Model Answer

Introduction

India’s maritime sector plays a crucial role in its economy, with over 95% of trade by volume and 65% by value depending on sea transport. Recent reforms in India’s port sector have boosted its global recognition and operational efficiency. The World Bank’s 2023 Logistics Performance Index (LPI) report highlights India’s impressive progress, with the country moving from 44th to 22nd in the “International Shipments” category since 2014.

Key Reforms in India’s Port Sector

1. Sagarmala Initiative (2015)

• The Sagarmala Initiative was launched to harness India’s extensive coastline and waterways for port-led industrialization.
• Focus Areas:
  • Enhancing port infrastructure and logistics efficiency.
  • Promoting coastal and inland shipping.
  • Optimizing cargo-handling capacity and reducing logistics costs.
• Impact: Sagarmala is transforming ports into hubs of industrial and economic growth, making India more competitive globally.

2. Port Modernization and Expansion

• Substantial investments have been made to modernize and expand existing ports and develop new ones.
• Upgraded Facilities:
  • Ports have been equipped with deeper drafts and better cargo-handling capabilities.
  • For example, the capacity at 12 major Indian ports has grown from 871 million metric tonnes (MMT) in 2015 to 1,617 MMT in 2023.
• These improvements allow ports to handle larger vessels and a wider range of cargo types, contributing to better trade facilitation.

3. Private Sector Participation

• The government has promoted Public-Private Partnerships (PPPs) to enhance efficiency and innovation in port operations.
• Benefits: This has attracted significant investments, improving port infrastructure and management.

4. Liner Shipping Reforms (2016)

• The Liner Shipping Reforms aim to make Indian ports more competitive.
• Achievements:
  • Lower shipping costs.
  • Enhanced turnaround times, with India’s average turnaround time (TRT) of 0.9 days, among the best globally.

5. Green Port Guidelines

• The Harit Sagar Green Port guidelines promote sustainable practices in ports, focusing on environmentally safe operations, which helps in reducing the ecological footprint.

Legislative Changes Supporting Port Reforms

1. Major Port Authorities Act, 2021

• This act grants greater autonomy to major ports, empowering them to operate more efficiently and independently.

2. Marine Aids to Navigation Act, 2021

• Ensures better safety and efficiency in vessel traffic management, aligning with global standards.

3. Indian Vessels Act, 2021

• Standardizes regulations for inland waterways across the country, improving uniformity and operational efficiency.

4. Ease of Doing Business

• The National Logistics Portal (Marine) provides a single-window digital platform for various stakeholders, streamlining the processes involved in cargo services, regulatory compliance, and financial services.
• The Sagar Setu app further enhances the ease of goods movement in ports.

5. Foreign Direct Investment (FDI)

• The government allows 100% FDI in port projects under the automatic route, along with a 10-year tax holiday for port developers, which promotes private investment in port infrastructure.

Future Directions

1. Integrated Connectivity

• There is a need to strengthen the integration of ports with railways, roadways, and inland waterways for seamless cargo movement between ports and hinterlands.

2. Digital Transformation

• Adopting advanced technologies like blockchain, Internet of Things (IoT), and artificial intelligence will streamline port operations, including cargo tracking and documentation processes.

3. Investment Promotion

• The government plans to attract more investments through PPP models and investor-friendly policies.

4. Regional Connectivity

• Promoting transshipment and coastal shipping will enhance India’s regional trade, especially in the Indian Ocean.

5. Safety and Security

• Ensuring strict safety measures and compliance with international standards is essential to prevent accidents and environmental hazards at ports.