International Conference

“Role of Maritime Industry” in Make in India

Industry

Recommendations

February 2016

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RECOMMENDATIONS ................................................................................... 3

1. Enhancing Ease of Doing Business .................................................. 3

2. Improving Connectivity ......................................................................... 5

3. Promoting Coastal Shipping & Inland Waterways Transport ..... 7

4. Improving Performance of Ports and Shipping .............................. 8

Contents

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RECOMMENDATIONS

1. Enhancing Ease of Doing Business

Implementing Port Community System (PCS): PCS is an electronic platform that connects multiple

systems operated by a variety of stakeholders that make up a seaport community. PCS is necessary to

transform Indian Ports from antiquated to modern state by bringing in a paperless regime, which is need of

the hour. The system helps in minimizing transaction time and cost to Indian export-import trade and increase

the efficiency of the system. The present PCS implemented at Indian Ports does not aim to bring all

stakeholders together under the same platform. It has been identified that same information is required by

different authorities multiple times for different clearances. This process results in cost and time overruns.

Keeping this is view, implementation of PCS with holistic and integrated planning should be taken-up

immediately.

Simplifying Laws to Promote Digitalization: Today, many laws which are in practice are very old and does

not support digitization of processes. At the same time various new laws formed or modified recently are

complex to implement. To promote “Make in India” and support the trade community, it is important to not

only modernize and simplify various laws but also to accommodate various digitization processes, which will

improve the ease of doing business in India.

Establishing Interdepartmental Coordination: Coordination between various authorities and stakeholders

in very important for facilitation of trade. Digitization and implementation of PCS in India will be a step towards

improved interdepartmental coordination.

Integrating Single Window Clearances is essential for facilitation of trade in India. The main value

proposition for introducing single window mechanism is to improve the time and cost efficiency for traders in

their dealings with government authorities. At present, there are multiple single windows in India which

should be converted into an integrated single window.

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Simplifying and Standardizing Customs Procedures: The non-uniform customs procedures adopted at some

Ports/Customs stations not only increase transaction cost and time of clearance but also prove to be major a hindrance

for trade. Documents providing same information are sought by the Customs Departments multiple times. Furthermore,

the requirement of large number of hard copies of these documents leads to unnecessary escalation of compliance

cost and time delay in clearance of the cargo. For instance the number of hard copies of Import General Manifest (IGM)

filed by shipping lines / steamer agents varies from 2 to 6 at various ports, which is also filed electronically with the

department. Keeping this in view, initiatives were undertaken for simplification of processes but have been ineffective

in their implementation. For instance, The Central Board of Excise and Customs (CBEC) has issued notification stating

that vessels carrying only coastal goods will not be required to file IGM/EGM. However in practice it is still not

implemented and the coastal transporters are required to file documents such as IGM/EGM, bill of lading/entry etc.

Moreover, the customs duty is exempted but a fee is paid by the coastal transporters for the shipment to be

loaded/cleared by the customs, which inflates the cost of cargo movement through coastal shipping thereby impacting

its competence. With this background, it is important to simplify the customs processes and standardize them across

all ports.

Expanding Round the Clock Customs Clearance: The customs need to extend its round the clock cargo clearance

at more locations. It should be enabled for all types of cargo. This will help in faster cargo clearance and improve ease

of doing business. Better Inter-Agency Coordination is required to make this possible.

Data Sharing Mechanism amongst Authorities: Data sharing between various authorities including customs should

be simplified to facilitate trade. At present traders need to fill separate forms with similar data, for various authorities.

This lead to increase in cost, efforts and time which can be avoided by adequate data sharing mechanism between

various authorities.

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2. Improving Connectivity

Initializing Private Investment in Railways: India is the only country in the world where road transportation is

gaining a more traction than railways. This modal shift is resulting in higher environmental degradation and carbon

footprint and excessive congestion at port gates in India. With this background, there is a need to increase the share

of railways in cargo transportation.

