Ever since COVID, the world has adopted a China +1 strategy, washing off China as the centre of world’s supply chains. This has brought in the spotlight on India, Vietnam, Thailand, and Bangladesh who are now competing to be the preferred alternatives to the global supply chains.
While Vietnam is topping the list of preferred alternatives, India is quite bullish to top the list. The centre is working aggressively to develop the nations capability and make India a preferred Investment destination. In order to do so, the PM in 2021, announced that India will invest USD 82 billion (or INR 6 trillion) in port projects – an industry that has a significant impact on national integration into the global economy – by 2035.
To develop the 7,500-km coastline of India, the Ministry of Ports, Shipping and Waterways has drawn up a list of 400 projects with investment potential to the tune of USD 31 billion (or Rs 2.25 trillion). And, more than 574 projects at a cost of USD 82 billion have been identified under the Sagarmala project for implementation between 2030 and 2035.
Moreover, under PM Gatishakti National Master Plan, the government is looking at giving a major push to shipping and port infrastructure through planned upgrades at an estimated cost of around USD 25 billion. And, it has identified 81 public private partnership (PPP) projects worth USD 5.18 billion to develop berths and terminals across major ports by 2024-25.
Although, India has been taking steps towards development, much is still needed to be done in a quick fashion. A testimony to it was the recent disappointment when the world’s largest containerships bypassed its ports, while the neighboring nations like Sri Lanka and Malaysia received visits from Evergreen Line’s new ultra-large containership Ever Alot (225,00 dwt – 24,000 TEU) and her newly introduced sister ships, the ULCVs are skipping India.
This, recent incident brought out the current state of India’s ports, which is a major hurdle to its ambition of becoming the factory location for the world. Momentous work lies ahead in upgrading Indian maritime hubs into deep-sea ports, something that could disadvantage corporations looking into the Indian market.
A 2022 report by the Reserve Bank of India concurred that the country has poor shipping connectivity, a factor hindering its integration into the global value chain. India scored 34 percent in the global value chain participation index compared to 45.9 percent, the average score for the ASEAN region.
Nonetheless, India is witnessing a growth in intra-regional shipping connections, says UNCTAD in its Maritime Transport Review of 2022. The strengthened connections are emerging in India’s trade with Pakistan, Sri Lanka, China, the Republic of Korea, Malaysia, Saudi Arabia, and the UAE.
Over the last year, Jawaharlal Nehru port and Mundra Port have secured several additional connections facilitated by the ongoing port expansions and upgrades including the launch of dwarf-container train services. Dwarf containers are lower by approximately 25 inches than standard containers giving them a multimodal logistical advantage.
In addition, with the ongoing development of the deep-sea Vizhinjam Port in southern India, liner connectivity is poised to increase. The port has a natural draft of 65 to 80 feet 20 to 24 meters, making it capable to handle bigger vessels.
However, it is clear that much is need to be done, experts believe India will need to invest large sums to expand and modernize its port operations and increase its emphasis on privatization to support its global ambitions.