CHAPTER 6: SUMMARIES, CONCLUSIONS AND RECCOMENDATIONS
The Indian Port has one of the largest merchant fleets with 187 minor ports and 12 major ports. As such, ports are a major contributor to the economy of India because almost 95% of trade in India is done through the sea. According to the findings, there has been a trend of moving products especially manufactured goods to the developing nations via sea and it is this notion that India has the potential to emerge as a large manufacturing hub. Based on previous researchers the major challenges facing Indian ports are a lack of private participation, over-dominance by the government, old infrastructure, high number of unskilled and untrained staff, lack of equipment to handle large capacity cargo, inefficiency caused by poor roads, inadequate cargo-handling equipment and port traffic. To address these issues, the government of India has embarked on different activities the most outstanding ones being port modernization, 100% FDI in the port sector and new port development. Literature on port modernization shows that it has been necessitated by high port traffic. The ports have a capacity of 1500 MTPA yet they are required to handle 2500 MTPA. Port modernization has been achieved by upgrading births and terminals and also improving the current port infrastructure. The theory of modernization posits that modernized societies are characterized by use of recent technology and as such, developing countries should practice the same in order to be modernized. The Indian government has embarked on modernization in the port sector in various ways. The Sagarmala project was initiated by the government with the sole aim of modernizing ports and so far it has achieved great success. This success is evident from the questionnaire and interview responses. According to the questionnaire responses, 47.1% strongly agreed while 24.3% agreed that the government has impacted on port modernization in the Indian ports. This was further elaborated by interviewees who quoted mechanization, replacement of worn out equipment, increase in drafts to handle new vessels and the development of new terminals as some of the government initiatives. Some of the ports that have been modernized in India are the deep sea port in West Bengal, Port of Madras and Vishakhapatnam and the Container transshipment terminal at Vallarrpdam Cochin port.
Concerning the development of new port, findings from secondary sources report that the TEU in Indian ports is increasing and this trend is expected to continue. As such, it is essential to develop new ports to accommodate this increase. Furthermore, major ports such as Mumbai among others can no longer accommodate any further expansion leaving new port development to be the only solution. The traffic handled by Indian ports shows the necessity for the development of new ports to ease this congestion. The advantages of developing new ports include improvement of cargo, reduction in traffic and reduced costs especially due to the development of Indian own transshipment hub. From the literature, the government is focusing on developing a port at West Bangal, Maharashta, ParadipSatelite Port, Machilipatnam, Tamil Nadu and one at Enayaman. 68.7% of the questionnaire respondents agreed that the government has impacted on port modernization in the Indian sector. The interview respondents contended that this move has helped to ease congestion, make use of recent infrastructure, reduced the costs incurred by India in the transhipment hub at Singapore and Colombo. This responses show that the Indian government has positively impacted in the Indian Port Sector through the development of new ports to counter the challenges faced by the sector.
According to the findings, the government of India has allowed 100% FDI in the Indian Port sector. The Solow-Swan model has been used to explain the vitality of FDI in Indian port sector by substituting capital accumulation variable with port traffic. The model posits that FDI promotes technological development which in turn increases productivity. As such, the port sector does not require approval from the government and investors are exempted 100% income tax for 10 years. The government has also encouraged the formation of joint ventures. Private investment is expected to allow for transfer of skills and aid in port modernization and new port development. 67.2% of the questionnaire respondents agree that the 100% FDI policy has transformed the Indian port sector. It was also found that a majority of the port staff is made up of young people between the ages of 20-40 years (77.2%) and as such are conversant with new technology and can learn very fast. Interviewees contended that the FDI policy will help boost the infrastructure development that is already underway and also increase the international presence for the Indian port sector. Besides that, the findings of the study show that FDI has helped to improve poor connectivity in the port sector and also enhance the acquisition of latest technological skills from foreign companies. Technological skills entail trained labour on the latest port technology among others. Some of the new port solutions that have been introduced in the Indian port include the RFID technology. The interviewees also admitted that the government has positively influenced their ports and this is evident by the secondary results on the development of Mumbai port and JNPT port (port studied).
6.2 Conclusions (Answers to research questions)
1. What is the impact of the Indian government on port modernization on the Indian Port Sector?
The Indian government has impacted on port modernization in various ways. Firstly, the government has enabled the construction of new terminals and berths and upgraded projects for berths. Secondly, the government as succeeded in installing new and modern equipment for handling cargo and the draught shave also been deepened to handle larger vessels. Thirdly, the Indian government has initiated the installation of Vessel Traffic Management System (VTMS) to allow for a smooth movement of vessels. Fourthly, there has been the implementation of the port community system through websites. Benchmarking activities have also been encouraged with the aim of upgrading the existing ports to meet international standards. The Sagarmala project has helped to modernize ports through dredging, mechanization and development of new terminals. Also, technological solutions such as OCR and RFID have been introduced in old ports.
2. How has the Indian government influenced new port development in the Indian Port Sector?
The Indian government has impacted on new port development by attracting foreign investors to help in government projects and allocating money toward this project. The government has initiated projects to develop new ports and strategic locations in the Indian coastline. The development of a transhipment in India is underway and this will help to reduce logistic costs. The government has proposed the development of the port at West of Bangal in Sagar Island. Besides that, new ports are also being developed at Machilipatnam, Maharashta, ParadipSatelite Port and Tamil Nadu. The new port being developed at Enayam is also expected to be operational by 2020. Furthermore, another port is underway at Odisha and is expected to increase the capacity of the port from 140 to 250 million tonnes per year.
