With growing maritime trade, major Indian ports are projected to handle about 800 million tonnes (mt) of cargo over the next five years from 530 mt in 2008-09 and several ports are in the process of creating necessary infrastructure to handle the growth in cargo traffic. While the shipping ministry forecasts a three-fold increase in cargo handling capacity of major ports by 2025-26 by augmenting the capacity to 1595.07 mt, the major ports are expected to handle about 798 mt of cargo by 2014-15. There has been steady progress in the ports sector. In the last ten years, major development projects have been undertaken for the betterment of Indian ports,” says D T Joseph, Former Secretary, Ministry of Shipping, Government of India in tete-a-tete with Rahul Kamat.
Let me begin by asking you about the ports and shipping sector in India, has the sector started showing signs of revival?
Indian Port did not suffer much blow due to economic meltdown as other sectors, but shipping industry worldwide got a hit. Therefore, in comparison to world shipping scenario, I don’t think the Indian shipping has seen any major setback due to recession, which is good for the Indian economy. This indicates that the development in India is taking place on most sustainable basis, such as our export was much balanced than any other western countries. But at the same time the adverse effect was reflected in downfall of volumes at some of the ports while the volumes were in line at some of the major ports.
Is it due to geographical location or trade…
The drop in volumes was purely because of trade not geography. If trade and manufacturing activities in India get a blow, it is obvious that the ports and shipping industry will be a part of it. For instance, if a particular port is dealing only with some countries, because of economic crunch the chances are more that these countries stop buying exported products from a particular port in India. But, despite of low volumes, Indian ports have grown 2 to 3%. In the last one year, the port sector has witnessed revival which is reflected in their ports performances, good results and increasing volumes.
What is lacking in India's port infrastructure?.
There has been steady progress in the ports sector. In the last ten years, major development projects have been undertaken for the betterment of Indian ports. New ports have come into being, existing berths were upgraded, capacity addition is under implementation and most importantly is government’s emphasize on education. Ten years before no adequate training centers for ports and shipping industry, but today many colleges and universities offer running diploma courses and degree courses.
Over a period of time the port sector in India has developed significantly. For instance, the east coast of India is lines up with new ports.
As far as Indian ports sector is concern, we need unified Port Development Policy for the country as a whole aligned with India’s industrial development. India has east coast and west coast, not many countries in the world enjoy this advantage. Moreover, India lies in the centre of international sea route. A good policy to develop ports on both – eastern and western seaboard could have increased trade much more than other countries.
Today most of the power plants are located near the port but there is not much room for industrialization in those areas. The union government should persuade the state government to have a policy offering mix of incentives for inland industries and costal based industries thus benefiting the port to an extent.
Even a port based Special Economic Zone would be an added advantage….
Yes. Mundra Port and Special Economic Zone Ltd (MPSEZ), Vallarpadam and Cochin DP World are some of the ports in India with special economic zone. The Ministry at one point was of opinion to transform all the ports of India into SEZ. Currently, I don’t have any update of that.
But since you were in the Ministry as a Secretary, didn’t you try to convince the policy makers?
In February 2004, a draft of maritime policy was prepared and uploaded on our website, but unfortunately it failed to draw much attention of the stake holders. Unfortunately after two years the draft was deleted from the portal and mo questions were raised on the policy. Government cannot press for a policy on the stakeholders if they are unresponsive. It has to be a two way process rather only government taking initiatives.
This means there was no awareness about the policy government had prepared?
The government should have created some kind of awareness to arouse the interest of stakeholders. There were no feedbacks on the policy. Also India lacks a proper regulatory framework to outlook the development on private ports. Neither the ministry nor the industry has taken any initiatives to undertake reforms much needed for the development of the port.
If I go by your earlier replies, I feel that the decision making in ports sector is very limited…
The decision making in the port sector is very slow and limited. If the ministry had taken faster and timely decisions, more private investors would have entered and port would have developed in all means for instance, new port, latest technology, new terminal, equipments etc. The ministry is just increasing the procedural difficulties for private investors in the port sector. The Port Trust should be converted into a more flexible instrument and the ministry should vest more powers in the hands of Port Trust. For every reason, a port trust has to turn to MoS, who is majorly controlled by Planning Commission and Ministry of Finance. This is the primary reason why non-major ports are growing faster. One needs to study the improvement in non-major ports operations. For example the tariff of the non-major ports is not controlled by any authority. The consumer forums should organized themselves and reveal the right rates.
Dredging is another issue to be talked about since we largely depend on the foreign dredging companies…
Port development without dredging activities is unimaginable. There are two types of dredging – capital and maintenance. While the later is of utmost importance, capital dredging deepens the port, which makes larger ships possible to enter the port thus bringing in more business. It’s a vicious cycle therefore we have to improve our dredging operation, which is controlled by only two or three countries in the world.
We need to equip ourselves with more dredgers. The government should encourage the small time players manufacturing dredgers and if the big equipment players foray into manufacturing dredgers, we will certainly overrule the monopoly of other western countries. In fact, if India starts manufacturing dredgers, we can aid the SAARC nations.
Globally, the thumb rule is that port capacity of a country should be at least 30% more than the demand. In India, capacity utilization is about 93%, which is good for ports and shipping companies, but bad for the economy. How far do you agree with this?
In 2003 we mentioned that the percentage of occupancy is so high in Indian ports leading to congestion. So it was recommended that minimum 30% redundancy surplus capacity could be built in at the port but later we discovered that the development in port facilities cannot take place overnight. Therefore as a part of planning, a port should always be ready with the draft action plan on congestion, and the Ministry should not allow the ports to operate in full capacity. It should be to the tune of 70-80% only and if the ports wish to have 100% operation interest than there should a provision of additional 30% capacity handling facility at the port.
Are major ports and non-major ports complimenting each other?
At the moment they are complementing each other. Because there are regional gaps in the coastal areas in terms of availability of ports therefore the existences of non-major ports in those areas are pretty complimentary for the major ports. But on the whole in the coming times the major ports will lose out its business to the non-major ports. Non-major ports have lot of flexibility in price fixation, appointment, promotions, and marketing and very importantly the decision making process at non-major ports are quite faster compared to major ports. All these factors put together in course of time we will witness no new investment for major ports.
What are the reasons for little investment in major ports?
Due to bureaucratic hurdles, private investors are reluctant to invest in major ports. Therefore instead of developing or bidding for any contracts of major ports, private investors are more comfortable in setting up private ports in the country. If the government fails to change its policy, or simplifies the procedures, and even if it neglects investment in the major ports, the non-major ports will prove beneficial and are sure to grow much faster than the major ports.
But there is another alternative; Government of India should privatize all non major ports if government doesn’t want to invest money.
At present the government is increasing the pressure on private players, not a major port to operate.
India’s economic boom is real, and sustainable. However, the shipping industry seems to be somewhat lagging behind. So, is the industry itself to blame for this?
I don’t agree with that. It is true that the shipping industry is not growing in the same ratio like economy. And, there are many reasons for that. Firstly the visibility of the shipping sector itself has been very low till now. It is only now that the workings of this sector and its needs are being made aware to the public, and, very unfortunately, even to the government. Looking back, even the number of debates taken place in the parliament in past few years pertaining to ports is very minimal compared to, roads and air transport. The maritime sector is commanding attention now and, in the next 5-10 years, it will grow as much as air transport or any other sector. Secondly, training has to be given to nurture the talent in this industry. There is a dearth of talent. Certain issues related to personal requirements of the employee need to be addressed by the government. It may appear that the shipping industry is lagging behind but that is not the case.
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| Posted on:8/18/2010 at 7:19 AM