We’re Looking to Usher In a ‘Blue Revolution’ in 5 Years
There is immense potential in shipping and ports industry, possibly even higher than roads
Nitin Gadkari is one of those rare politicians who love to talk in numbers. The Union minister for road transport, highways and shipping bombards his listeners with clusters of figures, often running into billions and crores, and asserts that these aren’t mere claims, and that he can be held responsible for every word he utters several years down the line. In the just-ended Maritime India Summit, Gadkari unveiled the Sagarmala Project which seeks to develop 7,500 kilometers of India’s coastline. He spoke of investments potentially totalling .₹ 12 lakh-crore on ports, allied infrastructure and industrial clusters which, if implemented, would mean a massive push for India’s Exim trade. In the summit itself, MoUs and agreements worth .₹ 82,900 crore were signed. On the sidelines of the event, Gadkari spoke to Anirban Chowdhury on what troubles India’s shipping sector, and what the government is going to do. Edited excerpts...
The shipping and ports industry has been stagnant for too long. We are finally seeing a lot of traction in terms of policy and projects announcement. What’s your larger vision? There is immense potential in this segment, and is possibly even higher than roads. What we are looking at is developing a ‘Blue Economy’, ushering in a ‘Blue Revolution’. We have 1,300 islands and 280 lighthouses. We are planning to develop eight major ports, and work on three of them will start this year itself. We are making dry ports. We are making as many as 27 industrial clusters. We envisage an investment of .₹ 4 lakh crore which also entails rail and road connectivity with ports. Add to that would be .₹ 8 lakh crore on industrial clusters. So, the total planned investment in the next 10 years is of .₹ 12 lakh crore. In fact, we will try to finish that in half the time — 5 years.
What do you think is the root of the problem? Why hasn't shipping contributed as much as it should have to Exim trade? The biggest problem in our exports is our logistics cost. Our logistics cost is 18% of the total, while for China, it is just 8%. For European countries, the chunk is 10-12%. The reason is 47% of China’s goods is transported through water. Japan and Korea ship 43-44% of their goods through water. In our country, that percentage was as low as 3.5% two years back. In our time, it has increased to 6%. Transportation cost by road is calculated on the basis of .₹ 1.5, on rail at .₹ 1, and on water only 20 paise. If we cut the chunk of logistics costs by 8 percentage points and bring it down to even 10% of the total (from 18%), our export volumes will rise by one-and-a -half times. Rise in exports will lead to growth of industrial sector, creation of jobs and rise in GDP.
In China, industries are located at distances of 150-200 kilometers from ports. Here the distances range between 700-800 kms. Our coastline hasn’t been as industrialised yet as it should be. For example, cotton is produced in Gujarat, it is shipped to the textile mills of Ludhiana, brought back to Gujarat and exported from Kandla Port. Similarly, cotton from Vidarbha goes to Tirupur and gets processed there. The transportation costs add significantly to logistics costs and we are not able to compete globally.
How has the Maritime India Summit been? We have seen considerable international participation… That’s true. We have signed a cooperation agreement with South Korea. The country is considerably advanced in this sector — their ports, digitised systems, mechanisation, turnaround time are extremely developed. For instance, we want to develop the LNG fuel segment more and can get relevant technology from the Koreans in this regard. Our agreement with Korea covers all these aspects and also development of ports. A total of 52 companies have participated in this summit. There’s huge interest. We signed 27 memorandum of understanding (MoUs) on the first day. We will sign 131 more today.
What is the latest status on cabotage rules? The government last month said all ports that trans-ship at least half of their total container volumes would be entitled to apply for cabotage relaxation. We have partly done away with cabotage in the western region and in some segments. We will see how the experience is and based on that we will extend it to other segments and across the country.
There has been significant progress in roadways too. How does it go forward? Till now, I have signed road projects worth .₹ 1.5 lakh crore. By May 26 when we complete 2 years of governance, I have targeted for that number to reach .₹ 2 lakh crore. That will add to .₹ 60,000 crore of shipping and port projects. When we came into power, two kilometers of roads were being built every day. We have increased that to 20 kilometres. I had targetted 30 kilometers, but should be able to reach 24-25 kilometres by May 26.