Shaping India’s Maritime Destiny

As India approaches its position as the world’s third-largest economy, its marginal presence in global shipbuilding (0.07%) and ship ownership (1.2%) highlights significant strategic and economic vulnerabilities. Dependence on foreign vessels for 95% of trade has resulted in substantial foreign exchange outflows. Additionally, the exclusion of ships from the Harmonised Infrastructure List and the SARFAESI Act restricts access to competitive financing, hindering the sector’s growth. With global shipbuilding dominated by China, South Korea, and Japan, which account for 93% of the market, India urgently requires policy reforms to align its maritime sector with its growing economic ambitions.

India’s Maritime Sector: Current Status and Growth Initiatives

Current Status

• India ranks as the 16th largest maritime country globally.
• The maritime sector manages 95% of India’s trade by volume and 70% by value.
• India is the 3rd largest ship recycler globally by tonnage, holding a 30% share in the ship-breaking market. The world’s largest ship-breaking facility is located in Alang, Gujarat.

Government Initiatives for Maritime Growth

1. Maritime India Vision 2030

Launched in March 2021, it outlines over 150 initiatives for the holistic development of the Indian maritime sector.

Aims to provide a blueprint for accelerated growth and modernization across various maritime domains.

2. Sagar Mala Program (2015)

Focuses on port-led development and logistics-driven industrial growth.

Comprises 415 projects with a planned investment of $123 billion, spanning four critical areas:

• Port Modernization and New Port Development
• Port Connectivity Enhancement
• Port-Linked Industrialization
• Coastal Community Development

Key targets include generating $2.7 billion in annual revenue from existing assets and creating 2 million direct and indirect jobs by 2030.

Importance of Investment in Maritime Infrastructure for India

1. Economic Security and Trade Resilience

• The recent Red Sea crisis (Houthi attacks disrupting global shipping routes) highlighted India’s maritime vulnerabilities. Global shipping costs surged in early 2024, forcing vessels to take longer routes around Africa.
• India’s heavy reliance on foreign ships (95% of international cargo) led to freight costs reaching $75 billion in 2022-23, with projections exceeding $100 billion soon.
• Geopolitical disruptions like the Ukraine war and tensions in the Middle East further expose India’s lack of maritime self-reliance (only 487 vessels for overseas trade), posing significant economic risks.
• Developing domestic maritime infrastructure can reduce forex outflows, stabilize freight costs, and give India greater control over its trade routes.

2. Strategic Positioning in the Indo-Pacific

• Strengthening maritime infrastructure aligns with India’s expanding role in the Indo-Pacific, especially as China increases its influence through initiatives like the “String of Pearls” and holds 46.6% of the global shipbuilding market.
• Initiatives like the India-Middle East-Europe Economic Corridor (IMEC) announced in 2023 showcase the strategic importance of maritime capabilities in countering China’s Maritime Silk Road.
• India’s leadership in the Security and Growth for All in the Region (SAGAR) vision depends on robust maritime infrastructure to enhance regional influence and credibility.

3. Employment Generation and Skill Development

• With a young workforce, India has an opportunity to dominate the global maritime sector, particularly as traditional shipbuilding nations face aging populations.
• India ranks third globally in seafarer supply, contributing 10% of the global maritime workforce, highlighting the sector’s massive employment potential.
• Initiatives like the Sagarmala programme have already created significant job opportunities, with millions more projected through port-led development projects.

Major Challenges in Enhancing Maritime Infrastructure in India

1. Financing and Infrastructure Status Barriers

• Ships Not Classified as Infrastructure: Ships are excluded from the harmonized list of infrastructure, limiting financing options despite shipyards being granted infrastructure status in 2016.
• Exclusion from SARFAESI Act: The inability to mortgage ships under the SARFAESI Act, 2002, deters banks from providing long-term loans for shipbuilding.
• High Financing Costs: India relies heavily on imports for critical raw materials in shipbuilding, leading to higher financing costs compared to global competitors.
• Minimal Market Share: India’s global shipbuilding share stands at just 0.06%, significantly behind leaders like China, South Korea, and Japan, due to financing and policy constraints.

2. Port Infrastructure and Efficiency Gaps

• Low Efficiency Metrics: Despite handling 1.4 billion tonnes of cargo in 2022-23, Indian ports have an average turnaround time of 2.1 days, far below international benchmarks like Singapore’s 0.6 days.
• Depth Limitations: Major Indian ports lack sufficient depth to accommodate ultra-large container vessels, increasing reliance on transshipment hubs in neighboring countries like Sri Lanka and Singapore.

3. Skilled Workforce and Technological Constraints

• Shortage of Specialized Skills: While India contributes 10-12% of global seafarers, it faces a significant shortage of specialized skills for shipbuilding and advanced port operations.
• Lag in Smart Port Technologies: Adoption of smart technologies like blockchain, IoT, and AI in port operations remains in its infancy, reducing operational efficiency and global competitiveness.

4. Regulatory and Policy Coordination Issues

• Fragmented Regulatory Oversight: Multiple regulatory bodies with overlapping jurisdictions cause delays and inefficiencies in project implementation.
• Challenges in Land Acquisition: Port expansion projects face hurdles due to land acquisition and Coastal Regulation Zone (CRZ) compliance requirements.
• Delayed Project Approvals: Lack of coordination between agencies leads to 2-3 year delays in major port projects. The absence of a single-window clearance system, despite being proposed in Maritime India Vision 2030, exacerbates these delays.

