A sea of opportunities along India’s coastline, experts tell Niti Aayog

Last year, the Union Cabinet approved a Shipbuilding Financial Assistance Policy proposed by the Ministry of Shipping.

Written by Pranav Mukul | New Delhi | Published: September 28, 2016 2:55 am
A senior Niti Aayog official said that going ahead, more such meetings would be held with other defence experts as well. A senior Niti Aayog official said that going ahead, more such meetings would be held with other defence experts as well.

In a meeting held with naval and maritime experts on September 16, the government’s think-tank Niti Aayog was apprised of several measures it could recommend to the government as part of its 15-year vision document to develop India as a ‘blue economy’ by leveraging its potential along the coastline.

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In the discussion, former Chief of Naval Staff R K Dhowan shared his suggestions with the Niti Aayog top brass on how India could potentially benefit from the 7,500 km long coastline, over 2 million square km of exclusive economic zone, more than 1,300 islands, and the strong river network for the purposes of trade and transportation.

The meeting was the first in a series of those to be hosted by Niti Aayog for the purpose of consulting sectoral experts as a part of its plan to integrate defence and internal security issues into the 15-year vision document, which replaces the five-year plan regime. A senior Niti Aayog official said that going ahead, more such meetings would be held with other defence experts as well.

The official said that one of the key recommendations made by Dhowan was to examine the possibilities of expanding deep-sea mining in India. Dhowan highlighted that China recently started pursuing the subject in a serious manner and was in the process of exploring mining potential in 10,000 sq km area, calling for measures be considered to examine and kick-start deep sea mining in India.

On Monday, the Ministry of Earth Sciences signed a 15-year contract with the International Seabed Authority (ISA), for exploration of Poly-Metallic Sulphides (PMS) in Indian Ocean. The ISA, which governs the non-living resources of seabed lying in international waters, had already approved India’s application for allotment of 10,000 sq km area along with a 15-year plan of work for exploration of PMS along certain regions of the Indian Ocean.

In the meeting with Niti Aayog, Dhowan highlighted that the maritime trade accounted for over 75 per cent in value terms and 90 per cent in volume terms of total Indian trade, and laid emphasis on the fact that since India enjoyed a strategic location in the Indian Ocean, it should deal with the incumbent challenges being faced by various allied sectors such as shipbuilding, and should also explore possibilities in transhipment.

Last year, the Union Cabinet approved a Shipbuilding Financial Assistance Policy proposed by the Ministry of Shipping, which aimed to provide financial assistance to Indian shipyards for shipbuilding contracts signed between April 1, 2016 to March 31, 2026. The financial assistance would be 20 per cent of the “contract price” or the “fair price”, whichever was lower, as determined by international valuers, for any vessel built in India subsequent to its delivery.

According to the official cited above, Dhowan said that the Indian ship-building industry faced various constraints such as an inefficient tax structure, control and access related restrictions etc. and while the recent steps by the government such as providing infrastructure sector status to shipbuilding industry were in the right direction, it was suggested that adequate steps be taken soon enough to boost economic activity in shipbuilding sector.

Furthermore, according to government data, all of India’s transhipment traffic gets handled in Colombo, Singapore and other international ports, and the Indian port industry loses out up to Rs 1,500 crore in revenues every year. It was suggested to Niti Aayog that urgent steps should be taken to harness the opportunity, with the possibility of developing Campbell Bay at Andaman & Nicobar Islands as a transhipment hub should being explored. In July, the government had granted in-principle approval to setting up of a major port with transhipment capabilities in Enayam near Colachel in Tamil Nadu.

As per a government statement issued in July, the Enayam port is expected to reduce the logistics cost for exporters and importers who currently depend on transhipment in Colombo or other ports thus incurring additional port handling charges.

In a recent blog, Niti Aayog vice chairman Arvind Panagariya had also batted for setting up of coastal economic zones — one on the west coast of India, and one on the east coast — to fully realise the strategic advantage India has due to its coastline, especially in the context of the proposed Sagarmala project.

“An important advantage of locating the zones near the coast is that they would attract large firms interested in serving the export markets. These firms would bring with them technology, capital, good management and links to the world markets. They would help create an ecosystem around them in which productive small and medium firms would emerge and flourish,” Panagariya had said in his blog.

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