,000 crore by 2025.
- Coastal shipping can be a catalyst for coastal industrial clusters and fit in with the plan to develop new smart port cities.
- Inland water transport is an environment-friendly and cost-effective mode of transportation, which has the potential to reduce logistic cost and relieve the congestion on road and railways.
Compelling reasons to invest in Indian ports:
- Government has allowed 100 per cent FDI in ports and 10-year tax holiday has been extended to enterprises engaged in developing, maintaining, and operating ports, inland waterways, and inland ports.
- Projected cargo traffic to be handled by 2021-22 is 1,695 mt according to the National Transport Development Policy Committee, an increase of 643 mt from 2014-15
- Around 2,422 mt of cargo handling capacity is required by 2021-22.
- Additional cargo handling capacity of 901 mt is required to be created in the next 6-7 years.
Need of the hour: focus on the improvement of infrastructure and deployment of technology
To project sea transport as the prime mode of transportation and effectively utilise our 7,517-km coastline we need –
- First and last mile connectivity
- Large scale containerization of cargo
- Development of efficient multi-modal transport services.
- Setting up port-based SEZs at all ports housing a cluster of maritime-related industries
- Warehouses and ship repair facilities would help develop a robust maritime sector.
Working on improvising trade infrastructure:
- Inland waterways extend to about 14,500 km across the country. In sharp contrast to peer countries, only 3.5 per cent of India’s trade is being done through waterways as against 47 per cent in China, 40 per cent in Europe, 44 per cent in Japan and Korea, and 35 per cent in Bangladesh.
- Colombo can handle more container traffic than all of India’s ports put together because India’s ports are too shallow to accommodate big container vessels.