A few months back Indian ports were under the spotlight for good reasons. As many as nine ports of India have made entry it to the global top 100 rankings in the latest edition of Container Port Performance Index (CPPI), developed by the World Bank and S&P Global Market Intelligence, for 2023.
These nine ports are: Visakhapatnam (19), Mundra (27), Pipavav (41), Kamarajar (47), Cochin (63), Hazira (68), Krishnapatnam (71), Chennai (80) and Jawaharlal Nehru (96).
According to the CPPI, Visakhapatnam Port has showcased strong performance with 27.5 moves per crane hour, a turnaround time (TRT) of 21.4 hours, and minimal berth idle time. The ranks in CPPI tell us that there has been a significant improvement via operational efficiency and service delivery in the efficient handling of ships and cargo.
Although ranked second in terms of volume of cargo, Singapore is no more the best performing container port in the world. Opened in 2005, China’s Yangshan port in Hangzhou Bay located south of Shanghai is the world’s best performing container port. Yangshan is an extension of Shanghai port. In 2023, Yangshan alone handled over 25 million TEUs (twenty-foot equivalent unit) containers. While Chinese ports are on the frontier, Indian ports are not that far behind.
Ports are the lifeline of the Indian economy, with more than 80 per cent of India’s merchandise trade (by volume) transported via ocean routes. Apart from handling trade, ports are also planned to serve the country’s strategic needs. At the time of independence, India was left with five major ports, and today India has 13 major and over 200 notified non-major ports, which are the key nodes in global supply chains and also crucial to the growth of the economy.
Cargo growth
As the Indian economy grew to $3 trillion in 2022 from $1.5 trillion in 2010, the total port cargo increased from 885 million tonnes in 2010-11 to 1,410 million tonnes in 2022-23.
But structural constraints have been one of the factors contributing to the low 4 per cent growth in cargo during 2010 to 2022. One of the common constraints identified in literature is low productivity and inefficiency of Indian ports, which have hindered exports and economic growth.
Globally, empirical evidence suggests that a country’s or a region’s economic growth in the long run is supported by sustained growth in total factor productivity (TFP). Labour and capital significantly improve total factor productivity. However, there are other factors that affect productivity such as innovation and technological efficiency.
There is an indication of deceleration of TFPG (total factor productivity growth) in pre-Sagarmala (see table). It is important to note that deceleration of TFPG has been checked from negative 0.005 in pre-Sagarmala phase to negative 0.003 in the whole period indicating that acceleration in TFPG in post-Sagarmala.
In case of pre-Sagarmala period (2000-01 to 2013-14), Port of Deendayal (DPA) (1.77), Jawaharlal Nehru Port (JNPA) (1.57) and Vizag Port (VPA) (1.54) had the highest average TFP among all major ports.
In the post-Sagarmala period (2014-15 to 2021-22), Paradip Port (PPA) (2.44), Port of Deendayal (2.16) and Jawaharlal Nehru (1.55) had the highest average TFP. Performances of these ports have significantly contributed to the TFP.
Top three ports
Overall, Deendayal, Paradip and Jawaharlal Nehru have been the top three productive ports in India. One can infer from the TFP trends the Paradip Port has witnessed consistent rise in productivity from 2000 to 2022.
On the other hand, Haldia and Kolkata ports have not shown any improvement in productivity levels post-Sagarmala. Therefore, there seems to be an increase in productivity among major ports (as measured by TFP) post-Sagarmala.
The acceleration of TFPG after the implementation of the Sagarmala project suggests that investments in infrastructure development have yielded positive results. Navigation automation, legislative reforms, etc. have also aided in improving the TFPG.
India has also introduced the Maritime India Vision (MIV) 2030 and Maritime Amrit Kaal Vision (MAKV) 2047. Enhancing efficiency through technology and innovation is one of the stated objectives of the MAKV 2047.
This grand plan underscores the need for technology advancement, innovation and transformation with the aim to bring in efficiency in operation, cost optimisation and ease of doing business.
Boosting of productivity of ports must be taken up as a priority objective by the union and the state governments. In particular, the Centre must allocate higher capital and technology to those ports which are lagging. Port authorities should continue prioritising investments in port infrastructure, including berths, cargo handling equipment, and connectivity to hinterland, to sustain this momentum.
Today’s ships must comply with the environmental regulations. Ship building, therefore, requires more strategic push. India must seek investments and technology from Korea and Japan. Policies to adopt greater automation, artificial intelligence, and data analytics will further enhance productivity in ports.
Port authorities should prioritise skill development and training programmes for port workers to ensure they have the necessary competencies to operate modern equipment and handle increasingly complex cargo.
By 2030, India’s annual port capacity is likely to exceed 3,000 million tonnes. In order to achieve this target, involvement of private sector is important, besides government’s active guidance and engagement. Landlord port model only pays when the port and port services are managed by the private operators. Greater Centre-State coordination in the maritime sector will pave the way for a comprehensive and inclusive development.
Strengthening the Maritime State Development Council (MSDC) and launching the Maritime Development Fund (MDF) are some low-hanging fruits that can be implemented immediately.
The writer is Professor, Research and Information System for Developing Countries (RIS), New Delhi. Views expressed are personal