The New Indian Government Must Act Quickly
By MarEx
Captain
Rohit Bhatia, based in India and managing director of Wade Maritime
Consultants, analyses the challenges ahead for India’s new government:
This is the biggest opportunity that India
has had in a long time. It is a chance to set course again on to a
higher growth path. The new prime minister, Narendra Modi, and his
government must work quickly and diligently to bring all the
stakeholders together, frame the right policies with insight from
industry leaders and ensure they are implemented without delay.
Greater investor confidence is the biggest
plus for the economy because of the new government. There is a wave of
euphoria in the country now with Mr. Modi being elected, and it is
coming from all sections of industry and society in general. This huge
mandate should drive him to look at all sectors of Indian industry,
including shipping, to bring higher economic growth to the country
again.
It remains to be seen how successful Mr
Modi will be in translating this huge support and confidence into actual
positive change. There will be challenges. On the economic front, he
has to tackle the country’s runaway inflation, faltering exports and
imports, supply-side bottlenecks and the prediction of a weak monsoon
season this year due to the “El Nino” effect which could derail any of
his good intentions to prop up the economy. India is mainly an agrarian
economy and with agriculture forming 17 per cent of the GDP and
employing over 50 per cent of the workforce. Monsoons play a very
important role in cultivation of crops and if the monsoon is weak, agri
output would be weak and as such it will directly affect the GDP growth
figure.
There are global pressures too with the US
Federal Reserve still in a ‘tapering’ mood which could result in rising
interest rates in the US. This could cause Foreign Institutional
Investors to pull funds from emerging markets including India and park
them in more secure western markets.
For the maritime industry, a lot needs to
be done on the political and regulatory front. Whether it is policy
related to land acquisition, environment, tariff, taxation, customs,
coastal shipping, dedicated freight corridors or investment, clear-cut
policies must be put in place and then implemented. A stronger and more
independent Ministry of Shipping is the need of the hour to ensure such
policies are made and implemented without undue delay.
Port development is already underway in
India and crucial to its economic development, but the government must
act here as well. In India, the major ports come under the jurisdiction
of the central government, the non-major ports under their respective
state governments. Major ports are not growing due to paucity of land
and poor hinterland connectivity. Therefore, their first and last mile
connectivity suffers. Moreover, central and state governments mostly do
not work in tandem resulting in delayed action, or no action, on
development projects.
The non-major ports have huge potential, as
they do not have these constraints. The current challenge is that
Indian state governments (other than Gujrat) do not currently have a
clear-cut maritime policy. Neither do they have maritime boards (except a
few states) to implement their policies, develop the non-major ports
and take care of maritime affairs.
Most of the investment we currently see in
these ports is private investment. The states need to develop non-major
ports with good hinterland connectivity, port and marine infrastructure.
They need to support port developers in getting finance, acquring land
and developing hinterland road and rail networks. Policy inaction,
political and environmental hindrances have delayed the formation of
dedicated freight corridors and the award of infrastructure projects,
and all of these have contributed to bottlenecks at ports.
The new government has majority in the
parliament on its own accord, but for this whole development exercise to
be successful, it will have to take its regional partners along. Some
of them control coastal states and so are well aware of the need to
develop all aspects of maritime infrastructure, not just ports. Their
mandates should address better hinterland connectivity, land acquisition
policy, coastal and inland water transportation policy, tariff
regulations, customs, income tax policy and more so that they earn the
on-going support of Indian industry.
Captain Bhatia is a well-known maritime
transportation industry expert with over 25 years of operational and
commercial experience including organizational turnaround, business
strategy, operational risk management, legal and regulatory matters. He
has in-depth technical, commercial and operations expertise gained by
serving at sea for over 15 years and later on ashore in the maritime
management consulting field. His work ashore has included working as a
risk management and loss prevention consultant, maritime business
advisor and managing director of a leading international maritime
management consulting firm.
He has worked on numerous projects over the
last decade in operational risk management, business strategy,
organizational design, human capital management, strategic investment
advice and regulatory compliance for leading shipowners, charterers,
traders, oil majors, ports and private equity firms. He is a specialist
in shipping operations, maritime economics, transportation strategies
and operational risk management as well as being a key note speaker on
various advanced training programs and seminars in the shipping
industry. He is a master mariner with an MSc in International Shipping
(UK) and a member of the International Association of Maritime
Economists.
http://www.maritime-executive.com/article/The-New-Indian-Government-Must-Act-Quickly-2014-05-23
