Despite a high capacity utilisation of over 90 percent, India's port and shipping sector continues to be bogged down by congestion due to high transit time, soaring logistics cost, inadequate flow of investments, small size of vessels and inadequate consolidation in the liner and terminal operator industry, according to a FICCI-Ernst & Young (E&Y) paper on "transforming Indian ports into world class facilities".

The FICCI-E&Y paper calls for focusing on three imperatives if the Indian port and shipping sector is to become competitive and world class. These include focussed infrastructure development, facilitating trade through an innovative mix of IT and other value-added services and promoting competition through privatisation.

Indian ports are today operating at over 90 percent capacity utilisation, owing to stagnant capacity, says the FICCI - E&Y paper. They are grappling with low productivity compared with world-class ports such as Singapore. For instance, the time taken for clearing import cargo and shipping export cargo is 21 days and 19 days respectively in India as against 3 days and 5 days in Singapore. In terms of railway costs, Indian shippers incur 7.9 cents per km as against Canadian railway cost of 2 cents.

Further, the logistics costs in India accounted for 13 percent of GDP compared to 11 percent in Japan; 10 percent in Europe and 9 percent in the US on account of poor logistics infrastructure at ports in the country.

In order to ensure well-planned capacity overhaul of ports, issues relating to land acquisition, reclamation and other delays would need to be effectively tackled, the paper notes.

Apart from physical infrastructure, there is a dire need to employ improved systems and trade facilitation measures in ports. These would go a long way in increasing capacity through reduced turnaround times of vessels and evacuation of cargo by better planning. ICT solutions and other value-added services are proven tools for trade facilitation through ports and these should be deployed in right earnest.

The FICCI-E&Y Paper states that Singapore, Finland, the UK, Germany, Senegal, Tunisia, Turkey, Thailand and Mauritius have benefited from automation of their trade processes. The increased level of paperless training in countries like Australia, Singapore, Japan, Korea, the UK (in excess of 75 percent) bears testimony to the fact that ICT has penetrated deep into the trade procedures of these economies. IT solutions are proven to be highly effective for activities such as effective cargo distribution systems and quick processing and proactive supervision on the workflow management.

The efficacy of deploying IT can be gauged from the fact that Singapore has already gained about 1 percent of its GDP through implementation of its PortNet system.

The paper points out that privatisation is imminent to enhance port capacities and performance. The new Model Concession Agreement, it emphasises, should be implemented to ensure maximum private participation.