Despite having the potential to become a maritime power house, India cannot utilize its full potential until it integrates the dispersed logistic activities of maritime trade. Comment.
Maritime trade accounts for approximately 90% of India’s trade by volume and 60% of India’s trade by value. Dispersed nature of maritime Logistic is a hindrance to efficient Logistics.
Dispersed nature of maritime trade Logistics:
- High number of clearances and regulatory hurdles.
- Lack of inter-modal connectivity.
- Lack of hinterland connectivity.
- Different regulatory regions for major and minor ports.
Measures taken by India:
- Sagarmala project – to boost port infrastructure and increase connectivity of ports with hinterland.
- Major Port Authorities Act – to enable structural reforms aimed at reforming regulation and operation of major ports.
- Increase private participation through asset monetization (NMP).
- Bharatmala Pariyojana – to enhance inter-modal connectivity with ports.
- Strengthening of inland waterways.
Despite above steps taken, challenges remain:
- Port infrastructure is lacking.
- Poor ease of doing business performance on port clearances.
- Logistics cost is high – 14% of GDP (~10% for development Nations).
Measures needed:
- Infrastructural:
- Enhance capacity of ports to handle large cargos.
- Frequent dredging and cleaning operations.
- Innovative models to promote PPP, such as hybrid-annuity.
- Administrative:
- Further liberalize major ports administration, on lines of act of 2021.
- Digitize all operations at ports to enhance transparency.
- Pre-clearances of shipments as followed in developed countries.
- Encourage multi-modal connectivity, through the development of inland waterways, last-mile waterways, etc.
- Parity of Indian ships with foreign ships by doing away with current discriminatory regime.
Maritime trade efficiency can help trap potential of India’s exports and boost economy to reach dollar 5 trillion target.
Topics: GS-III: Indian Economy Issues Relating to Planning • GS-III: Infrastructure Ports Roads Airports Railways • GS-III: Investment Models