Shipping — The Engine of Growth
Our vast coastline of 7,500 km and the strategic location along most major shipping highways put the Indian maritime sector at an advantageous position. For years, the maritime routes have been used for trade and a show of strategic strength by conducting naval exercises in collaboration. Today, India boasts of a modern shipbuilding and shipping sector, that enhances overall industrial growth.
These factors provide a strong basis to attract big investments in the Indian maritime sector. In the words of Prime Minister Narendra Modi, this sector has a huge potential to become, “the engine of growth” for India.
The government has launched a number of major initiatives such as the Sagarmala project, ports modernization, and Inland Waterways and Coastal Shipping development. Increased public-private partnership in these initiatives will buoy up the sector, thus uplifting its potential. For this, it is also essential to give a smooth passage to these opportunities to improve the country’s maritime sector. The government plans to modernise existing port infrastructure and create new ones, to promote green energy, IT development and most importantly, bring up the talent to sustain the operation of the structure.
The Sagarmala (string of ports) project, centred on the modernisation of ports and development of infrastructure, is considered one of the best initiatives to increase the competitiveness of the Indian maritime sector. It will develop 12 coastal economic regions with an estimated investment of Rs 12 lakh crore, for putting up manufacturing hubs, and port modernisation projects. This will create tremendous employment opportunities, estimated at four million direct and six million indirect jobs, and empower coastal communities through skilling programmes. So far, projects worth Rs 1 lakh crore (USD 15 billion) under Sagarmala programme are at various stages of implementation and development. (ref: Kishore Jayaraman, President, Rolls-Royce, India & South Asia)
After the wake of successful business-conducive policies in sectors such as manufacturing, IT, aviation, defence etc, the government has introduced the Major Ports Bill to upgrade autonomy to port boards to ensure decision-making is quick and transparent.
Now that shipyards get the infrastructure status, there will be Income tax exemption for infrastructure development including ports and a 10-year tax holiday to develop ports. A 70% rebate in service tax on coastal shipping brings the fares at par with road and rail. Additionally, it comes with central excise duty exemption on capital goods, raw materials, and spares used for repair of ocean-going vessels. An openness to Foreign Direct Investment (FDI), may see huge investment opportunities in the marine sector.
The government’s Maritime Agenda 2020, ‘Project Green Ports’, will emphasise on environmentally sustained growth. It aims to install solar and wind -based power systems at all major ports across the country.
The signing of several MoUs with countries such as Korea and Egypt in developing ports, sharing technology, manpower training, etc may stimulate steady growth in maritime traffic.
A Promising Future
The progress could be faster if these improvements are taken care of:
- A seamless transportation: To move cargo across all modes — ship, rail, and truck, Indian needs smoother connectivity across all modes of transport.
- ‘Make in India’: Encouraging Indian shipyards to bag foreign orders in a more aggressive manner and also meet the requirements of Indian ship-owners can further help boost the industry. A cost-effective and skilled manpower base, quality-controlled steel industry, technology know-how and an increased demand in shipbuilding could augment India’s global shipbuilding share.
- International partnerships: Partnerships and collaborations in areas of ship design, automation, and technology, training and development of manpower can bring in high levels of cost efficiency thereby enabling competitiveness. In the current scenario of regulations to control emissions from ships set by IMO, focusing on environment-friendly technology and solutions, such as LNG-powered vessels, will help us align to global shipping standards.
As it grows to be one of the major economies in the world, India will require a vibrant and strong maritime industry for economic as well as strategic reasons. It will depend on how we utilise opportunities to transform the sector into an engine of growth for India. Therefore, while 2016 saw the maritime sector’s transformation, we may now be on the brink of a maritime revolution.