INDIA'S

MARITIME
SECTOR
RISING ABOVE THE WAVES

OVERVIEW

Ports play an important role in the overall economic development of a country.

India is one of the fastest-growing and large economies in the world, with a
GDP growth rate of 6.1% as of 2018-19. Approximately 95% of India’s
merchandise trade is done through sea ports. India is one of the biggest
peninsulas in the world with a coastline of ~7,516.6 kms and 200 major and
non-major ports. Indian ports are categorised into two parts: Major ports
(under central Government administration) and Non-Major ports (under state
Government administration). The ports in India serve as a backbone for EXIM,
international trade, coastal shipping and cruise shipping.

As India opened its economy towards liberalisation, privatisation and

globalisation in the year 1991, government policies were formed to develop
export potential and improve trade and commerce. Development of Special
Economic Zones (SEZ) and allowing foreign enterprise participation has
helped India in achieving high trade growth over the period.

India’s top export destinations are the US, UAE, Saudi Arabia, Hong Kong,
China, Germany and Republic of Korea. Key commodities handled at the Indian
ports are petroleum products, coal, automobile, iron ore, engineering goods,
chemicals and electronics.

1
MAJOR INDIAN PORTS

India has 13 major ports (listed in the table).

Traffic handled at major ports: *April to February 2021 (in 000’ tonnes)

Source: Indian Ports Associa on

According to the Indian Ports Association data, India's top 13 ports witnessed a considerable
decline in cargo traf ic between April 2020 and February 2021 to 600 million tonnes owing
to the Covid-19 pandemic. Cargo traf ic at 12 major ports dropped by 8.80% to 477.75
million tonnes from April to December 2020 over 523.84 million tonnes YoY.

CARGO TRAFFIC STATS

Traffic Handled at Indian Ports (Million tonnes)

Note: Figures in green indicate growth over previous year. | P: Provisional

Source: Ministry of Ports, Shipping and Waterways
2
During 2019-20, Major and Non-major Ports in India have handled 1,319.92 million tonnes of
cargo, an increase of 3% from the previous year. Major and Non-major ports cargo grew at
0.8% and 5.6% during 2019-20. The share of Non-major Port in the total traf ic handled at
Indian Port increased from 45.5% in 2018-19 to 46.6% in the year2019-20.

Traffic Handled at Indian Ports (Million tonnes)

Share of overseas cargo traffic at Major Ports during 2019-20

The overseas cargo handled at Indian Ports increased by 4.7% during 2019-20 from 4.5%
during 2018-19. Among the Major Ports, Deendayal Port handled the maximum overseas
cargo of 105.85 million tonnes with a share of 19.4% followed by Paradip Port (14.2%), JNPT
(11.8%), Vishakhapatnam Port (10.3%), Chennai Port (7.7%), Haldia Dock (6.9%), Mumbai
Port (6.3%), New Mangalore Port (5.3%), V.O. Chidambaranar Port (5.0%), Cochin Port
(4.2%), Kamarajar Port (3.3%), Kolkata Dock (3.0%) and Mormugao Port (2.6%) during
2019-20.

SAGARMALA - A GOVERNMENT FLAGSHIP PROGRAMME

The Government of India has planned to modernise the country’s ports through a project
called Sagarmala. Sagarmala is the lagship programme of the Ministry of Ports, Shipping and
Waterways (MoPSW) to promote and develop ports in the country by harnessing India’s
7,500 km-long coastline and potentially navigable waterways. Sagarmala, can be a game
changer for the maritime sector, due to its focus on port-led development.

3
The project is expected to receive Rs. 3.4 lakh crore (US$ 46.27 billion) in investments that
will be leveraged towards increasing cargo shipments to 2,600 million tonnes. About 187
minor and major ports have been identi ied by the government and will be developed in a
phased manner, involving public–private partnership.

