Current affairs Blog
An ocean of opportunity: Waterways can make India a trade leader in South Asia
- March 6, 2019
- Posted by: admin
- Category: INDIAN ECONOMY Fact & Analysis
Access to great water bodies within and outside your borders is a huge asset. India is a land of rivers, and its 7,500-km-long coastline gives it access to Arabian Sea, Bay of Bengal and the Indian Ocean. The name of our country itself comes from the mighty Indus river, and this alone should be inspiring enough to use our great water resources to increase our share of global trade and promote internal trade.
One of the weaknesses of the industrial set-up in India is the supply chain. Roads and railways are major transporters, but both have their limitations. It has been observed that poor conditions of roads are a major source of distress for trading. Trains used for commercial transport are also plagued by delays and breakdowns. Moreover, both these modes of transport, along with air, require huge capital inflows to build the infrastructure. The rising cost of fuel is also a major concern.
When it comes to waterways, however, the need for capital inflows is low, as the major infrastructure needed is docks and ports at strategic areas. One of the greatest challenges of managing any supply chain is ensuring timely delivery and controlling costs. Use of waterways will reduce costs of transporting goods and increase the speed of delivery.
Transportation costs in India are already high, i.e. 18-20% of GDP (in China, it’s about 10%). The US, the EU and China have invested heavily into their waterways programmes and are reaping the benefits.
Waterways is not a new concept. The Sagarmala Project—an ambitious attempt to link India’s coastal regions to inland waterways—was first proposed in 2003. It was given a green light in 2015, and is a massive initiative with investments running in lakhs of crores of rupees. It is estimated to contain over 500 projects, and create benefits worth billions of dollars and create millions of new jobs.
However, the project is moving at a slow pace, and this is both increasing its costs and reducing benefits. It’s necessary to speed up this project so that its value doesn’t diminish. The opponents criticise its high costs and the potential damage to existing waterways, but the high capital costs will be followed by a lowering of costs once ports become operational. The infrastructure is being built to last many decades, during which initial costs will be recovered. The question of environmental feasibility is important, but the use of waterways will reduce our reliance on roads and railways, decreasing vehicular pollution and deforestation.
The project can also be expanded to public transportation. India has vital maritime assets such as the Andaman and Nicobar Islands that are a gateway to South East Asia, and the development of maritime infrastructure out there can increase our role in the area of global shipping. India shares inland waterways with many of its neighbours, and the extension of the Sagarmala Project in the SAARC and the BIMSTEC regions can resolve the supply chain woes of our largest trading partners, and also help give India trade leadership in South Asia, acting as a counter to China’s Belt and Road Initiative.
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