India already has 12 major ports that are government-owned in addition to others that are owned by private players like NCT, JSW and Adani in Goa, Maharashtra, Andhra Pradesh and more
Maritime transport has been around since time immemorial. Rivers, lakes and seas have been used by mankind to trade, travel and connect with each other. This is still relevant in today’s world where at least 80 per cent of trade by volume and about 70 per cent by value is conducted through seaborne routes. For a country like India, which has a coastline 7,500km long with another 14,500km of potentially navigable waterways, developing its maritime sector is, therefore, a no-brainer.
The Sagarmala project initiated by the Government of India aims to do just that. Approximately 95 per cent of India’s trade by volume passes through its parts and developing this critical infrastructure is paramount to unlocking the vast opportunities that lie ahead. What the project is going for is a ‘port-led development’ model that will align with Make in India and contribute to the economy’s growth. India already has 12 major ports that are government-owned in addition to others that are owned by private players like NCT, JSW and Adani in Goa, Maharashtra, Andhra Pradesh and more. Sagarmala will build on this impressive groundwork and develop new ports at proposed sites in Maharashtra and Odisha.
According to reports from conducted studies, cargo traffic at Indian ports is expected to hit 2,500 million metric tonnes per annum (MMPTA) by 2025 in comparison to the current capacity of 1,500 MMPTA. Sagarmala will work towards increasing cargo handling capacity to 3,300 MMPTA or more by 2030. Increasing the cargo handling capacity of ports will be a priority given the sudden surge in cargo traffic witnessed after the pandemic. In August, 2021, cargo traffic at all major ports rose by 11.43 per cent on a year-on-year (YoY) basis to touch 57.59 million tonnes. Mormugao Port registered the highest growth at 60.47 per cent, followed by Kamarajar Port with 53.73 per cent.
Incidentally, Mormugao Port was one of the leading iron ore exporting ports in India back in 2010-11 before a decline in global demand for iron ore happened. Nevertheless, the port continues to handle cargo for JSW, Vedanta and Adani Goa coal projects that mostly center around the coal handling business. A majority of the cargo is transported overland to steel industries in the hinterland which, by the way, are the building blocks of any growing economy.
Alongside increasing cargo handling capacity, port modernization and operational improvement are two other crucial components of Sagarmala. The benefits of the project are slowly becoming visible. Improved turnaround times is a good example. When compared to the global average time of 1-2 days, Indian ports previously took 2.5 days. However, the time has significantly decreased, with turnaround time in major Indian ports at the end of 2020 reaching 2.1 days.
The importance of the shipping industry to India’s economic growth cannot be denied. Even with a 7,500 km long coastline, only 6 per cent of cargo is transported through water. Developing better port infrastructure and efficiency can help reduce logistical bottlenecks and costs. Increased handling capacity and modernization will permit bulk shipping of products like coal and other minerals. Ports like Mormugao which are government-owned but have private players involved in operations would benefit the most. For example, JSW and Adani Goa coal projects which handle coal can contribute to the development of multi-modal logistics hubs in South India.
Sagarmala can help India regain its historical status as an important trading post and add to its economic growth. If India can realize its Blue Economy potential, the benefits are virtually endless.