SAGARMALA PROJECT SCOPE

The Sagarmala project will have the

following components:

• Port modernisation and new

port development: Decongestion
and capacity expansion of existing
ports and developing new
green ield ports.
• Enhancing port connectivity:
Connecting ports to areas deprived
of river bodies and optimising the
cost and time of cargo shipments through multimodal logistics channels including domestic
waterways.
• Port-linked industrialisation: Developing port-proximate industrial clusters and
Coastal Economic Zones to reduce logistics cost and time of EXIM & domestic cargo.
• Coastal community development: Developing coastal communities through skill
development and creating livelihood activities, developing isheries, coastal tourism, etc.
• Coastal shipping & inland waterways transport: Lending an impetus to ship cargo
through environment-friendly coastal and inland waterways channel.

More than 574 projects costing Rs. 6.01 lakh crore (US$ 82.03 billion) have been identi ied
for port modernisation, new ports development, port connectivity enhancement, port-linked
industrialisation and coastal community development between 2015 and 2035. As of
September 30, 2019, 121 projects worth Rs. 30,228 crore (US$ 4.13 billion) have been
completed and 201 projects worth Rs. 309,048 crore (US$ 42.18 billion) are underway.

Share of overseas cargo traffic at Major Ports during 2019-20

MARITIME INDIA VISION 2030 – INTRODUCTION

The Maritime India Vision 2030 (MIV) 2030, launched in March 2021, is a 10-year roadmap
with the aim of overhauling the Indian maritime sector. It is the latest venture of Sagarmala. A
dedicated Maritime Development Fund (MDF) will be created to oversee funding of the
Maritime India Vision 2030. The vision envisages Rs. 3 lakh crore (US$ 41.44 billion)
4
investment in port projects that are
likely to generate 20 lakh
employment opportunities. The
MIV 2030 vision document outlines
10 key themes as follows:

1. Develop best-in-class port

infrastructure
2. Drive e2e logistics ef iciency
and cost competitiveness
3. Enhance logistics ef iciency
through technology and innovation
4. Strengthen policy and
institutional framework to support all stakeholders
5. Enhance global share in ship building, repair and recycling
6. Enhance cargo and passenger movement through inland waterways
7. Promote ocean, coastal and river cruise sector
8. Enhance India’s global stature and maritime co-operation
9. Lead the world in safe, sustainable & green maritime sector
10. Become top seafaring nation with world class education, research & training

Se ng Up a Regulatory Body
As required by the Indian Ports Act, a pan-India port authority will be set up over the project
to oversee major and non-major ports, enhance institutional coverage and boost investor
con idence by ensuring structured growth of the ports sector. The regulatory authority will
be set up under the new Indian Ports Act (to replace the century-old Indian Ports Act 1908).
The additional task of the proposed regulatory body will be to develop new ports, regulate
scheduled ports, schedule grievance redressal between major and non-major ports and
promote healthy competition.

OBJECTIVE OF MARITIME INDIA VISION 2030

The Maritime India Vision aims to streamline the process for exporters by enabling direct
movement of shipments from factories without any intermediaries and improving the
competitiveness of shippers in international trade. The ministry also aims for increasing
India’s visibility in the international maritime sector, and strengthening maritime relations
with different countries, as part of the vision.

Key objectives of the Maritime India Vision 2030 are as follows:

• Building three mega major ports, each with a capacity of over 300 million tonnes of cargo
- Developing mega capacity ports in high potential areas of Gujarat, Maharashtra and Odisha-
West Bengal Cluster at an investment of over Rs. 80,000 crore (US$ 11.05 billion) is also in
plan.
• Increasing the frequency and volume of Indian cargo trans-shipped within the country
from 25% to 75% - The government plans to increase the volumes of Indian transhipment
cargo at Indian ports from 25% in 2020 to more than 75% by 2030 by operationalisation of
Vizhinjam port and development of Transhipment zone in Kanyakumari and Champbell Bay.
• Reducing vessel-related charges at major ports, which are 2-6x higher than global ports –
Introducing procedures that will ease cargo movements by various initiatives such as
implementing Enterprise Business System (EBS) to simplify and digitize processes across
Major Ports by 2021, developing National Marine Logistics Portal to implement 100%
paperless processes including online payment and implementing uni ied ship e-registration
portal.
• Deepening the draft to 14-18 metres based on cargo pro ile and vessel calls, with at least
three major ports to have a depth of over 18 metres.
• Development of green sustainable ports to increase the share of renewable energy to over
5
60% by 2030 from current levels of less than 10%. Promoting waste to wealth through
sustainable dredging and domestic ship recycling.