This could be realized by initializing private investment in Railways through the following initiatives: (1) Developing

more network on Build Own Transfer (BOT) basis, (2) Developing private railway for Public Private Partnerships

(PPP) terminals, wherein the project is funded as part of the port project and (3) Formation of Project Specific Special

Purpose Vehicle (SPVs) having equity and debt financing,

Developing Last Mile Port Connectivity: Last mile connectivity is imperative for improving the port connectivity. In

some ports, private players have taken the lead in developing last mile connectivity. For Instance, Pipavav is located

adjacent to the NH 8E. The port has built an 11 km connecting highway and formed a JV with the Indian Railways

(the Pipavav Rail Corporation Ltd) which has built a 271 km rail link to the main grid at Surendranagar. On March 25,

2015, GoI has approved setting up a special purpose vehicle (SPV) for all major ports to provide last-mile rail

connectivity. The government plans to create Port Infrastructure Vikas Nigam Private Limited with equity participation

from major ports. The company will construct, operate and maintain rail and road infrastructure to facilitate last mile

connectivity. Implementation of these initiatives would facilitate better linkage of ports with the hinterland.

Initiating Fast Track Development of Proposed Dedicated Freight Corridors: Construction of proposed six

dedicated freight corridors should be undertaken on a fast track mode. Private sector involvement and easy access

to funding and effective monitoring of the progress of the projects can expedite the construction of the projects.

Creating National Logistics Network by development of Multimodal Logistics Parks (MMLPs): Development

of Logistics Park and terminals should be taken up on priority at various locations and should be integrated with

railways for smooth movement of the goods. CONCOR has plans to set up 15 new multi-modal Logistics Parks

(MMLPs) at vantage locations along the freight corridors and at major industrial estates for providing seamless

connectivity.

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Developing Inter-modal transportation: Currently, Government is not pushing inter-modal transportation which could

be most economical way of transportation of goods. There are various norms which hinder use of inter-modal

transportation for instance separate permissions are required whenever the mode of transport of transshipment

containers changes from train to road or vice versa. To boost efficient mode of transportation by inter-modal

transportation of cargo, this norms need to be simplified and no separate permission should be required. Moreover,

Interlink of transportation network is also very important.

Formulating Road Development & Maintenance Program: Improvement of quality of roads is the basic requirement.

India has the second-largest road network in the world, spanning about 4.7 million km (March, 2015). As on March

2015, the share of the National Highways and motorways is about 2% but it carries 40% to 50% of the total traffic.

Moreover, only 24% of the highways have four lanes2. Average speed of trucks on Indian roads is about 20 km per

hour v/s 45 to 50 km per hour in developed countries. Quality of the roads directly impact the speed of transportation.

Therefore it is important to carve out road development and maintenance program at National Level and State Level.

Increasing the Railway Share in Overall Traffic: Today share of railways in JNPT has reduced to about 18% from

25% earlier, mainly due to mid-stream policy changes and higher tariff. To increase the railway share in overall traffic

following things are required to be done immediately:

Service tax abatement to railways similar to road transport

Avoid any mid-stream tariff changes without checking ground realties

Introduction of double deck and high speed trains

Developing Inter Departmental Coordination and Project Monitoring: Improving inter departmental coordination

for fast approval of the projects and allocating more investments for development of the efficient and smart transport

network is required. Delays in project time schedule often lead to cost overrun which can be avoided by stringent

monitoring of project schedule and adherence to timelines.

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3. Promoting Coastal Shipping & Inland Waterways Transport

Developing Dedicated Infrastructure for Coastal Shipping: Dedicated jetties should be developed at all ports

as part of coastal shipping infrastructure. In addition, shipbuilding capacity of Indian shipyards should also be

developed by devising incentives and other tax relaxation for coastal Vessel.

Simplifying Laws for Coastal Cargo: Laws and regulations for coastal cargo should be simplified and coastal

cargo may not have to go through similar procedures as of EXIM cargo.

Promoting Fiscal and Monetary Incentives for Developing Coastal Shipping: Indian Shipping should be

brought on to an international level in terms of fiscal and monetary incentives, access to domestic or international

funding, taxation, regulatory aspects etc. Incentives such as fiscal incentives, freight subsidies and tonnage tax

for inland vessels would facilitate international competitiveness in inland waterways. As a measure to encourage

modal shift in Europe multimodal transport operators were given direct monetary support by covering the losses

incurred during the initial operations period. Level playing field is required for inland and coastal vessel operators

are required for success of Coastal shipping in India.

