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Address trade & industry concerns to unleash next wave of growth in maritime sector: Biz honchos plead govt at CII’s Maritime, Ports, Logistics & warehousing 2017 conclave

Sagar Sandesh News Bureau Mumbai
 While largely lauding the present government for taking proactive reform initiatives to boost growth in Indian maritime sector, the maritime industry business leaders at the CII maritime conclave at Mumbai on 22nd Nov, urged government to address some of the gnawing key issues hampering the growth and expansion of the sector. In his address, Mr Khalid Khan, Regional Chairman, Federation of Indian Export Organisation(FIEO) hailed the government for jumping 30 notches on the World Bank’s Ease of Doing Business ranking. He lauded the government for improving of processes like payment of taxes, delivery of credit and clearances leading to scaling of notches on the ease of doing business index. However, he mentioned how  Gem and Jewelry exports that took a big hit following demonetization is now seeking government attention to infuse growth spirits back into the sector.
 
He further lamented that Goods and Service Tax(GST) regime operating on the model of pay first and reimburse later is wreaking havoc on working capital cycle of exporters and further appealed that  government should expedite the possibility of keeping exports out of GST. Commending government for giving fillip to infrastructure growth in maritime sector, Mr. Khan said addressing infrastructure and operational bottlenecks at ports, roads and rail would bring down the overall logistics cost and further would make Indian exports globally competitive. Reiterating on removing of infrastructural bottlenecks, he said immediate priority is to redress the procedural constraints and operational congestion experienced by trade in rail, road and port shipment of imports and exports.
 
Reeling under red tape
 
Mr Vijay Kalantri, Chairman & Managing Director, Dighi Port pitched for connectivity competitiveness of indian logistics sector. While the world average of transportation cost is 3 per cent, for India it is 6 per cent, he said. Divulging how redtape-ridden bureaucracy and short-term financing banking system deal blow to port entrepreneur aspirations, Mr Kalantri said that to develop a port an investor still requires 37 permits to be obtained from 37 disparate government agencies consuming greater amount of time of the port project life cycle. “There is no functioning Single Window System, and you cannot build a port in three years”, he said and added with touch of irony that bank‘s port finance repayment loan cycle kicks in before the single brick is laid.
 
Expressing his angst at the non-starter of deep-funding long-term bonds for port infrastructure financing, Dighi Port chairman groaned that nothing has moved in that direction. Listing out an array of ails in the policy armour of government, he exhorted government to make it hassle-free to develop 20 more ports before the country’s GDP rebounds to 8 to 9% in near future. Besides, the three major concerns of connectivity, finance and permits, government should also intervene to resolve local and union issues, he said.
 
Extolling the port-based SEZs model that is functioning quite successfully in neighbouring Bangladesh, he clamoured for sops to match the competitiveness of Port-based SEZs in Bangladesh and Veitnam. He cautioned that there would be attrition of cargo from Indian trade to the nautically nearer former countries if the government via policy instruments fail to create a competitive ecosystem in port-based SEZs. Calling for closer cooperation between central and state government in the bottleneck redressal exercises, he espoused the idea of joint resolution framework comprising central government and state government stakeholders to look into connectivity and congestion issues in road, rail and port infrastructure.
 
 
 
 Ushering in of electric vehicles to change cargo dynamics
Citing innovation posing biggest threat as well as opportunity to logistics sector, Mr Rajiv Aggarwal, Chairman, Essar Ports said automation, robotics, hyperloop, shared taxi services model present both threat and opportunity to legacy multi modal logistics model. Dwindling of coal and iron ore cargo handling at Indian ports entail how the focus is shifting greatly towards renewable energy like wind, solar and thermal, he added. He maintained that electric vehicles revolution is going to alter the cargo paradigm at Indian ports.
Road is flexible for freight handling
Elaborating on the inverted transportation modes, he said that sea freight handling cost is at 25 paise per km whereas for rail and road it stand at Rs 1.5 and Rs 2.5 per km respectively. Despite per km high cost, shippers and freight forwarders prefer roads to rail and port because the latter are relatively inflexible in comparison to the former mode, he added. Movement of cargo at ports is quite rigid due to government control and same goes with monopolistic railways, he rued and added that government should replicate the telecom sector deregulation boom story in ports and railways. Unveiling his mind on what government should to enhance existing port capacity, he elicited that deepening of draft, mechanisation of berths and improving of connectivity could augment existing port throughput by 3 to 4 times.
 Sagarmala set to slash India’s logistics cost from 12% to 9% of GDP
 Reaffirming faith in government’s Sagarmala maritime programme, Mr Neeraj Bhansal, Deputy Chairman, JNPT asserted that Sagarmala certainly would lead to lower India’s logistic cost from 12% to 9% of GDP. Offering his thoughts on the functionality of business in the contemporary maritime business environment, Mr Bhansal said stakeholders should uphold service-level commitment and should strive for creation of value rather than maximization of profit. Elucidating his advice with an anecdote, he detailed how an exporter had to run from pillar to post after his turmeric export consignment to Japan was rejected by Japanese phytosanitary inspection for iron filings contamination. Mishandling and indifference to service-level commitment by port community stakeholders have landed the exporter in soup, he said and cited an anecdote to buttress the lack of service-level commitment among port community stakeholders.  Detention of containers beyond 48 hours under Direct Port Delivery(DPD) systems attract a levy of Rs 50,000 to Rs 60,000 and an exporter who is charged the detention levy has approached the port for discounting of charges due to low service-level commitment of port community operators, JNPT Deputy Chairman said.
 Fend off fancy stakeholders
 Port community operators should adopt client-centered business model and should keep cost- driven fancy stakeholders at bay, he said. The sustainable port community business model should work towards shoring up of service-level commitment than functioning as profit centres, he added.
 Debottlenecking and new infra devpt go in tandem
 Refuting the grumblings of aggrieved entrepreneurs complaining lack of vigour in government reforms drive in Indian maritime sector, Sanjay Bhatia, Mumbai Port Trust contended that Rs 8 lakh crore Sagarmala project envisaged to build 530-odd projects in maritime sector is going in the right direction. “In 2016, government has completed 33 projects worth Rs 3,261 crore under Sagarmala”, he said quoting a senior official in the shipping ministry. Government has so far completed 95 debottlenecking recommendations of Mckinsey consulting concerning maritime sector other than Sagarmala, he said. Mr Samir Shah, Conclave Chairman and Partner, JBS Group in his opening remarks rued that logistics industry haven’t got the rousing reception that IT industry has received in the country. Akin to towering IT industry personalities like Narayana Murthy of Infosys and Aziz Premji of Wipro, society and the country have not hallowed the unsung icons in the logistics sector, he bemoaned.

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