Though India can become a much bigger maritime power, many lacunae have to be ironed out from the system. Bajrang Kumar Choudhary, CEO – Infrastructure Project Development, Srei Infrastructure Finance Ltd, charts the growth path that the country must follow.
What are the top three or four problems ailing Indian ports?
For a country of IndiaÂ´s size and complexity, where 95 per cent of trading by volume and 70 per cent by value is done through sea, it is very important to develop a sustainable maritime transportation system for economic growth and inclusive development. With a coastline of about 7,517 km, India is today the sixteenth-largest maritime country in the world, but it is rather unfortunate that none of our ports feature in the global top 20.
The key challenges before the maritime industry in India today are the low draft, lack of mechanisation, slow evacuation and insufficient rail/road infrastructure. Limited availability of surface freight infrastructure is the biggest impediment to increased trade activity across all the transport corridors in the country. Unless we seriously work towards improving hinterland connections, the capacity constraints would continue to trouble us. It is therefore very important to connect all the inter-state and international transport corridors to foster growth and economic development.
Inadequate draft at IndiaÂ´s major ports is another pain point for the industry. Most major ports in India have insufficient draft to cater to modern ship vessels. This leads to high logistics cost and long lead-times as cargos originating and bound to India need to be routed through transhipment ports from neighbouring countries.
India could soon become a much bigger maritime power in line with our extraordinary growth numbers once we start doing more coastal and inland water movement.
What are the solutions to the problems?
Though the maritime industry in India has evolved over the years, issues such as hinterland connectivity and congestion continue to haunt the industry despite attempts towards modernisation of port infrastructure and development of new ports.
An integrated approach towards capacity addition and hinterland connectivity is required to make Indian ports globally competitive. We urgently need to increase rail lines and develop freight corridors all over India to ease congestion and improve productivity of our port terminals. We should also develop more and more inland waterways and promote coastal movement for a seamless cargo movement in and out of the country.
We also need to focus on increasing use of technology for automation of cargo processes which would help ease the congestion to a large extent.
Additionally, we also need to review the role and need for the Tariff Authority for Major Ports (TAMP) which has severely constrained the growth of major ports. With the advent of private ports, role of TAMP is becoming obsolete as the private non-major ports are not governed by TAMP, while the major ports continue to suffer because of such tariff regulation. It is believed that a matured market like ports doesnÂ´t require any regulatory authority such as TAMP to fix rates, as tariffs should always be driven by demand and market forces.
Is it a challenge to procure material handling equipment?
The problem is not availability of equipment but lack of indigenous manufacture of harbour cranes and un-loaders. We have to depend on expensive overseas equipment, which in the first place, was not created for our special requirements. More than equipment, what we lack is sufficient automation, which can increase the port efficiencies dramatically.
Are you interested in developing ports yourself?
We are an infrastructure financing company, hence we actively and continuously keep on looking at financing opportunities that come our way within the core infrastructure sector both at the primary market as well as the secondary market. We already have an appreciable and robust portfolio in roads & highways concession and are gradually expanding our infrastructure activities to industrial parks, ports & shipping and the water & wastewater management sector. We are positive about the opportunities in the ports sector and keep on looking for financing opportunities in the sector and are also involved in a few projects ourselves.
To what extent do you think the Sagarmala project will alleviate existing problems?
Sagarmala can help to solve the connectivity problems and promote coastal shipping in a big way. This will play a big role in reducing the logistics cost (India has very high logistics cost, one of the highest in the world). The Sagarmala project aims at increasing port capacity and at the same time the focus is also towards hinterland connectivity through heavy-haul rail corridor, freight-friendly expressways and strategic inland waterways. Furthermore, the focus on skill development to harness the potential of coastal communities would also deliver long-term benefit to the sector.
What were your takeaways from Maritime India Summit?
The Maritime India Summit in Mumbai appears to have been fairly successful in its maiden attempt to create awareness about the potential in the Indian maritime sector. It has been reported that almost 140 agreements have been signed resulting in business agreements for Rs 82,905 crore. These figures indicate the positive intent and outlook of private players in the sector, and we do hope that all these commitments made this year would soon start translating into tangible financial investments.
As I mentioned earlier, we too are quite optimistic about the rapid expansion in the sector and are quite hopeful about contributing towards the growth of this sector through our active participation in various upcoming opportunities.