Developing Allied IWT Infrastructure: Development of adequate navigational depths in rivers, night

navigation, ship repair facilities etc are essential to boost the development of IWT. Every state should have a

subsidiary company under a Major Port Trust which can develop inland waterways.

Supporting Freight Agreement for IWT & Coastal Shipping: Long term freight agreement should be

supported to ensure that vessels have two way freights. This should be ensured by identifying corridors,

commodities being transported and the cargo interests involved and building a consensual agreement through

incentives.

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Integrating Coastal Shipping with Transport Network: Modal integration would be the key to successful

penetration of inland waterways system in the transport sector. Keeping this in view, adequate infrastructure

needs to be developed for modal integration of inland waterways with roads and railways along with

adequate evacuation infrastructure. Policy promoting modal integration can bring in the much needed push

required by Inland waterways.

Encouraging Awareness Programs: Awareness programs need to be developed to spread cognizance

among the cargo owners about coastal shipping and IWT. Awareness needs to be spread amongst the cargo

owners on the benefits that inland waterways has to offer and the role it can play in faster and seamless

movement of cargo across the supply chain.

4. Improving Performance of Ports and Shipping

Implementing Information Technology: Implementation of Information Technology systems for real time

monitoring of goods would be vital for effective performance of the sector. Some of the key benefits of using

IT includes optimization of yard space, minimization of non-productive activity, maintenance of truck/train

turnaround times, improvement of utilization of the existing infrastructure, reduction of vehicle and train

turnaround times etc.

Initiating Smart Network Program: Initiating smart network program at national level would fasten the pace

of development of intermodal connectivity. Further, this program should be integrated with programs like

Make in India, Smart Cities, Economic Corridors, Dedicated Freight Corridors, etc.

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Rationalizing Port charges: Port charges at Indian ports are enormously high as compared to global ports

and therefore many shipping lines find it unprofitable to operate with such high charges. Keeping this in view,

port charges should be rationalized.

Reframing Modal Concession Agreement (MCA): The existing Model Concession Agreement for Ports is

drafted with a landlord perspective. A new Model Concession Agreement should be drafted keeping in view

the partnership perspective.

Developing and Modernizing Ports: There is a need to develop new ultra-modern port with a state of the

art technology. Furthermore, it is essential to modernize the existing ports and enhance their capacity by

constructing new berths and terminals; expanding existing berths at ports, installing new and modern cargo

handling equipment’s, deepening the draught in ports to handle larger vessels, installing Vessel Traffic

Management System (VTMS) for smooth movement of vessels and implementing Web-based system for

smoothing the processes.

Transloading an alternative to Dredging: Dredging is high cost incentive and all the ports need to be deep

draft ports. Dredging also have direct impact on environment and eco-system, therefore trans loading should

be seen as an alternative to dredging, wherever possible in bulk commodities.

Building Indian Fleet Tonnage: Reserving commodities for Indian Ships and executing long term contracts

would help in building Indian Tonnage. Crude oil and thermal coal are the two major commodities which

should be kept reserved for Indian flagged vessels. This will help in increasing the Indian Tonnage. In

addition, long term contracts should be executed with various PSUs and private companies in India which

are involved in import and export of goods. It is important to build the Indian Fleet tonnage as it saves foreign

exchange. Long term contracts with Indian players would also provide them with the required incentive to

modernize and build their fleet capacity.

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Easy Finance: There is a need to provide infrastructure status to shipping industry. This would bring in the

required financial benefits for improving profit, enabling shippers to get easy finance for ships, for building

Indian tonnage. Competitive finance cost and availability of easy finance for shipping industry supports

Indian ship-owners in developing their fleet base.

Strengthening Regional Maritime Connectivity: Improving commercial relationships and developing trade

agreements with various organization/ countries/ regional corporations will help in developing the trade

connectivity. Strengthening regional cooperation and coordination amongst various countries and

stakeholders and financing cross-border transport projects will help in enhancing the regional maritime

connectivity.

Business Ethics: Time bound, result oriented, transparent and corruption free processes should be enabled

through e-governance systems.

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