5. Competition and Market Position

• Global Competition: India faces stiff competition from maritime leaders like China, which controls 46.6% of global shipbuilding, and from emerging players.
• Capacity Utilization: Indian shipyards operate at 60-70% capacity, lacking economies of scale that competitors enjoy, further weakening their market position.
• Container Manufacturing Deficit: India has limited domestic container manufacturing capabilities, creating a dependency on global suppliers.

6. Lag in Coastal Shipping Development

• Underutilized Coastal Shipping: Despite having a 7,500 km coastline, coastal shipping accounts for only 6% of India’s domestic freight movement.
• Coal Transport Gap: Currently, 30 million tonnes (MT) of coal are transported via coastal shipping annually, while the potential demand is nearly 100 MT by 2030.

7. Hinterland Connectivity Gaps

• Last-Mile Connectivity Issues: Only 30% of major ports have direct rail connectivity, significantly increasing logistics costs.
• Lack of Dedicated Freight Corridors: The absence of efficient freight corridors linking major ports to industrial hubs results in logistics costs that are 15-20% higher than global standards.
• Inadequate Multimodal Infrastructure: Limited development of coastal shipping and inland waterways restricts integrated multimodal transportation options.

Strategies to Accelerate Maritime Infrastructure Development in India

1. Integrated Port Development Framework

• National Port Grid Authority: Establish a unified authority to coordinate the development of major and minor ports, reducing inter-port competition and fostering specialization.
• Hub-and-Spoke Model: Develop 3-4 mega ports (e.g., Vadhavan Port) as transshipment hubs, with smaller feeder ports supporting them.
• Port-Specific Master Plans: Align port development with regional cargo profiles, hinterland industrial clusters, and industrial corridors for sustainable cargo flow.
• Industrial Integration: Link ports with industrial corridors and Special Economic Zones (SEZs) to ensure a steady cargo supply chain.

2. Technology-Driven Port Modernization

• Smart Port Infrastructure Management Systems (SPIMS): Pilot SPIMS at key ports like JNPT and Mundra to enhance operational efficiency.
• Blockchain-Based Port Systems: Build on JNPT’s digitalization success by implementing blockchain-enabled Port Community Systems for paperless trade.
• IoT Integration: Introduce IoT-enabled systems for real-time cargo tracking and port equipment monitoring.
• National Maritime Single Window: Accelerate the creation of a single window for customs, immigration, and port operations, similar to the UK model.

3. Multimodal Connectivity Enhancement

• Dedicated Freight Corridors: Expedite pending sections to connect major ports with industrial hubs.
• Coastal Economic Zones: Develop zones with integrated logistics parks to boost efficiency.
• Port-Rail-Road Connectivity: Standardize connectivity models across ports, drawing inspiration from Gujarat’s GIFT City.
• Dedicated Fund for Connectivity: Create a dedicated port connectivity fund under the National Infrastructure Pipeline to finance last-mile connectivity projects.

4. Green Port Initiative

• Renewable Energy Integration: Mandate the use of solar and wind energy at ports, targeting a fixed percentage of renewable energy consumption.
• Shore-to-Ship Power Supply: Implement systems to reduce emissions from berthed vessels.
• Green Clearances: Develop expedited environmental approvals for eco-friendly port projects.
• Environmental Monitoring Systems: Install automated systems for continuous monitoring of port emissions.
• Green Corridors: Establish electric vehicle infrastructure to support sustainable cargo movement.

5. Skill Development and Capacity Building

• Maritime Skill Development Centers: Set up centers at major ports in collaboration with the private sector.
• Specialized Training: Develop courses on port automation, smart port operations, and advanced cargo handling.
• Global Certification Programs: Implement mandatory certifications for port workers aligned with international standards.
• Knowledge Exchange Programs: Facilitate knowledge-sharing with leading international ports.
• Innovation Labs: Create maritime-focused innovation labs at IITs and maritime universities.

6. Private Sector Participation Model

• Revised PPP Frameworks: Design balanced risk-sharing mechanisms in public-private partnership (PPP) models with clear exit options.
• Hybrid Annuity Model: Adapt successful highway project frameworks for port projects.
• Special Purpose Vehicles (SPVs): Create SPVs for port-led development, involving states and private entities as equity partners.
• Infrastructure Investment Trusts (InvITs): Use InvITs to attract long-term investments in port infrastructure.

7. Coastal Community Integration

• Fishing Harbors and Tourism: Develop infrastructure for fishing and coastal tourism alongside commercial port development.
• Skill Development for Coastal Communities: Implement programs to train locals in port-related activities.
• Rehabilitation Packages: Provide comprehensive support for project-affected communities, ensuring long-term livelihoods.
• Community-Managed Ports: Establish minor ports managed by local communities for trade and fishing activities.

8. Port Efficiency Enhancement Program

• Performance Benchmarking: Introduce real-time performance monitoring systems with reward mechanisms for top-performing ports.
• Specialized Cargo Handling: Develop facilities tailored to port-specific cargo profiles to improve efficiency.
• Dedicated Coastal Berths: Allocate dedicated berths for coastal shipping at all major ports.
• Free Trade Warehousing Zones: Establish free trade zones at ports to reduce logistics costs and improve trade competitiv

Enhancing India’s maritime infrastructure is essential for building trade resilience, driving economic growth, and ensuring strategic security in line with the nation’s economic ambitions. By implementing targeted policy reforms and increasing investments, India can significantly reduce its dependence on foreign vessels while fostering sustainable practices in alignment with Sustainable Development Goal (SDG) 9: Industry, Innovation, and Infrastructure.

Developing a robust maritime sector will not only boost domestic manufacturing but also contribute to SDG 13: Climate Action, ensuring environmental sustainability for future generations. This comprehensive approach promises long-term benefits for the economy, environment, and society.

The End of the Blog: Shaping India’s Maritime Destiny