Ports hold the key to growth, employment
Government reforms and infrastructure schemes are to further boost the contribution of ports to the Indian economy
India’s goal to become a global manufacturing hub and an export powerhouse rides a lot on the health of its ports. With a vast coastline of more than 7,500 km, ports on the western and eastern seaboard anchor India’s aspirations for rapid economic development and diversification. At a time when Indian businesses are aiming at exports worth $900 billion during FY24, ports will act as the gateway to the country’s economic aspirations of becoming a $5 trillion economy by facilitating the movement of raw materials, finished products, and other commodities.
Ports play a multifaceted role in India’s economy by facilitating international trade, industrial growth, energy imports, tourism, and employment generation while contributing significantly to government coffers and regional development. As per a report by the ministry of ports, shipping and waterways, approximately 95% of India’s trade by volume and 68% by value is moved through maritime transport. They are crucial components of India’s economic infrastructure, supporting its aspirations for growth and development.
Ports have shaped the course of Indian civilisation throughout history. Several well-planned cities and settlements on the banks of the Indus and docks on the sea coast during the Indus Valley civilisation were crucial for trade and maritime activities with regions as far as Mesopotamia, Oman, and the Persian Gulf. Ports played an equally significant role during the Mauryan era and the Gupta period in ancient India, allowing the exchange of goods like spices, textiles, and gemstones.
Throughout history, ports have facilitated trade, cultural business, and the movement of goods and people, resulting in economic prosperity and cultural richness by connecting India to distant lands and civilisations through maritime routes. If one visits Lothal or Dholavira, the celebrated Harappan era sites in Gujarat, one can see evidence and remains of it. While the growth in the ports sector was somewhat muted in post-Independence times, the past three decades have witnessed tremendous growth due to rapid economic development and supportive government policies.
As per the ministry of ports, shipping, and waterways, India had 12 major and more than 210 non-major ports as of 2022. While most ports are government-controlled, the private sector has also made significant contributions to developing the nation’s port infrastructure. For instance, the Mundra port, which recently celebrated its 25th year of establishment, is privately owned. It has the critical advantage of a 15-metre natural draught that allows for handling large vessels with up to 75,000 metric tonnes of cargo. Similarly, the Adani Group’s deep-water international seaport in Vizhinjam, Kerala was set up in a public-private partnership. The recent Global Maritime India Summit 2023 in Mumbai inaugurated by Prime Minister Narendra Modi signals the importance of this infrastructure.
The legislation of the Special Economic Zones Act in 2006 created another opportunity for the ports sector, leading to the establishment of port-connected SEZs in several ports. Ports on India’s western coast are well-connected to major industrial and commercial centres including Mumbai, Pune, Ahmedabad, and Delhi. They serve as logistical hubs, enabling efficient transportation of goods to and from the hinterland. Proximity to these ports has led to the mushrooming of industrial clusters, attracting investments in the manufacturing, petrochemicals, textiles, and automobile manufacturing industries.
Similarly, connecting infrastructure like the Mumbai-Nagpur Samruddhi Mahamarg is taking the benefit of international trade to India’s central and far-flung regions. Many of India’s energy imports, including crude oil, natural gas and coal arrive through ports on the western coast. Ports like Mundra and Kandla handle significant volumes of crude oil essential for the country’s energy needs and industrial processes.
Similarly, ports on the eastern coastline lead in the export and import of minerals and metals, along with attracting cruise liners and other marine tourism activities. Eastern coast ports such as Chennai, Visakhapatnam, Kolkata, Paradip, and Haldia provide a gateway for India’s trade with countries in Asia, Europe, and the Americas. Their strategic location along the Bay of Bengal is critical in delivering shorter shipping routes to Southeast Asia, East Asia, and Australia. These ports generate numerous job opportunities directly and indirectly, ranging from port operations and logistics to transportation and manufacturing.
While the central and state governments share the regulation of ports, the former has made multiple reforms that helped streamline and accelerate growth in this sector. Through the flagship Sagarmala scheme, the central government provides financial assistance for the holistic development of ports.
The Sagarmala scheme envisages 802 projects worth ₹5.40 lakh crore by 2035. Of this, 220 projects worth ₹1.12 lakh crore have been completed, while 231 projects worth ₹2.07 lakh crore are in various stages of implementation.
As numbers indicate, this crucial support also leads to substantial increased revenues for the government. For instance, as per news reports, the Mundra port generated more than ₹80,000 crore in revenue for the customs department. Add to this the employment generation and ancillary economic impact, and the contribution of ports to the Indian economy is immense.
Therefore, the government needs to accelerate reforms and implement various infrastructure schemes and programmes to let ports anchor and skyrocket our economic growth.
Dhanendra Kumar, a former executive director at the World Bank for India, Sri Lanka, Bangladesh and Bhutan, was the first chairman of the Competition Commission of India. The views expressed are personal
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