Infrastructure

KEY POINTS

Challenges

·        High Logistics costs – Low quality infrastructure of Indian ports raises business costs and reduces global competitiveness.

·        India’s low rank of 146 in the World Bank’s Trading across Borders Index underlines the high cost.

·        Causes for such high costs:

·        Features of the ports themselves: Poor quality of existing infrastructure.

·        Procedures- lengthy processes that is still necessary for export and import.

·        While customs operations in India are rapidly going paperless and converting to digital, inspections and scrutiny continue to be lengthy for cargo and other shipping operations.

·        Movement in hinterland – Connectivity between ports and hinterland is still a formidable hindrance.

·        Sagarmala is trying to address this issue by emphasising on multi-modal connectivity to ports.

·        But connectivity improvement plans continue to be affected by operational problems on roads as well as perennial problems of acquiring land for expansion.

·        Cabotage laws – It continues to remain restrictive in India.

·        Foreign-flagged vessels are not allowed to ship cargo from one Indian port to another as that remains a protected turf for domestic shippers.

·        Some initial reforms have been introduced here, such as for roll-on, roll-off (RoRo) vessels.

·        But, further change in cabotage laws is essential for encouraging transshipment functions on Indian coasts.

·        Trans-shipment facilities – These are vital for enabling cross-continental traffic and smooth functioning of global value chains.

·        For becoming a global maritime hub, as the Sagarmala aims to, India must develop good trans-shipment facilities. But, India is yet to develop major trans-shipment ports.