Global investors get a peek into Narendra Modi’s ambitious maritime development plans
In a few years from now, if India achieves even 10% of what was showcased at a gala maritime summit organized by the government in Mumbai last week, Prime Minister Narendra Modi and shipping minister Nitin Gadkari could lay claim to being the architects of a resurgent sector.
The sector, through which 90% of India’s external trade by volume and 72% by value are transported, has largely been neglected by successive governments. No Indian port ranks among the global top 20. If former Prime Minister A.B. Vajpayee was instrumental in steering India’s highway development programme to where it is today, Modi is striving to do the same with its maritime sector, straddling a vast coastline of 7,500km. To be sure, the seeds of an ambitious maritime development programme christened Sagarmala were sown by Vajpayee in 2003.
I hadn’t ever come across a government holding a global maritime summit on such a large scale with 4,500 delegates from 40 countries in attendance. The partner country for the summit was South Korea, a maritime superpower.
Modi himself flagged off the summit with a speech which gave the impression that he means business.
The summit was held a fortnight after state-owned entities in India’s port and shipping sectors reported their best performances in many years in the year ended March, particularly after the global meltdown of 2008 that had a devastating impact on shipping. In 2015-16, India’s 12 state-owned ports handled a record quantity of cargo which grew more than 4% in the last two years despite a global slowdown. Kandla port reached the 100 million tonnes (mt) mark in cargo-handling, the first among the 12 ports to achieve this feat. Port efficiency parameters at the dozen ports have shown improvement in 2015-16 by registering the fastest average turnaround time for ships; operating profit margins that were declining have increased while the combined operating profit of the 12 ports rose by Rs.670 crore in 2015-16.
Jawaharlal Nehru port, India’s busiest container gateway, posted a net profit of over Rs.1,000 crore, again a first for a state-owned port. Shipping Corp. of India Ltd, Dredging Corp. of India Ltd and Cochin Shipyard Ltd are set to post higher profits than previous years.
“This is just the beginning,” Modi told the delegates. “We want to do more. We are enhancing our own capacities of execution and implementation. The national perspective plan of the Sagarmala programme has been released today. In the last two years, major ports (a term used to refer to state-owned ports) have awarded 56 new projects involving an investment of more than Rs.25,000 crore. This will create an additional port capacity of 317 mt per annum. Our vision is to increase port capacity from 1,400 mt to 3,000 mt by 2025. We want to mobilize an investment of Rs.1 trillion in the port sector to enable this growth. Five new ports are planned to meet the increasing demand of the export-import trade which will rise in proportion with the fast-growing Indian economy. New ports are also being developed by several coastal states of India,” the prime minister said. “Since my government took over, among other things, we have laid emphasis on building futuristic infrastructure. This includes building next-generation infrastructure in many sectors. Port, shipping and maritime infrastructure is prominent among them. It is my government’s endeavour to revive and restore India’s position of eminence in the global maritime sector.”
The prime minister emphasized the maritime development programmes were designed to provide employment opportunities to the youth (four million direct and six million indirect jobs) and to empower coastal communities living in 72 districts that make up 18% of India’s population.
During the two-day summit, business agreements for 141 projects were signed entailing an investment of Rs.82,905 crore, or $12.8 billion.
While Modi touched upon the larger picture in his speech, the investor community was a trifle disappointed by the absence of any reference to two key issues facing major ports. The first pertains to the introduction of market-driven pricing of port services at major ports by winding down the Tariff Authority for Major Ports (TAMP), the rate regulator for the 12 ports, an issue that has agitated the investment community for long.
The second issue is the government’s position on long-pending structural reforms of major ports by transforming them into corporate entities from the current trustee set-up.
Both these are intrinsically linked to the success of the maritime development programme.
That aside, Modi invited investors to India with his concluding remarks: “This is the right time to come to India; it is even better to come through the sea route; the Indian ship is well-equipped for a long haul; don’t miss it; missing it means missing a pleasant journey and a great destination. Once you are here, I assure you that I will personally hold your hands to see that your berthing is safe, secure and satisfactory”.
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