Addi onal Projects under Mari me India Vision 2030

• Create Eastern Waterways Connectivity Transport Grid – This project will develop
connectivity with Bangladesh, Nepal, Bhutan and Myanmar.
• A Riverine Development Fund (RDF) – This fund will provide low-cost inance to inland
vessels and extend coverage of the tonnage tax scheme (applicable to ocean-going ships and
dredgers) to inland vessels to enhance their availability
• The port charges will be revised to make them competitive by scrapping hidden charges
levied by ship liners. More transparency and accountability on port charges
• Promotion of water transport – Decongestion of urban areas and development of
waterways as an alternative means of urban transport. Five themes will be promoted for
cruise tourism – pilgrim, heritage, ayurvedic & wellness, island tourism and regional
international circuit (India, Sri Lanka, Myanmar and Thailand). The policy plans to
incentivise global cruise liners to make India their home port.
• Strengthening the maritime institutions to enhance India’s training and development
capabilities at par with global standards. This would help in increasing India's share of
seafarers from 12% at present to over 20%.
• Prioritising development of 23 national waterways is planned under it with maximum
potential in Phase 1 besides increasing the cargo movement from 73 million tonne per
annum (MTPA) to over 200 MTPA.

MIV 2030 – Key Targets

6
MARITIME INDIA VISION – IN ACTION

The government has introduced key developments in the areas of ports and shipping, which
are in line with the Maritime Vision 2030 superseding the Sagarmala programme:

‘Direct Port Entry Facility’ at V.O. Chidambaranar Port – In October 2020, a Direct Port
Entry (DPE) facility was launched at the V.O. Chidambarnar Port in Tuticorin by Mr. Mansukh
Mandaviya, the Union Minister of State for Shipping and Minister of State for Chemicals &
Fertilisers. The Direct Port Entry will facilitate continuous and direct movement of containers
from mills to the container terminal, without intermediary handling at container freight
stations. Earlier, containers were taken to container freight stations that operated only
between 10 am and 8 pm on working days, causing delays in admitting containers into
terminals. DPE will enable faster export clearance and provide cost-effective export
admittance.

Proposal for mandatory 'Made in India' Barges – The Ministry of Shipping is considering a
plan to make domestically manufactured barges mandatory for coastal and inland waterways
movement. The idea is a part of its exercise to formulate the Maritime Vision 2030.
Development of the domestic shipbuilding industry through manufacturing of barges is one
of the key agendas of the government. The ministry is also looking to bring down the cost of
barges to make the Indian industry more competitive for export markets. Shipping Minister,
Mr. Mansukh Mandaviya, has highlighted that the Ministry of Shipping has directed all major
ports to procure barges that are only Made in India. At present, the ship-building industry
remains concentrated in countries such as China, Japan and South Korea, with India being a
leading global player in ship recycling.

Ease in registering vessels – In October 2020, the Ministry of Shipping announced plans to
ease nationality norms for registration of ships by permitting vessels that can be
considerably owned by Indian entities and people owned by overseas company Indians and
LLPs to register underneath the Indian lag. At present, only vessels wholly owned by Indian
entities can be registered and put up the Indian lag. The easing of ship registration is a part
of the Maritime India Vision 2030 to increase Indian delivery tonnage. Currently, a bare-boat-
charter-cum-demise (BBCD) ship can be transformed into an Indian lagship only when the
inal instalment of the constitution rent is paid to the overseas proprietor. Until then, it puts
up the lag of the jurisdiction of registration. This easing can permit ships bought via BBCD
route to register in India earlier than the tip of the constitution interval.

