Day 14 – Q 2.What are the challenges in developing world class port infrastructure in India? What measures have been taken by the government to upgrade the ports? Discuss.
2. What are the challenges in developing world class port infrastructure in India? What measures have been taken by the government to upgrade the ports? Discuss.
भारत में विश्वस्तरीय पोर्ट इन्फ्रास्ट्रक्चर विकसित करने में क्या चुनौतियाँ हैं? बंदरगाहों को उन्नत करने के लिए सरकार ने क्या उपाय किए हैं? चर्चा करें।
India has an extensive 7,500 km coastline with 12 major ports and just under 200 minor ports, of which 139 are functioning. Primarily, the major ports deal with, by volume, 95% of India’s total foreign trade. But, across the board, these ports are underperforming because of serious infrastructure and connectivity problems.
According to the NITI AAYOG,to achieve the ambitious target of having a 5% share in world exports and climb up the ranks in ease of doing business, India needs to address its port ecosystem. Also Port infrastructure forms key part of the trade infrastructure.
In this regard, the challenges facing in development of a world class port infrastructure include the following:
- Issues with PPP Model- Most port PPPs impose strict limits on what private operators are allowed to do, usually in terms of the types of cargo they are allowed to handle.
- Limited Hinterland Linkages- Inefficiency due to poor hinterland connectivity through rail, road, highways, coastal shipping and inland waterways.
- Incoherent Policy Measures – Port Infrastructure has been a neglected space in terms of policy focus due to multiple factors.
- Sub-optimal Transport Modal Mix – Lack of requisite infrastructure for evacuation from major and non-major ports leads to sub-optimal transport modal mix.
- Lack of adequate berthing facility, number of berths, sufficient length for proper berthing of the vessels at the Non-Major Ports is another problem.
- Processes and operations across India’s ports are not standardized or uniform, costs and time for key processes are unpredictable and there is an unacceptable level of variation across ports as well as within ports.
- Financial constriants – Years of underinvestment have left the port infrastructure in dismal condition especially with regards to the non-major ports.
- Deficient dredging capacity – Draft is also a major limitation in India as terminals and ports are unable to cater to vessels beyond Panamax (Draft over 13 meters) size that are increasingly dominating global trade.
- Land acquisition and environmental clearances are some specific challenges for port infrastructure.
Due to India’s inadequate port infrastructure, many investors are wary of getting involved in business in the region and also hampers the overall economic prospects, to overcome which government has taken the following measures as well as to usher in the ideal of port led development :
- In 2016, India passed the Central Port Authority (CPA) Act. The act grants more autonomy to the major ports.
- The Revised Model Concession Agreement (MCA) was released in 2016, which includes incentives for the private sector to get involved with the ports through updated tariff guidelines and discounted revenue shares.
- The government provides a 10-year-tax holiday to companies that help maintain and operate ports. If these companies undertake a port development project, the government will help with up to 50% of the cost.
- Sagarmala Project: The programme aims to modernize India’s ports so that port-led development can be augmented and coastlines can be developed to contribute in India’s growth. Port Modernization & New Port Development, Port Connectivity Enhancement, Port-linked Industrialization and Coastal Community Development form the component of this Project.
- Project Unnati: It has been started by Government of India to identify the opportunity areas for improvement in the operations of major ports.
- Introduction of Port Enterprise Business System – A was tender issued by the Indian Ports Association (IPA) to maintain an Enterprise Business System (EBS) to modernise and automate port processes for five central government-owned ports.
- Priority should be given on expanding capacity and improving operational efficiency.
- Environmental clearances, Tariff norms, land acquisition etc. need to be standardized and implemented for the port sector so as to boost foreign investments.
- The regulatory regime should be made less complex and less rigid.
India’s cargo traffic handled by ports is expected to reach 1,695 million metric tonnes by 2021-22, according to a report of the National Transport Development Policy Committee and to capitalise on this potential, expedient development of port infrastructure becomes vital which will further help in realising the dream of $5 trillion economy by 2024.