Maritime sector in India has been the backbone of the country’s trade and has grown manifold over the years. To harness India’s 7,500 km long coastline, 14,500 km of potentially navigable waterways and strategic location on key international maritime trade routes, the Government of India has embarked on the ambitious Sagarmala Programme which aims to promote port-led development in the country.
The concept of Sagarmala was approved by the Union Cabinet on 25th March 2015. As part of the programme, a National Perspective Plan (NPP) for the comprehensive development of India’s coastline and maritime sector has been prepared which was released by the Hon’ble Prime Minister, on 14th April, 2016 at the Maritime India Summit 2016.
Need for Port-Led Development in India
India is one of the fastest growing large economies in the world with a GDP growth rate of 7.5% in 2015-16 and ports play an important role in the overall economic development of the country. Approximately 95 % of India’s merchandise trade (by volume ) passes through sea ports. Many ports in India are evolving into specialised centres of economic activities and services (Table 1) and are vital to sustain future economic growth of the country.
|Port (Throughput in MMTPA, 2014-15)||Industrial Region (Area in Hectares )||Specialised Commodity|
|Deen Dayal -92.49||Deen Dayal SEZ (280 Ha + 120 Ha Expansion )||Multi Product SEZ|
|Chennai Port -52.54||Auto Hub|
|JNPT -63.8||Proposed JNPT SEZ (277 Hac)||Multi Product SEZ|
|Mundra Port -105||Adani Mundra SEZ (6472.8 Ha)||Multi Product SEZ|
|Sikka Port -124||Reliance Jamnagar SEZ (4494 Ha)||Petro-Chemical Hub|
|Hazira Port /Dahej Port (7.1+ 27)||Dahej SEZ (1682 Ha)||Part of Dahej Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR)|
However, Indian ports still have to address infrastructural and operational challenges before they graduate to the next level. For example, operational efficiency of Indian ports has improved over the years but still lags behind the global average. Turnaround time (TAT) at major ports was approximately 4 days in 2014-15 , whereas global average benchmark is 1-2 days . Some of the private sector ports in India like Mundra and Gangavaram, have been able to achieve a turnaround time of around 2 days .
Secondly, last mile connectivity to the ports is one of the major constraints in smooth movement of cargo to/from the hinterland. Almost 94% of Indian freight uses either road or rail for transportation of goods . A significant share of this cargo experiences “idle time” during its transit to the ports due to capacity constraints on highways and railway lines connecting ports to production and consumption centers. Although water-borne transport is much safer, cheaper and cleaner, compared to other modes of transportation, it accounts for only 6% of India’s modal split . By comparison, coastal and inland water transportation contribute to 47% of China’s freight modal mix, while in Japan and US, this share is 34% and 12.4% respectively . Significant savings can be achieved by shifting movement of industrial commodities like coal, iron ore, cement and steel to coastal and inland waterways. For example, transportation of coal through coastal shipping costs one-sixth (Rs. 0.20 per tonne km) as compared to rail (Rs. 1.20 - 1.40 per tonne km). However, more than 90% of coal currently moves via railways . The constraints on connectivity and sub-optimal modal mix results in higher logistics cost thereby affecting the manufacturing sector and export competitiveness.
The third factor is the location of industries / manufacturing centres vis-à-vis the ports. While cost differential between India and China is not significant on a per tonne km basis, China still has a lower container exporting cost, than the cost in India, due to lower lead distances . Presence of major manufacturing and industrial zones in coastal regions in China, which were developed as part of the Port-Led Policy of the government is the main reason for lower lead distances.
Any programme for port-led development needs to consider the above mentioned factors to effectively harness the potential of India’s long coastline.