Designate a trans-shipment hub port – The shipping ministry announced plans to

designate a port as a trans-shipment hub to ease India’s dependence on overseas hubs. The
ministry has revealed that 4.1 million (twenty-foot equivalent units) TEUs or 25% of Indian-
originating and destined container traf ic were trans-shipped in foreign hubs such as
Colombo, Singapore, Port Kelang and Jebel Ali, bene iting foreign governments at the expense
of time & cost inef iciencies for Indian traders. According to a consultancy irm Drewry, with
the trans-shipment move, Indian traders stand to gain by US$ 40-50 per TEU, translating into
annual savings of ~Rs. 800 crore (US$ 108.87 million) if the entire 2.5 million Indian
containers get trans-shipped at the V.O. Chidambaranar Port Trust (VOCPT) instead of the
Colombo Port.

The ministry will pick the port based on certain criteria to develop a port as a trans-shipment
hub. Cochin Port Trust and the VOCPT are potential candidates vying for a trans-shipment
tag. Development of the VOCPT as a trans-shipment hub is one of the development areas in
the ‘Maritime India Vision 2030’ blueprint.

Replacing the Major Ports Trusts Act (1963) with Major Port Authorities Bill (2020) –
The Major Ports Trusts Act (1963) was constituted to enable smooth functioning of ports.
However, key ports faced stiff competition due to accelerated growth in the trade and
development of private ports. Regulation of tariff under the Major Port Trusts Act and their
7
administrative control by the central government have hindered growth and development of
major ports. Hence, the Major Ports Authority Bill (Bill) was introduced in the Lok Sabha in
March 2020 to empower ports and make them competitive. The bill aims to enable key ports
to function with greater autonomy, enhance decision-making and modernise infrastructure
by revamping the institutional framework.

Expediting development support to Vizhinjam Port, Kerala – One of the objectives of the
Maritime India Vision 2030 includes prioritising development of the Vizhinjam port by 2023.
The vision document highlights the government’s plan to develop another trans-shipment
port in the Kanyakumari region by 2030 after completion of the Vizhinjam port. Currently,
only 25% of the Indian cargo trans-shipment is handled by Indian ports, resulting in higher
cost to Indian traders for routing their containers through Colombo, Singapore and Jebel Ali.
A trans-shipment port such as Vizhinjam will act as a hub for smaller vessels to load cargo
onto larger ships for transport to the inal destinations. Vizhinjam port development has
received investments worth Rs. 5,552 crore (to compete with Colombo) due to favourable
factors such as deep draft and proximity to the main shipping lane. The project is entitled to
receive a viability grant funding of Rs. 1,635 crore (to be contributed equally by the central
and state governments), making it the irst port project to receive such a grant.

Installing Port Community System (PCS) – Another major initiative taken by the Indian
Ports Association is the Port Community System (PCS), which is a centralised hub for
electronic low of trade-related data for all ports and ports-related entities. The PCS acts as a
single window for port community members and stakeholders to exchange messages
electronically in a secured portal. The government conferred the PCS system with the Digital
India Award on December 30, 2020, recognising its signi icance in the industry.

Implementing digital port ecosystem – In December 2020, the Ministry of Ports, Shipping and
Waterways (MoPSW) announced plans to implement a Rs. 320-crore project for ive major
ports to provide a digital port ecosystem. These ports are Mumbai, Chennai, Deendayal,
Paradip and Kolkata (including Haldia). A total of 2,474 processes were rationalised,
harmonised, optimised and standardised to arrive at a inal re-engineered process count of
162.

INDUSTRY EXPERTS TAKE ON MARITIME INDIA VISION 2030

From 19 to 20 November 2020, INMEX SMM India, the premier trade exhibition for shipping
and maritime industries by Informa Markets, was hosted virtually in India and Hamburg
Messe und Congress in Germany. The exhibition recorded 2,876 footfalls (domestic and
international buyers from the US, the UK, the UAE, Spain, Germany, Hong Kong, Singapore,
Qatar, Turkey and Brazil). Industry experts discussed key issues in the Indian shipping arena
including Maritime Vision 2030 document, digitalisation in shipping and impact of COVID-19
on shipping.

