Budget: Inefficient ports to see private participation, but exporters say present struggle across logistics will continue

In a move to strengthen the Ports, Shipping and Waterways sector, Finance Minister Nirmala Sitharaman in her Budget speech on Monday announced the Public Private Partnership mode for major ports in FY 22.

“Major ports will be moving from managing their operational services on their own to a model where a private partner will manage it for them. For the purpose, 7 projects worth more than Rs 2000 crore will be offered by the major ports on Public Private Partnership mode in FY 21-22,” the minister stated.
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Sitharaman added that a scheme to promote flagging of merchant ships in India would also be launched by providing subsidy support to Indian shipping companies in global tenders floated by Ministries and CPSEs. “An amount of Rs 1624 crores will be provided over 5 years. This initiative will enable greater training and 14 employment opportunities for Indian seafarers besides enhancing Indian companies’ share in global shipping,” she highlighted.

The ports and shipping sector has been under much strain since most part of last year due to a dip in exports that came with the pandemic and the consequent container shortage that wreaked havoc. Ajay Sahai, DG & CEO, Federation of Indian Export Organisations (FIEO) says that such a move will help ports market themselves far better. “The private partnership will be able to push it. In major ports, despite the huge facility at their disposal, their handling of cargo is not so efficient. When private players come in, more accountability and marketing of services will also come in,” he says.

However, he is of the view that some initiatives on container manufacturing should have also been included, a key area that is currently dominated by China. “Maybe in the initial period, fiscal support may be given to container manufacturing to give it a push. We are too much at the mercy of foreign players at this point of time. If the government can encourage Indian shipping line at a global level, that will be of great benefit to the sector,” Sahai adds.

Exporters whom ET Digital spoke to said that while the current measures are good for the long term, benefits in the short term won’t quite accrue. Mahavir Pratap Sharma, Immediate Past Chairman, Carpet Export Promotion Council (CEPC) feels that such steps won’t translate to relief in the present context. “These are good long term infrastructure opportunities for people to invest in, but as an MSME or exporter, this does not give me an immediate relief from the struggle being faced right now across logistics. For any port to get reformed will mean atleast a 2–3-year window. It will take time,” he asserts.

In sync with Sahai’s views, Sharma mentions that measures related to shipping lines stocking more containers in India were missed in this year’s Budget announcements. “The mandate to invest in making containers in India needs to be immediate. We need to have empty containers coming into our ports. These containers should come back in large quantities because we are not importing in bulk from China anymore. The Ministry of Finance could have made sure that this crucial aspect was taken care of,” he forthrightly states.

Container shortage has been a sore point with exporters who have faced long delays and seen a surge in freight costs due to the paucity of containers at ports. Exporter bodies had earlier also written to Minister of Commerce and Industry Piyush Goyal citing how this issue needs immediate attention for exports to continue their upward trajectory.

As part of her speech, Sitharaman also announced that India has enacted Recycling of Ships Act, 2019 and acceded to the Hong Kong International Convention. “Around 90 ship recycling yards at Alang in Gujarat have already achieved HKC-compliant certificates. Efforts will be made to bring more ships to India from Europe and Japan. Recycling capacity of around 4.5 Million Light Displacement Tonne (LDT) will be doubled by 2024. This is expected to generate an additional 1.5 lakh jobs for our youth,” she said.

Budget: Inefficient ports to see private participation, but exporters say present struggle across logistics will continue Budget: Inefficient ports to see private participation, but exporters say present struggle across logistics will continue Reviewed by TechCO on 2/07/2021 Rating: 5

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