The Indian Shipping Industry

With a coastline of 7,517 kilometres, India is ideally positioned on the world’s shipping routes. Maritime transport handles roughly 70% of India’s trade. The government has also introduced various fiscal and non-fiscal incentives for enterprises that develop, maintain, and operate ports, inland waterways, and shipbuilding in India to promote the country’s shipping and port industries.

History of Indian shipping

• Indian shipping and shipbuilding can be traced back to the early days of civilization in Harappa and Mohenjo-Daro. In the oldest existing Indian language, Sanskrit, the Rig-Veda mentions the various parts of a shipping vessel.
• The shipbuilding industry was primarily concentrated in coastal areas, such as Bombay, Cochin, Tuticorin, Mandvi, and Cuddalore.
• The ships and shipyards in ancient India were used to carry out and expand international trade with the then-existing European empires. 
• Shipbuilding in India suffered in the 13th century with the arrival of European voyagers such as Vasco da Gama, which led to colonisation in the country.
• But with the advent of the 17th century, shipbuilding in India experienced a resurgence due to a political alliance formed between Indian rulers in the western part of the country to counter Western shipbuilding and naval efforts.
• During the British colonisation of India in the 17th and 18th centuries, Indian shipbuilding suffered due to a lack of competent rulers to keep the Indian maritime industry afloat.
• In 1941, India’s first shipbuilding factory was established in Visakhapatnam. In 1952, the Indian government adopted it and renamed it ‘Hindustan Shipyard Limited.’
• The Shipping Corporation of India Ltd. (SCI) was established in 1961 and changed from a private limited company to a public limited company in 1992.
• It was given the status of ‘Navratna’ in August 2009.

The current view of the Indian shipping industry

• According to the Ministry of Shipping, maritime transport accounts for approximately 95 percent of India’s trading volume and 70 percent of its trading value.
• The Ministry of Shipping was renamed the Ministry of Ports, Shipping, and Waterways by the Prime Minister in November 2020.
• India today has 12 major ports and 200 minor/intermediate ports (under state government administration). The largest major port in India is the Jawaharlal Nehru Port Trust, whereas Mudra is the largest private port.
• India is also one of the top five ship recycling countries globally, with a 30% share of the global ship recycling market.
• Six new mega ports with world-class infrastructure are being developed as part of the National Perspective Plan for Sagarmala, with Vadhavan, Paradip, and Kandla ports leading the way.
• The largest major container handling port in India is the Jawaharlal Nehru Port Trust (JNPT) in Maharashtra, while the largest private port in India is Mundra in Gujarat.
• According to reports, India’s major ports, such as JNPT and Kandla, have higher utilisation rates than the global average.
• In major Indian ports, the average turnaround time, or the time between a vessel’s arrival and departure, fell from 87 hours in FY 2016 to 59.51 hours in FY 2019.
• 62.16 hours was the average turnaround time in FY21.
• With 6.8 million Gross Registered Tonnes (GRT) and a ranking of 17th in the world, India is one of the world’s major maritime nations.
• In FY20, India’s 12 major ports handled 704.93 million tonnes of cargo and had a capacity of 1,534.91 MT. During FY21, major port cargo traffic reached 672.61 MT.
• The cargo traffic through the Indian ports is expected to exceed 2500 MT per year by 2025, compared to a current capacity of around 1500 MT. As a result, the sector’s development must be accelerated to increase capacity.
• To reach an annual capacity of over 3300 MT, India is working on capacity expansion and new port development.

Problems faced by the Indian shipping industry

The COVID-19 crisis has had a significant impact on the shipping industry, which nearly halted operations. The financial performance of all international shipping companies has been impacted by restrictions on the movement of goods and people, with a significant drop in demand for goods and their transportation throughout the supply chain. On both the supply and demand sides, the COVID-19 pandemic has disrupted logistics chains, resulting in significant losses.

Impact of fuel prices

The shipping industry is severely impacted by the continuous volatility in crude oil prices. To begin with, it has an impact on the costs of freight transportation. As a result, shipping companies prefer bulk shipments over frequent smaller shipments. Although this saves money for shippers and receivers, it has a negative impact on the logistics industry. The number of empty miles sailed by a carrier rises when shipment frequency is low. The more stops a carrier makes on a given route, the higher the profit.

Need for greater technological up-gradation and integration

Integration between port authorities, shipping lines, road transport authorities, railway authorities, and inland waterways systems is critical. Too many authorities, each with their own rules, hinder smooth operations. The demand for single document cargo clearance is growing, and this global trend must be adopted in India, which will necessitate technological advancements and the integration of relevant regulations.

Labour shortages

Supply chains are experiencing a labour shortage and a shortage of many materials. There is a growing demand for truck drivers and a shrinking supply in the transportation industry. Because products cannot be shipped between plants or to their final destination without drivers, this shortage exacerbates shipping issues.

Other factors

Other factors that affect operating costs and profits include geopolitics, trade wars, sanctions, and macroeconomic factors (exchange rate volatility, an unexpected increase in oil prices). From a security standpoint, hackers’ ability to control port operations remotely is a concerning threat. The ability of remote container management to monitor temperature, humidity, O2 and CO2 levels within containers also constitutes a significant challenge.

Conclusion

The Indian government is an important supporter of the shipping and port industry. It has opened up the automatic route to 100 percent FDI for port and harbour construction and maintenance projects. It has also made it easier for businesses that develop, maintain, and operate ports, inland waterways, and inland ports to take advantage of a 10-year tax break. All these factors are aimed at facilitating the growth of the Indian shipping industry.