The sectors of port and aviation are very important for the growth and development of any economy. This is because they involve handling of both commuter as well as cargo traffic. In India, the government has taken several initiatives for the growth of these sectors. But a lot more is to be done given the potential of both these sectors.
As per a report of India Brand Equity Foundation (IBEF), the cargo traffic attended by Indian ports in 2015 were of value 1,052 Million Metric Tonnes (MMT) which is going to increase to 1,758 MMT by 2017. Though the increase is not very significant but it is important to sustain the growth for which cooperation between the private sector and the government is needed. The government has declared several initiatives for the betterment of the sector. Prominent among them include the Sagarmala initiative wherein the government plans to invest `70,000 crore for development of 12 major ports in the next five years. The initiatives like Sagarmala provide wonderful opportunities of public private partnerships.
Out of the ports operational in India, major ports are registering a steady growth as compared to minor ports. According to an IBEF report, major ports saw a 4.6% yearly increase of cargo traffic. The value rose to 264.73 million tonnes during April -August in 2016. The report also gave the segment wise percentage of the cargo traffic attended at ports which stands as P.O.L.(Port of Loading) at 32.44 %, coal at 24.09%, container traffic at 19.65%, other cargo at 12.68 %, iron ore at 4.6% and other liquids at 4.13%.Regarding minor ports, a report by ICRA (Information and Credit Rating Agency)states that there has been a decline in volumes of cargo handling by 1% in the Financial Year (FY) 2016.The drop is of 18% in iron ore, 11% in other cargo and 8% in coal volumes.
In such a scenario, the economists are of the view that the government needs to consider issues related to both major and minor ports. It should devise port specific plans to make them profitable. This would ensure business for minor as well as major ports. The government is increasing its budgetary allocation for the sector on a regular basis. For instance, the revised estimate of the Budget 2016-17 had `450 crore for the Sagarmala project which has been increased to `600 crore in the Budget estimate of 2017-18. But then it is important to review the success of projects regularly and subsequently address the shortcomings. The government also needs to pay attention to the concerns of the private companies regarding availability of liquidity. Together with banking institutions, the government can devise mechanisms which can benefit all parties.
Regarding foreign investments, a report by the Department of Industrial Policy and Promotion (DIPP) under Ministry of Commerce and Industry states that Foreign Direct Investment(FDI) received by the Indian ports sector between April 2000 and March 2016 was of value $1.64 billion. The experts feel that the investment in the sector can increase from the foreign shores in future as the government has allowed 100 % FDI. The quantity of investment will only vary depending on global economic situation.
Economists are of the view that investments from abroad will serve several purposes. It will bring in the required technologies necessary for the upgradation of the cargo handling capacity of the existing ports. Also by virtue of the new investments, permanent assets will be created in form of establishment of new ports. Economic activity will be escalated. Also with buzzing economic activity taking place at the ports, foreign trade will increase.
International Air Transport Association (IATA) in a report has estimated that India which is currently at ninth position will become the third largest aviation marketplace replacing the United Kingdom by 2026.With several governmental initiatives in place along with eager participations from the private sector, the aviation sector has bright prospects.
Both the cargo and passenger traffic segment is showing steady increase in capacity. According to a report by Department of Industrial Policy and Promotion (DIPP), Ministry of Civil Aviation, the passengers carried by scheduled domestic airlines have increased by 29% from 148 million during April 2012 to March 2014 to 190 million in April 2014 to March 2016.Also a latest report from the Directorate General of Civil Aviation (DGCA) states that total passenger traffic increased by 23.10 % to 90.36 million during January to November 2016. This shows that there is no dearth of passengers for the airlines companies. In fact, a vast price conservative market is lying untapped. Both luxury and low cost carriers can cater to this market by lowering the price of air tickets.
Regarding cargo handling, a report from Airport Authority of India(AAI) shows that the international and domestic freight traffic both have registered a growth of 8.2% and 4.7% respectively leading to an increment of 6.9% in total freight traffic during April to June 2016-17 as compared to April to June 2015-16.
Also due to government allowance of 100% FDI in airports and nonscheduled air carriers under automatic route, the FDI inflow has substantially increased in the sector. The report by DIPP states that the rate of FDI has grown by 605% from $61.84 million during April 2012 to March 2014 to $435.81 million from April 2014 to March2016.
Further, the government initiatives like framing a concrete National Civil Aviation Policy (NCAP) 2016, launching of UDAN (Ude Desh ka Aam Naagrik) scheme, development of Maintenance, Repair and Overhaul (MRO) sector in India related to aviation will act in boosting the sector. The provisions of Budget 2017-18 like development of some selected airports of tier two cities under the PPP mode, modification of Airport Authority of India Act for enhanced usage of land assets will pave way for more sectoral investments.
What is important for the government now is to monitor the aviation programme well. A periodic assessment of the situation is to be made. Evaluation is to be carried thereby and accordingly tailor made plans to expand airport infrastructure all over the country can be done. Regarding manufacturing in India, Make in India programme, rolling out uniform taxation schemes like Goods and Services Tax (GST) can augment the development of the sector.