Encouraging Investment in the Port Sector: Steps and Schemes

Encouraging Investment in the Port Sector: Steps and Schemes

Question - Port development is the key to economic growth and progress. Discuss the steps and schemes by the government to encourage investments in the port sector.

Government of India has taken several steps to encourage investment in the Indian port sector:

Steps

• 100% FDI under automatic route is permitted for projects for port development

• Port sector has been provided infrastructure status

• Standardisation of bidding documents for PPP projects such as:

- Request for Qualifications,
- Request for Proposal and Concession Agreement

• Revision of tariff guidelines for major ports have given flexibility to PPP operators to be more responsive to market conditions

Schemes

About Maritime Agenda 2010-2020

• Development and modernisation of ports is planned through The Maritime Agenda 2010-2020

• This agenda aims to create port capacity of 3200 MT to handle expected traffic of 2500 MT by the year 2020

• It aims at bring ports at part with global standards of performance and capacity

• Increase in tonnage under the Indian flag and share of Indian ships in nation’s EXIM trade

• Promotion of coastal shipping which is eco-friendly and will reduce pressure on roadways

• Increasing India’s share in global ship building to 5% from 1%

• Share of Indian seafarers is between 6 to 7 percent in international shipping industry;agenda aims to increase it to 9% in the current year

About Sagarmala Project/Scheme

• The implementation of the Sagarmala project aims at:

- Complete development of ports
- Port led development of the hinterland
- Efficient connectivity

• Main aim of the project is port development in direct and indirect ways to spur a Blue Revolution

• The National Sagarmala Apex Committee will be established for the promotion of projects and programmes under this scheme

• Fund requirement for this scheme is INR 692 crore in the current fiscal

Sagarmala aims at:

- Port-led industrialisation

- Port based urbanisation

- Port and coastal tourism and recreation

- Short-sea shipping coastal shipping and Inland Waterways Transportation/IWT development

- Ship building, ship repair as well as ship recycling

- Logistics parks, warehousing, and maritime zones/services

- Integrating with hinterland hubs

- Offshore storage, drilling platform

- Specialisation of ports in economic activities

- Focus on use of renewable energy for port development

Facts and Stats

• Estimated traffic in all ports including non metro ones as per ministry estimates is 2495 MMT

• Total capacity of these ports is pegged to be at 3280 MMT

• Total proposed investment in non major ports is expected to be INR 2.87 thousand crore by 2020

• Total proposed investment in shipping sector by 2020 is pegged at INR 1.65 thousand crore; proposed investment in ports is pegged at INR 119449.41 crore by 2020 and 167930.84 crore in non major ports

• At present, Indian ports handle 90% of India’s EXIM trade