[Editorial Analysis] The shipping sector is at sea

Mains Paper 3: Economy
Prelims level: Sagarmala Programme
Mains level: Infrastructure: Energy, Ports, Roads, Airports, Railways etc. and Investment models

Context:

• Vision of the Sagarmala Programme is to reduce logistics cost for EXIM and domestic trade with minimal infrastructure investment.
• The major economies of the world have always realised the potential of shipping as a contributor to economic growth. For example, control of the seas is a key component of China’s Belt and Road Initiative (BRI). China is trying to take control of the Bay of Bengal and the Indian Ocean Region.
• Sagarmala, a government programme to enhance the performance of the country’s logistics sector, provides hope. Its aims are port-led industrialisation, development of world-class logistics institutions, and coastal community development.

Why Maritime transport?

• Maritime transport actually accounts for roughly 80% of international trade, as opposed to other modes of transportation, according to UNCTAD in 2020.
• Transport by water is cheaper than transport by air, despite fluctuating exchange rates and a fee placed on top of freighting charges for carrier companies known as the currency adjustment factor (CAF).

Vision of the Sagarmala Programme:

• Reducing cost of transporting domestic cargo through optimizing modal mix
• Lowering logistics cost of bulk commodities by locating future industrial capacities near the coast
• Improving export competitiveness by developing port proximate discrete manufacturing clusters
• Optimizing time/cost of EXIM container movement

Components of Sagarmala Programme are:

• Port Modernization and New Port Development: De-bottlenecking and capacity expansion of existing ports and development of new greenfield ports
• Port Connectivity Enhancement: Enhancing the connectivity of the ports to the hinterland, optimizing cost and time of cargo movement through multi-modal logistics solutions including domestic waterways (inland water transport and coastal shipping)
• Port-linked Industrialization: Developing port-proximate industrial clusters and Coastal Economic Zones to reduce logistics cost and time of EXIM and domestic cargo.
• Coastal Community Development Promoting sustainable development of coastal communities through skill development & livelihood generation activities, fisheries development, coastal tourism etc.
• Coastal Shipping and Inland Waterways Transport Impetus to move cargo through the sustainable and environment-friendly coastal and inland waterways mode.

China factor:

• China’s growth is strong merchant marine and infrastructure to carry and handle merchandise all over the world.
• The seas are a key component of China’s Belt and Road Initiative (BRI). China is trying to take control of the Bay of Bengal and the Indian Ocean Region.
• China marine growth may imbalance regional power balance and threat to Indian growth and security.

Helping foreign shipping liners:

• Starting from the establishment of new ports in independent India to the establishment of the present-day Chabahar Port in Iran, all of India’s actions on the shipping front have been counter-effective.
• This is due to a visionless administration. All the shipping infrastructure in peninsular India only helps foreign shipping liners. India has concentrated only on short-term solutions.
• India also developed optimum shore-based infrastructure with road and rail connectivity to facilitate their trade
• There was balanced infrastructure onshore and at sea. Shore-based infrastructure was developed to cater to the carrying capacity. This needs to be understood with a clear economic sense.
• Foreign carriers and their agents continue to ransack EXIM trade with enormous hidden charges in the logistics cycle. Much of foreign currency is drained as transhipment and handling cost every day.
• India, the bureaucracy has repeatedly allowed infrastructural developments in multiple cargo-handling ports. As a result, Indian ports compete for the same cargo.
• India need to only concentrate on developing the contributing ports to serve the regional transshipment hubs for which improving small ship coastal operations is mandatory.
• India need quality products to be available in global markets at a competitive price. This will happen only if we develop balanced infrastructure onshore as well as at sea.

A ray of hope (Sagarmala):

• Sagarmala, a government programme to enhance the performance of the country’s logistics sector, provides hope. Its aims are port-led industrialisation, development of world-class logistics institutions, and coastal community development.
• Sagarmala initiates infrastructural development on the shorefront; this will also get reflected in domestic carrying capacity.
• The solution for, shipbuilding, repair and ownership are not yet preferred businesses in peninsular India.
• The hope or ‘Make in India’ growing louder and with simultaneous multi-folded cargo growth in the country, we need ships to cater to domestic and international trade.
• Short sea and river voyages should be encouraged. The ship-owning spirit of the Indian merchant marine entrepreneur has to be restored.
• Sagarmala should include coastal communities and consider evolving schemes to harness the century-old ship-owning spirit and sailing skills of peninsular India
• Coastal communities should be made ship owners. This will initiate carriage of cargo by shallow drafted small ships through coast and inland waterways.
• All minor ports in peninsular India will emerge as contributing ports to the existing major ports and become transhipment hubs on their own. Old sailing vessel owners should be encouraged to become small ship owners.

Point of concern (Sagarmala):

• The youth population is merely a number, not a skill-based strength,india need skill and innovation to compete with china.
• According to an ICRA study, the program is being impeded due to lack of timely investment mobilization and budgetary support.
• Another challenge is the creation of an environment favourable for businesses and tangible incentives to attract the private sector.
• There has been resistance from the fishing communities and environmental activists in certain areas. The Karnataka High Court recently stayed the work on Karwar Port following protests by the local fishermen.
• At the end of 2018, the centre diluted the Coastal Regulation Zone Notification- a move that is favourable to the Sagarmala Program but highly dangerous for the fragile coastal ecosystem.
• This is because Sagarmala, along with Bharatmala, were declared as ‘strategic projects’– i.e. exempt from the provisions of CRZ. This implies that land can be reclaimed from ecologically sensitive CRZ-I zones and roads can be built here.
• Apart from this, there have been instances of Sagarmala projects triggering accelerated coastal erosion and increased pollution from the industrial clusters.
• Port expansions involve massive dredging into the sea that destroys vast stretches of fertile fishing grounds and destabilises jetties.
• Over the years, there is reduced parking space for small artisanal boats, curtailed access to fishing harbours and unpredictable fishing catch. This is significantly affecting the fishing communities, who are already suffering due to the impacts of living next to mineral handling facilities and groundwater exhaustion.
• There has been less than the ideal allocation for the coastal community development pillar of the project.
• There is also suspicion among the fishing community that this ambitious programme would lead to displacement and would adversely affect their fishing trade.
• Fishermen are of the view that the programme has been designed to privatise sea and to uproot fishermen from their hamlets.
• The Health Crisis (corona) has greatly affected the trade projects that form the basis for the Sagarmala program. This has led to the need for fresh blueprints (Maritime Vision 2030).

Conclusion:

• There is a need for increased funding for the welfare of the local fishing communities.
• Their traditional livelihoods must be safeguarded while promoting communities’ growth and development. There must be increased modernization with emphasis on sustainability.

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