The logistics industry is the core of every economy. Likewise, in India, the logistics industry includes a significant portion of shipping-based transportation with the potential to develop at an astounding rate. Shipping swiftly transports items between geolocations resulting in the strengthening of the economy. India has one of the longest coastlines in the world, which is around 7516.6 kilometers long. It has a large presence in the marine industry due to its advantageous location on the shipping routes of the world. The majority of cargo ships that travel between East Asia, the USA, Europe and Africa pass through the Indian territorial waters paving a way for enormous possibilities of trade through shipping, which are yet to be explored and can be realised with the fact that India possesses 205 small and intermediate ports in addition to its tally of 13 major ports. As per the Ministry of Ports, Shipping and Waterway, 95% by volume and 70% by value of India’s trade are conducted by sea transport.
India has a maritime heritage that can be traced back to 3000 BC. During the Indus Valley Civilization, people had a marine trading connection with Mesopotamia during this period. There is a tone of evidence from the Mohenjo-Daro and Harappa excavations showing that marine activity was very active during this time. Since then, the marine sector has witnessed significant growth. A significant role in Indian port administration is played by the categorization of Indian ports as major, small, and intermediate. Maritime transportation is included on the “concurrent list” and is thus subject to administration by both the Central Government and the individual State Governments because of the federal structure and the constitution of the country. The Central Shipping Ministry oversees the administration of the main ports, while the appropriate departments or ministries in each of the nine coastal states oversee the administration of the small and intermediate ports.
The government has not established any monetary incentives for those who use coastal shipping, unlike consumers of other modes of transportation. Until recently, businesses that relied on coastal shipping paid high and undifferentiated taxes, including income tax, customs duty on bunkers, landing fees, etc. Other challenges include the need for enhancement of the capacity of all major, small and intermediate ports. Currently, shipping services are becoming popular around the world, the size of the vessels is getting bigger, many ports in our country are still having trouble keeping up and many of these vessels cannot get into most of the ports.
COVID-19 further exacerbated the problems of the shipping sector globally. Restrictions on the movement of goods and people have negatively affected the financial performance of all international shipping businesses, resulting in a major decline in demand for commodities and their transit through the supply chain. The suspension of manufacturing and the shortage of work force to load and unload goods, as well as truck drivers, have had halted commerce and port operations.
Recently, to explore the full potential of the shipping sector, the government has taken several steps to boost the maritime industry. According to Indian Shipping Statistics 2020, “As on 31st December 2020, India had a fleet strength of 1463 vessels with a gross tonnage (GT) of 13.01 million as compared to a fleet strength of 1429 vessels with 12.75 million GT at the end of December 2019. This reflects a net addition of 34 vessels with an increase of 0.26 million GT during the calendar year 2020″.
In 2015, the Union Cabinet approved the Sagarmala programme to modernize, mechanize and computerize port infrastructure along the Indian coastline. The goal of this programme is to reduce the logistical cost and time of the export cargoes. It also includes the identification of industrial capacities close to the ports to reduce the cost of transporting bulk goods, improve export competitiveness, and efficiently move containers between ports on a priority basis. The initiative also aims to optimize infrastructure investment to reduce domestic freight logistics costs. In addition, the programme hopes to create as many as 4 million new direct jobs and 6 million new indirect jobs.
The other initiatives include a reduction in the GST from 18% to 5% for foreign-going vessels and coastal ones, announcement of subsidy in the union budget 2021 funding worth Rs.1,624 crore to Indian shipping companies to encourage merchant ship flagging in the country and collaboration with Russia on shipbuilding and inland waterways. The government intends to put 23 waterways into operation by 2030 since they are both cost-effective and ecologically beneficial.
In addition to the plethora of projects, pursuing “Make in India” would raise enormous prospects, particularly in the ship repair business. The shipbuilding programme will encourage Indian shipyards to get even more orders from abroad. Currently, according to the Ministry of Ports, Shipping and Waterways’ Maritime India Vision-2030, the global collapse in the shipbuilding industry has had a severe influence on Indian shipyards, and India’s share of the global markets has decreased to less than 1%. Thus, India’s private shipbuilding industry is currently declining and the sector is trying to change the narrative by taking efforts in the required direction.
In concert with the growing environmental consciousness, the marine sector is pushing for the use of alternative, cleaner fuels to decrease carbon emissions to the greatest extent feasible. Safe shipping, greater seaborne commerce and the use of cleaner fuels will continue to promote the expansion of India’s marine logistics business. The marine logistics business has a promising future due to technological advances and the government’s many ongoing initiatives.