Speaking on the Maritime Vision 2030 document, Mrs. HK Joshi, CMD, Shipping
Corporation of India, observed that the Maritime Vision 2030 has come at the right time and
it is a visionary approach of the ministry to ensure growth. “Vision 2030 document aims for
India to become self-reliant in shipping, ship building and ship infrastructure, and a global
player. If we become a leading domestic player, we can move on to the global map. Shipping,
ports and inland waterways are industries that are going to churn the economic development.
The maritime sector can oil the wheels of the economy. Shipping is the core and prerequisite for
the growth of ship building. We need to have substantial growth in Indian tonnage, which will
automatically boost ancillary industries. The Maritime Vision 2030 document integrates these
to ensure Indian built, lagged and owned, foreign built and Indian lagged and owned ships can
support the existing tonnage and ind the advantage.”

Director-General of Shipping (DGS), Mr. Amitabh Kumar, at an industry speci ic event

recently stated, “Vision 2030 is still a draft vision, and the inal document is not ready. But it will
8
remain dynamic over the next decade, changing its contours with time, and adapting to
situations that may arise, and keeping abreast of developments. Properly developed ports are
one of the four limbs of Vision 2030. We have already solicited the participation of the private
sector in maritime infrastructure development and adopted the private-public partnership
(PPP) model for terminal management at ports.”

He further added, “Another important limb of the Vision 2030 document is maritime training.
We are looking at launching at least ive seamen courses to deal with ships that will come into
the market during the decade 2020 to 2030. The courses will combine electronics with nautical
science, and electronics with marine engineering. A lot of emphasis will be given to research by
bringing together not just the maritime sector institutes, but also related stakeholders like the
Indian Institutes of Technology (IITs).”

KEY FACTORS DRIVING THE MARITIME SECTOR

Geographical factors – India is a peninsular country with a long coastline—surrounded by

the Indian Ocean and Bay of Bengal. India’s ports are strategically located on the world
shipping routes. Most cargo sailing between East Asia and America, Europe and Africa pass
through Indian territorial water.

Economic factors – India is an emerging economy with a large population, growing

consumer base and strong labour force. India's emerging middle-class population will
continue to drive the demand for products and services. Consumption is in the upward trend,
making India an attractive investment destination. India is the third-largest economy in the
world, after China and the US, in terms of Purchasing Power Parity (PPP). It is also one of the
major G-20 economies with an average growth rate of 7%+ for more than a decade.

Industrial growth – While the pandemic affected manufacturing industries in 2020, it is

interesting to note that the index of industrial production (IIP) is now gradually picking up
owing to lockdown relaxations. The Prime Minister’s Aatmanirbhar campaign has caused
most industries to be self-reliant by boosting its production. This will help in increased
exports through the ports. Additionally, strong growth in the country's steel industry is
boosting the demand for coal, iron ore and crude steel imports and exports.
Waterways is the most economical means of bulk transport. Growth in manufacturing will
ensure higher demand for cargo shipments via ports.

Encouraging cruise tourism – Cruise tourism in India is still in a nascent stage. However,
the government has now taken cognizance of the matter and announced several cruise
tourism development projects that will bene it the overall ports. The union government plans
to develop cruise tourism and increase the number of Indian cruises from 150 to 1,000 in ive
years, with effective use of the coast and inland water for cruise tourism. In August 2020, the
9
Ministry of Shipping rationalised tariff rates for cruise vessels. To attract cruise ships to
Indian shores, port charges have been decreased from US$ 0.085 to US$ 0.35 per Gross
Registered Tonnage (GRT) for the irst 12 hours of stay. Shipping Minister Mr. Mansukh
Mandaviya has applauded the ministry’s decision, stating that the move is a result of the
ministry’s efforts to realise the Prime Minister’s vision of putting India on the global cruise
map (for ocean and river cruises).

