<b>T N Ninan:</b> Maritime failures

Narendra Modi has just inaugurated a National Maritime Summit, perhaps the country’s first. Using the occasion, he has announced ambitious goals in terms of capacities, investment and jobs, all of which may or may not be realised. The important thing though is that it has brought into focus a long neglected aspect of the Indian economy: its poor trade infrastructure. There is no reason why China’s 10th largest port should be 50 per cent bigger than India’s largest. And why all of India’s 12 ports that are officially classified as “major” should not be able to carry much more traffic between them than the single port-city of Singapore. Or why Colombo can handle more container traffic than all of India’s ports put together — with something like three-quarters of that being transshipment of containers from India, because India’s ports are too shallow to accommodate big container vessels. For a country with a long maritime tradition, this is a pathetic state of affairs.

There has been an attempt in recent years to increase the country’s port capacity, but the real successes have been in the private sector, mostly by one man: Gautam Adani. His Mundra port in Gujarat has overtaken Kandla to become the country’s largest. Dhamra (in Odisha), which he acquired from Tata-Larsen & Toubro a couple of years ago, is as big as Haldia, and he intends to make it as big as Mundra. Meanwhile Krishnapatnam port on the southern Andhra coast is being developed by local entrepreneurs, and claims to handle as much traffic as the long-established Chennai, even as private companies have been contracted to handle some of the traffic at government ports. But it is Mr Adani who could become the champ of the country’s port business once he builds the deepwater port at Vizhinjam in Kerala, designed to take some of the transshipment traffic away from Colombo. Most of the private ports have a draft that is deeper than the old government ports can claim, and therefore have better potential.

The rest of the country’s maritime business is also a not encouraging story. Indian ships account for a tiny part of the country’s trade: about 15 per cent, compared to the international norm of 40 per cent. It has no civilian shipyards to compare with the world’s best. The two or three private ones that look to build commercial vessels are deep in debt and short of orders; most Indian ship-owners prefer to look to foreign yards, because of better quality and assurance on delivery schedules. In short, India’s maritime business needs a booster shot.

Part of the problem is India’s skewed pattern of trade: goods imports are 50 per cent bigger than exports, so ships that bring goods to Indian ports often have no return cargo. In the case of some ports, the import-export ratio is as skewed as 90:10. Freight rates are therefore high, on top of which Indian ports — while more efficient than before, in terms of turnaround times — are expensive in terms of tariffs. Mirroring a complaint from the airline industry, bunker fuel costs are high too. But perhaps the most important reason for the stunted nature of India’s shipping-related businesses is the lack of port-based development as an industrial strategy.

That too has begun to change, as more and more companies plan investments with port linkages in mind — for ease of importing raw materials or components and shipping out finished goods. Whether it is oil refineries or car factories, steel mills or power stations, there is a clear shift to coastal vicinities. The Modi government has done its bit by pushing its Sagarmala programme for promoting shore-based industrial and related activity. The hinterland too will get more efficient transport links once the two railway freight corridors are completed, hopefully by the target date of 2019. The economic and efficiency gains from all these will show up over time. It is all rather late in the day, but better now than never.