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Growing at a compounded annual growth rate (CAGR) of over eight per cent, the seaborne trade in India may cross the 830 million ton (mt) mark by 2016-17, apex industry body ASSOCHAM said on Monday.
“This would require massive investment to the tune of over Rs 17,000 crore as there is a need to augment the port capacity by over 140 mt from the current level of about 690 mt,” according to a study titled ‘Shipping Industry: Today & Tomorrow,’ conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
“The private sector participation is imperative for such huge investments in the shipping sector,” said D.S. Rawat, national secretary general of ASSOCHAM, while releasing the study.
Lack of level-playing field for private operators, hinterland connectivity, especially lack of co-ordination between road, rail and port authorities and proper risk allocation are certain key issues affecting port development in India, he said.
The government needs to act as a facilitator to create opportunities for attracting fresh investments in the shipping sector, more so as about 41 per cent of India’s fleet of ships belong to the 20-year-plus age group indicating a slow rate of new fleet addition.
This augurs well for the Rs 7,300 crore worth of India’s shipbuilding and ship-repair industry as 20-years-plus older ships require more frequent and extensive repair and maintenance. “However, this makes the Indian fleet less competitive as mostly young vessels below 15 years old are often preferred in international trade.”
Drastic decline in share of Indian ships in carriage of overseas trade over the years is a significant concern. Indian shipping carriage dropped from about 36 per cent to just about eight per cent between 1990-91 and 2009-10. “This is causing a drain on precious foreign exchange in terms of payment of freight charges and this could instead be used for other high priority imports and scaling up infrastructure facilities.”
India can save up to Rs 26,000 crore by 2016-17 if we can increase the share of coastal shipping in total traffic carriage thereby reducing the burden on other modes of transport. There is a need to encourage coastal shipping as a viable mode of bulk freight transportation as it has just about three per cent of share in carrying regional traffic.
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