3. What is the effect of the Indian government policies on FDI on the Indian Port Sector?
The Indian government has allowed 100% FDI in the Indian port sector through automatic route. Furthermore, the government has encourage joint ventures to allow for benchmarking and transfer of skills on the latest port technology. This initiative has increased foreign investment in the Indian port sector and subsequently helped to improve infrastructure. The automatic route will also enable projects to be initiated quickly because they will be no longer a need for lengthy government procedures on the same. FDI generate form the port sector will allow for both port modernization and the development of new ports. Besides that, the FDI policy will increase the productivity of the port sector through the application of latest and efficient technologies in handling cargo. Also, the inward FDI in the port sector has been used to develop terminals at JNPT and International. Transshipment Terminal at Cochin Port. Moreover, FDI has been used to enhance port connectivity and as such ease congestion and traffic.
Having identified the problems facing the Indian port sector and how the government has impacted on the sector, it is vital to find ways to enhance the government’s involvement while reducing the negative factors. Throughout the study, the government has been identified as a great contributor to the success of the Indian port sector. However, if the government comes up with policies that are restrictive to the port sector, there will be negative consequences. One of the main problem facing the Indian ports is the over-dominancy by the government. Therefore, it is recommendable that the government should corporatize ports for enhanced efficiency, increased commercial orientation and greater accountability (Rao and Gupta, 2006). Despite the fact that there has been corporatization of ports, it has been very slow.
Corporatization will help the ports to be more autonomous and reduced excessive government control. Furthermore, it will also enable the port sector to access commercial funding needed for expansion (Wu and Goh, 2010). Even while the government has encouraged private investment, competition has not been encouraged by introducing two or more service providers. As such, there is a danger of private companies emerging as monopolies. For example all the 6 berths in Chennai were given to an Australian company instead of dividing providers. Therefore, the Indian government should also address these challenge. Corporatization can be achieved by setting up fully owned subsidiary firms by the Port Trusts and leasing the ports to this firms.
There is need to have a regulator that controls on tariff rather than leaving the Indian port sector on the market forces. According to Juhel (2010), market forces alone are okay when there is already competition. However, this is not the case in the Indian port sector. As such, there is need for a regulator that includes pricing to implement, monitor and penalise the non-performing ports. A regulation body will also help the port sector to bargain collectively with the government to improve the Indian port sector. Furthermore, such an authority will help in facilitating efficient multimodal transportation in the port sector (Banerjee and Gupta, 2013)
The Indian government should also consider electronic data exchange systems. These systems as per Alderton and Saieva (2013) will enable ships to inform the port authorities about their cargo arrangements to allow the port authorities to prepare in advance for a faster offloading of vessels. Furthermore, it will also encourage a speedy cargo clearance and in turn help to reduce the problem, of increased port traffic. Therefore, standardization of the protocols will help in operational efficiency which in turn will increase productivity (Verhoeven, 2010). Moreover, there is need for the government to invest in capacity. Although the Indian government has embarked on the development of new ports to ease congestion in non-federal ports, the problem is still the same at federal ports. The government should focus on both private and public ports in order to allow for the smooth flow of cargo (Veenstra, Zuidwijk and Van Asperen, 2012). Therefore, there is need to increase port efficiency and capacity. Further investment in and development of the port infrastructure coupled up with investment and changes in the regulatory body will help to enhance the overall performance of the Indian port sector.
6.4 Suggestions for future research
There is need for future research on how each government initiative affects port characteristics separately. In the current study, the researcher considered different port factors, however, there is need for in-depth study on how each factor affects the port sector. This research was done in India using two ports, the Port of Mumbai and JNPT port as case study. As such, it was limited to that specific location alone. Future researcher should consider doing a similar research in all ports in India to determine if their findings will be consistent. Also, this study only used a sample of 70 and 4 interviewees. The future researchers should consider large samples of up to 500 because such large samples are valid and reliable and as such lead to a highly generalized finding.
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APPENDIX 1: QUESTIONNAIRE
More than 50
Please indicate to what extent you agree or disagree by choosing the appropriate number
3. The government has greatly impacted on new port development
Strongly disagree Disagree Neutral Agree Strongly Agree
1 2 3 4 5
4. The government policy of 100% FDI in automatic route has improved port infrastructure
Strongly disagree Disagree Neutral Agree Strongly Agree
1 2 3 4 5
5. The government has greatly impacted on port modernization
Strongly disagree Disagree Neutral Agree Strongly Agree
1 2 3 4 5
6. The following are factors that limit the growth of the Indian port sector. Please indicate to what extent you agree or disagree.
S/N Factor 1 2 3 4 5
7 Port traffic
8 Poor technology
9 Ownership by the government
10 Inadequate cargo-handling equipment and machinery
11 Inefficiency due to poor hinterland connectivity through
APPENDIX 2: INTERVIEWS
1. What are the challenges and opportunities in the Indian Port sector?
2. What is your view on the government policy of 100% FDI in the port sector?
3. What is the impact of government initiatives to modernize ports?
4. Do you think the government’s plan to develop new ports will help the port industry? If yes, explain how.
5. How has the government impacted on you port?