Union Shipping Minister G K Vasan recently launched the Maritime Agenda 2020, which envisaged investments worth over Rs 1.65 lakh crore in the maritime sector. In an interaction with T E Narasimhan, the minister says the industry will set an example by executing these projects through public-private partnership (PPP).
What is the Agenda 2020 all about?
It’s a perspective plan of the shipping ministry for the present decade. The agenda, released on January 14, aims to create a port capacity of around 3,200 million tonnes (mt), from 617 mt as on March 31, 2010, to handle the expected traffic of about 2,500 mt by 2020. We want to bring our ports on a par with the best international ports in terms of performance and capacity.
Other initiatives include a dredging policy, increasing tonnage under Indian control and also the share of Indian ships in our trade. We are looking at promoting coastal shipping, as it will help in decongesting our roads. We also want to increase India’s share in global ship building to 5 per cent from the present 1 per cent.
What kind of investment does the agenda envisage?
The agenda envisages investments worth Rs 1.65 lakh crore in the shipping sector by 2020. A majority of the projects will be implemented through the public-private participation (PPP) model.
Will there be any Budgetary constraints on creating infrastructure which would support the ministry’s target by 2020?
The government alone cannot invest. We need private sector participation to build such a big capacity. Private partnership is a key feature of any port development programme and we are expecting a majority of investments from private players, with a high proportion from overseas investors.
Already, many overseas investors, including PSA, APM and DP World have evinced interest in India’s port development programme. To facilitate private sector participation, the government has also put in place an investor-friendly policy framework.
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Some policy initiatives taken by the ministry include 100 per cent foreign direct investment in shipping and port sectors, simplifying model concession agreements for port projects that has expedited the decision making process, standardising bidding documents to ensure uniformity and transparency in awarding projects.
As a result, private investments in the port sector has increased significantly over the years. For example, till now, 24 projects worth Rs 6,486 crore were taken up under the PPP model and were completed successfully. Another 19 projects worth Rs 12,500 crore are being implemented.
We now plan to raise money from the public to create infrastructure. For the first time, government-run Ennore Port will come out with an initial public offering, or IPO.
What is the current status of the port’s IPO and what will be the quantum of money to be raised?
The Shipping Board has approved the plan and now it will go to the Cabinet for approval. Around Rs 500 crore will be raised through the IPO.
Fourteen projects worth Rs 6,466 crore have been lined up for the port. These include three dredging projects, seven terminal projects and four projects for rail-road connectivity.
Though a major share of the investments will come from the private players, we have to invest in creating infrastructures like dredging and connectivity.
What are the current bottlenecks for the industry?
The key challenges for the industry are infrastructure bottlenecks and high logistics cost, which is at 13-14 per cent of the gross domestic product. This is way above the level of 7-8 per cent of GDP in developed countries.