CHAPTER 1
INTRODUCTION
1.0 BACKGROUND
In spite of a 7517 km coastline dotted by 12 major and 185 minor ports, coastal shipping
in India is playing a marginal role, accounting for only 7 percent of domestic cargo
movement. The total coastal traffic handled at the Indian ports in 2002-03 was around
120 million tonnes (MT) made up of 49 MT cargo loaded, 6 MT transshipped and 65 MT
unloaded. This is abysmally small compared to coastal cargo moved in countries like
China where coastal cargo traffic handled touched to 614 MT and in USA where it was
207 MT in the year 2000.
India’s economic reforms have started yielding dividends and the GDP has been growing
at an average rate of 6-6.25 percent per year in the last 10 years. The transport demand
has shown sustained growth at annual average rate of 8.5 percent in the corresponding
decade. The export sector, after its lack lustre performance in three successive years, has
notched up an impressive rate of growth in the last fiscal 2002–03 of 21 percent in spite
of several adverse developments around the globe. Encouraged by this development and
some other albeit feeble signals about the revival of the economies of two of India’s
principal trade partners viz. US and EU, India is now chasing the target of one percent
share in World exports by 2006. Some foreign trade analysts have for sometime been
emphasising the need for significant paradigm shift in the national policy in favour of
expanding the production base, to satisfy the demand from domestic and overseas
consumers and ensuring among other things that both sets of buyers have equal access to
India ’s products of the same quality design and standard. This will in no way weaken the
ongoing thrust on exports, which is an absolute necessity even though India’s foreign
reserves have quantum leap to nearly 90 billion dollars.
Coastal Shipping expected to enter a buoyant phase in the post reform era has only
registered a marginal growth so far. India’s coastal fleet excluding offshore supply
vessels (OSV) has been hovering around a meager level of only 0.47 to 0.60 million gross
tonnage during the last ten years. Coastal cargo traffic during the period 1993 to 2003
grew at Compounded Annual Growth Rate (CAGR) of 8.4 percent vis-à-vis the coastal
tonnage growth in terms of capacity (gross tonnage) at CAGR of 2.5 per cent.
Of the country’s 185 minor ports, only 61 ports are functional, according to the latest
update prepared by the Ministry of Shipping for the Maritime State Development Council
(MSDC). The largest number of non-functional ports are in Maharashtra (46), Gujarat
(23), Andamans (17), Kerala (10), Tamil Nadu (9), Andhra Pradesh (9), Goa (4) and
Karnataka (4).
India has 14500 km of navigable Inland Waterways made up of river system, canal,
backwaters, creeks and tidal inlets. About 5200 km of major rivers and 485 km of canals
are suitable for mechanized crafts. The total cargo moved by Inland Water Transport
(IWT) in 2002-03 was about 2 million tonnes (MT) corresponding to just over 1.5 billion
tonne kilometre (btkm) or 0.15 percent of the total inland cargo.
Chapter 1: Introduction
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Figure 1.1 The Indian Coastline
Chapter 1: Introduction
1 - 3
Currently India’s transport system handles 870 btkm of freight and 2450 billion
passengers-kilometre a year. The two crucial sub systems of transport viz. rail and road
transports have witnessed phenomenal increase in demand for transportation of
passengers and freight. It is estimated that:
(a) 25 percent of National and State highways are congested. Truck speeds
average only 30-40 km per hour. Rakesh Mohan Committee Report estimated
economic losses from congestion on account of poor roads at Rs. 200-300
billion a year and due to road accidents about Rs. 100 billion (MOST Study).
The social costs for the freight carried by road according to another estimate
are in the range of Rs.0.6 to 0.8 per tonne km.
(b) The total energy surplus made up of domestic production and imports; nearly
40 percent is consumed by road transport vehicles. The prevailing global
uncertainty about availability and fluctuating cost of fuel is causing concern
with 70 percent of the country’s energy requirement being met through
imports.
(c) There are highly negative environmental consequences of poor transport.
Road sector contributes about 47 million tonnes of Carbon Monoxide (CO) in
a year.
(d) If GDP is to grow at 7-8 percent per year over the next 10 years or so, the
demand for transport may grow at around 10 percent a year. With higher than
average traffic growth is projected at several corridors, substantial capacity
enhancements will be required over the next 10-15 years. About 25 percent of
rail links may be required to service traffic approaching or exceeding charted
capacity by year 2006-07. It is estimated that Rs. 3000 billion would be
required to expand National, State and Expressways by 2012 to meet this
demand.
This makes imperative the need to look closely at the potential of the water transport
systems to ease the pressure on surface transport modes and arrest the continuous damage
caused to environment by the movement of road transport vehicles. It is estimated that the
nation would save Rs. 15-20 billion through diversion of 5 percent of cargo from road
apart from reduction in pollutants by 6 percent and savings in fossil fuel energy.
Economic growth Trade
Gridlock
Economic Meltdown
Impact on Road/Rail Infrastructure
Congestion
Figure 1.2 Long Term View
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What lends urgency to this task is the recent decision of the Government to deregulate the
agriculture sector, which means that for the first time our agricultural produce will move
freely to any market anywhere in India. The entire farming community is upbeat about
this development. Apparently if the flow of agricultural produce were constrained by
bottlenecks in transport, it would jeopardize the aspirations of the agriculture sector
contributing 25 percent to GDP and sustaining 65 percent population of the country.
Coastal trade is an integral part of the total national trade. Since this trade is increasing, it
is legitimate to expect that given the cost and time constraints that trade has to undergo
invariably because of shortage of capacity in the rail system and also the road transport,
coastal shipping would come into reckoning provided it can offer compatible facilities at
comparative costs.
All things considered attention must be focused on the development of coastal shipping
and inland waterway systems.
