Socio-Economic benefits of Ports

A port is a location on a coast or shore containing one or more harbors where ships can dock and transfer people or cargo to or from land. Ports are one of the primary components of the general transportation sector and are nowadays linked to the expanding world economy. Ports are basically a means of integration into the global economic system. As international barriers to trade have effectively been lifted by the WTO-agreements since the 1980s, global manufacturers have vertically disintegrated their production systems into geographically dispersed and flexibly organized supply chain systems. The international trade regime allowed manufacturers to re-locate their production and assembly plants to more cost-efficient locations in developing economies. 

Some of the important socio- economic benefits of ports are:

Fuels economic development - They are important links of hinterlands to points overseas. They facilitate movement of goods to and from hinterland. They increase international trade ( both exports and import). Increase in exports lead to industrialization in the hinterland as well as around ports. Increase in imports lead to increase in consumer choice and provision of goods at competitive rates.

Development of cities - Most of the world’s major cities are port cities. Ports spur the economic activities around them like banking, finance, Insurance, logistic etc. This lead to development of cities around ports. For example – Mumbai and Kolkata.

Increase in Employment  - Ports increase employment both directly and indirectly. Direct employment refers to employment in port related activities. Indirect employment increases due to increased industrialization and increase in other services like banking and insurance.

Relatively Environment friendly - When compared to other transportation systems, railway transportation requires twice as much energy consumption, while road transportation requires ten times as much as sea conveyance. During the past few decades the world has become increasingly environmentally conscious and, with its lower energy consumption, marine transportation is obviously more environmentally friendly than other means.

Increase world Economic Integration – Globalization has been partially successful due to cheap transportation facilitated by ports. 

Development of Infrastructure – Increase the economic activity between hinterland and ports lead to development of infrastructure including railways, roads & inland waterways. Such infrastructure makes our exports more competitive and as a spillover effect provide world class infrastructure to citizens.

As discussed above ports are important for socio-economic development of the region thus nations are moving for “Port led development”. China has experienced such development. China developed its industrial towns near ports to facilitate this export led growth. It has proposed Maritime Silk Route to catalyse port led development.

Importance for India 

India has a long coastline of about 7,517 km along the western and eastern shelves of the mainland. With 12 major ports and 187 minor ports, India ranks 16th among maritime countries and has one of the largest merchant shipping fleets in the world. According to the Ministry of Shipping, approximately 95% of the country’s trade by volume and 70% by value moves through maritime transport, highlighting the importance of ports and their contribution in sustaining the growth and development of the Indian economy.

The increasing trend of Western countries moving their manufacturing functions to low-cost countries and the fact that India need to create millions of jobs for youth joining workforce every- year means that India could be a prospective manufacturing hub after china. This means we also need to focus on port led development by improvement in port infrastructure.

Policy Initiatives by government for Port led development

The Ministry of Shipping, the nodal agency for ports, encompasses the shipping and port sectors, including shipbuilding and ship repair, major ports and inland water transport. As per government policy, 100% FDI is allowed in port development projects. As way of incentive, 100% income tax exemption from income tax is extended to companies investing in port infrastructure. Further, a 10-year tax holiday has been given to enterprises engaged in the business of developing, maintaining and operating ports, inland waterways and inland ports.

A major promotional initiative of the ministry is the National Maritime Development Programme (NMDP), an initiative to develop the maritime sector, with an outlay of USD 11.8 billion. The policy lists measures for enhancing private investment, improving service quality and promoting competitiveness to meet medium- and long-term objectives. The programme will be implemented through public/private partnership in two phases.

The National Maritime Agenda 2010–20 outlines the framework for the development of the port sector with a target capacity of over 3 billion tonnes by 2020, largely through private sector participation. The agenda envisages a cumulative investment of around Rs. 2,774 billion in the port sector between 2010 and 2020 in three phases. The non-major ports are expected to account for 61% of the proposed investment and the major ports for the rest. The agenda also suggests policy-related initiatives to improve the operating efficiency and competitiveness of Indian ports. These include major ports to be turned into landlord ports by 2020 with their role being to provide the port infrastructure, while operations and services would be provided by the private sector participants.

Sagar Mala project is a strategic and customer-oriented initiative of the Government to modernize India's Ports so that port-led development can be augmented and coastlines can be developed to contribute in India's growth. It looks towards transforming the existing Ports into modern world class Ports and integrate the development of the Ports, the Industrial clusters and hinterland and efficient evacuation systems through road, rail, inland and coastal waterways resulting in Ports becoming the drivers of economic activity in coastal areas.