Sarkaritel.com International News and Features

CII calls for reviving India's Maritime Sector

New Delhi, November 17, 2006

The Confederation of Indian Industry (CII) today called for evolving a new mechanism for reviving India's Maritime Sector. According to CII, a renewed focus on India's Maritime Sector would both increase private sector investments and, also enable more efficient management of the maritime sector.

A CII study of the Indian Maritime Landscape, prepared by KPMG, recommends a focus on critical issues with regard to shipping, ports, hinterland connectivity, and development of human resources in the Maritime Sector in India.

The CII Report highlights the fact that to become globally competitive, utmost importance has to be given for development of core infrastructure. Development and growth of port sector in particular, is crucial as ports play a vital role in the overall economic development of the country.

The Report calls for the need to focus on the 5 broad aspects such as :

• Ship building & Ship Repair Industry

• Global Maritime Security Environment

• Ports

• Hinterland Connectivity

• Human Resource Development

The Report details that with the exponential growth in the number of ships calling on Indian Ports, providing ship-repairing facilities is becoming an important opportunity for the industry. Not only does ship-repair activity help generate substantial local jobs, it also builds the capacity of local industry. It is noteworthy that among the 326 yards in China, nearly 160 focus on ship repairs.

Indian shipyards enjoy a price advantage over many international shipbuilding yards. However the Indian yards lack the capability to build large and modern ships. Presently Cochin shipyard is the only yard that has the capability to repair and develop large ocean going ships. While the Government has provided subsidy benefits to ship yards developing oceangoing vessels for exports, it needs to ensure that the benefits reach the private operators through development of effective procedures and policies that can help Indian players become competitive vis-ŕ-vis international players.

China, Japan and Korea are capable of developing highly sophisticated ships which meet international requirements. Indian ship builders by contrast are good at making hulls but lack the capability to match foreign players in technology.

Indian ship building industry needs to focus on benchmarking efficiencies to international standards to improve delivery times, price and quality which in turn will enhance the competitiveness of the Indian shipbuilding sector. Measures such as performance incentives, PPP models etc could be introduced to improve efficiency.

Also, the Report indicates that the taxation regime applicable to Indian shipping industry comprise multiple taxes (totaling up to 12 taxes) including service tax and the fringe benefit taxes. These taxes make the Indian shipping industry uncompetitive in comparison to international players. Introduction of simplified tax procedures and incentives to ensure Indian players are competitive with respect to international competition is needed, the report mentions.

Maritime security initiatives have assumed critical importance in context of the threats from terrorist activities globally. The Report calls for implementation of global maritime security initiatives, which is necessary for ports to ensure continued integration with the world shipping and port trade.

A detailed analysis carried out relating to Indian Ports highlights that the total volume of the traffic handled by all Indian ports during 2005-06 was 568.93 million tonnes, of which 423.41 million tonnes ie. around 74 % was handled by Major Ports; and the remaining 145.52 million tonnes by the non-major ports.

In fact, during 2005-06, the Major Ports have handled a record traffic of 423.41 million tonnes with a growth rate of 10.30% over the previous year, which is higher than the GDP growth. Out of the total traffic handled at Major Ports, Petroleum crude and products maintain the largest share of about 33 %, Iron Ore 20 %, Coal 14 %, Container 14 % and the rest shared by general cargo.

To meet the projected traffic of 705.84 million tonnes by 2013-14 likely to be handled at Major Ports, a capacity of around 917.59 million tonnes has been estimated

Hinterland connectivity is a major bottleneck in seamless movement and growth of multimodal transportation in the country. The cost of switching from one mode of transport to other modes of transport is high at present. Given the increasing traffic at Indian ports, it is important that road and rail connectivity measures are undertaken. The Government has undertaken the development of dedicated freight corridors, port connectivity projects, and the NHDP led expansion of national & state highways. Besides new projects, there is also a need to upgrade current infrastructure to improve the load carrying capacity and quality of roads as well as the capacity of rail to match future traffic. The Report recommends that early completion of various projects in the rail and road sector is crucial to meet the heavy traffic projections for future.

Human Resource Development in the maritime sector specifically, needs a special emphasis according to the CII-KPMG report. The report highlights the fact that great importance has always been attached to the maintenance of high quality training imparted to maritime personnel in India which has enabled India to emerge as a major manpower supply nation to world shipping. India has total of around 150 training institutes with 4 in public sector and around 146 in private sector, capable of producing 11,164 seafarers (4575 officers and 6589 ratings) annually.

The present scheme of payment of Productivity Linked Reward is based on certain productivity parameters which are calculated on all India basis. As of now, the payment is made out of the resources of the Port Trusts and each of the major port trusts are independent entities. The Report recommends that the Productivity Linked Reward should be redesigned and calculated on the performance based on productivity parameters of individual Port Trusts.

While training has been identified as a focus area by the Government it is also necessary to address the need for training for special skills in areas where ports face manpower shortage. These include areas such as crane operators, pilots, VTS operators etc. Incentives should be provided to ports to invest in training infrastructure such as simulators etc. Plans should also be developed to ensure retention of staff in key areas such as pilots, IT, VTS operation etc.

The CII-KPMG Report brings out the immense growth and opportunity provided by India's maritime sector, which is reflected in the increase in the demand for infrastructure and services across the entire value chain comprising shipping, ports, ship-building/repair, and logistics. While this growth has thrown up bottlenecks in infrastructure and service provisioning across the sector, it has also opened up opportunities in each segment. Therefore, it is critical to pursue comprehensive measures at the policy, administration, and project level in each segment so that bottlenecks are addressed and opportunities are capitalized upon, thereby ensuring that the growth momentum is sustained.
 

E-Mail : newseditor@sarkaritel.com