Impetus to domestic water transport channel – Passenger movement through waterways

is rising along the rivers and the coast. Waterways are found to be an economical and
environment-friendly means of transportation. RO-RO vessels, RO-PAX vessels, mainland-
island and inter island vessels, and ferry vessels are in demand across the country. In India,
Inland Water Transport (IWT) has the potential to relieve the over-burdened railways and
congested roadways. The Jal Marg Vikas Project (JMVP) for the development of National
Waterways in India is inancially supported by the World Bank and expected to be completed
by 2023. The JMVP was implemented with an aim to reduce rail and road congestion, carbon
footprint and minimal resource depletion. The states covered under the Jal Marg Vikas
Project are Uttar Pradesh, Bihar, Jharkhand and West Bengal.

Additionally, in Dec. 2020, the government announced plans to develop new routes for ferry
and RO-RO (Roll-on Roll-off) services to promote coastal shipping and boost coastal tourism.
The new routes will connect Somnath Temple, Hazira, Okha and Jamnagar. The destinations,
along with six international routes, have been identi ied under the Sagarmala project, a
lagship programme of the MoPSW. The ministry has recently implemented one such service
by deploying the RO-PAX vessel ferry service between Hazira and Ghogha.

An ambitious project, Kochi Water Metro Project, is being carried out by Kochi Metro Rail
Limited (KMRL) for easy passenger movement between metro rail, water and road in and
around Kochi. At least 16 stations have been identi ied on the waterfront. As of December
2020, ~50% of piling work for the Water Metro’s boat jetty at high court has been completed.
The KMRL has so far completed construction of 18 piles at the site. KMRL has engaged about
40 labourers, through its contractor, and work is on in full swing. Apart from piling, other
civil construction activities are also being undertaken.

Trade collaborations and maritime cooperation with other countries – India and several
Gulf countries have recently began collaborating in the maritime sector and such cooperation
is expected to boost port operations.

Recently, India and Denmark have agreed to partner in the areas of maritime technologies.
The latest meeting between the two parties was conducted in December 2020. The areas of
cooperation between the two countries include the following:

• Online maritime knowledge cluster – India has invited the Technical University of
Denmark (DPU) and Maersk Maritime Technology to become a global partner in India’s
Maritime Knowledge Cluster
• Digital certi icates for seafarers and ship registry – India and Denmark are developing
their own systems for digital certi icates for the seafarers and are working on an online ship
registration system
• Maritime security – Both countries have decided to tackle the issues of piracy in the Gulf
of Guinea
• Green technologies – Indian and Danish companies will cooperate on several green
technology-based projects in the ports sector through public-private partnerships. Talks are
also on with Denmark for technical cooperation to loat solar power stations and shore-based
power supplies at Indian ports

Additionally, in December 2020, India and Sri Lanka have rekindled their key trilateral
maritime dialogue after a gap of six years. External Affairs Minister, Mr. S. Jaishankar, has
revealed that New Delhi will assist Colombo in enhancing its capabilities to meet the rising
maritime and security challenges in the Indian Ocean region.
10
THE ROAD AHEAD

India Maritime’s short-term prospects remains bleak due to the pandemic affect, global
developments, and low domestic demand. However, the long-term outlook looks promising
backed by a series of government reforms and recovery of trade globally.

India Infrastructure Research report suggests that cargo traf ic at Indian ports is expected to
be in the range of 1,700 mt to 2,271 mt by 2024-25.

A strong pipeline of 574 projects worth around Rs. 6 lakh crores (US$ 81.97 billion) by the
Sagarmala program for the development of Indian ports offer signi icant opportunities to
various stakeholders.

Consistent focus of the government to develop port infrastructure, robust project pipeline,
Sagarmala programme, proposed National Integrated Logistics Policy, draft Maritime India
Vision, etc, are expected to keep investors interested in the sector

Additionally, most key government policies such Major Port Authority Bill, Merchant
Shipping Bill, the Indian Ports Bill, and other acts and guidelines are already at different
stages of scrutiny. The government has also granted ‘infrastructure status’ to logistics and
ports sub-sectors which is leading India to be a global manufacturing and trade hub.

11