Intro: If India wants to become the manufacturing hub of the world and acquire the largest share of global trade once again, it must perform the development of network of sea ports which are the key items of logistics infrastructure.
As per the accounts of noted economic historian Agnus Maddwin, until 17th century AD, India was the richest country with largest economy of the world. During Mughal period (1526-1858), the Gross Domestic Product (GDP) of India was 25.1 per cent of global GDP. In 2014, the share of India in global trade stood at a paltry 2.07 per cent. This shows the steep economic downfall that this country has suffered over the tumultuous period of history. India possessed the largest and most technologically sound line of shipping ports and harbours, along with the most advanced shipbuilding industry of the world. Today, India’s sea port infrastructure is woefully inadequate to handle a 10 per cent growth rate of foreign trade through coastal ports. It is most unfortunate, to say the least, that development including modernisation of India’s sea ports did not receive adequate attention of the government during the six decades of independence. If India is to become the manufacturing hub of the world and acquire the largest share of global trade once again, it must perform the development of network of sea ports which are the key items of logistics infrastructure.
To develop sea ports, huge funds are required and India has allowed 100 per cent Foreign Direct Investment (FDI) under automatic route for projects related to construction and maintenance of ports and harbours, subject to applicable regulations and laws. The PPP model has rightly been fixed for business entities in this sector. The case for foreign investment in this sector is strongly made out in broad economic terms by the under mentioned facts and figures.
There has been an unprecedented increase in cargo handling capacity to 800 million MT in February 2014 from 575 million MT in 2009. There is a projected increase in cargo capacity to 2,289 million MT from 1,235 million MT during the period from 2012 to 2017. The cargo at major ports is projected to increase from 546 MMT in 2013 to 943 MMT in 2017. The container demand is expected to increase to 21 million TEU by 2017 from 6.5 million TEU in 2012.
India has over 7,500 km of coastline with 12 major and 60 operational non major ports. 90 per cent of the country’s trade by volume and 70 per cent by value are moved through maritime transport. 12 major ports in India handle approximately 58 per cent of cargo traffic. Cargo traffic witnessed CAGR of 3.9 per cent at major ports, 13.7 per cent at non-major ports and 10.4 per cent of container cargo during 2007-12.
Investment opportunities exist in port development, port support services and ship repair facilities in ports. The government’s Maritime Agenda 2010-20 plans to create port capacity of around 3,200 MMT to handle the expected traffic of about 2,500 MMT by 2020. It also plans to implement full mechanisation of cargo handling and movement at ports. Special Economic Zones are being developed in close proximity to several ports – comprising coal-based power plants, steel plants and oil refineries.
Among the key provisions in budget of 2014-15 to facilitate this is the exemption from IT Act for Infrastructure Development under Section 80 IA.
India is a poor country with many super rich people. The gross wealth owned by Indians, whether accounted or unaccounted, is enormous. A huge portion of this wealth is illegally generated and stashed away in foreign countries including tax haven states. This wealth has to be identified, labelled and declared national asset to facilitate its retrieval and use for our infrastructure development. Steps for its retrieval brook no delay. FDI is also welcome but there is going to be no substitute for Indian money when it comes to infrastructure development.
We dream of an India with a share of 15 to 20 per cent in global trade and this dream is a matter of only putting the clock back, a series of pragmatic steps in resurrection of its pristine stature of an economic giant. This will surely happen with well directed and focused action.
(The writer is a senior columnist)