Execution of projects necessary to make Indian Prime Minister Modi’s “Make-in-India” slogan a succes

Modi takes direct control of project monitoring body to fast-track almost $300 billion In an apparent move to clear some $300 billion worth of projects which, although officially approved, have not been implemented thanks, mainly, to India’s cumbersome and obstructive red tape, Indian Prime Minister Narendra Modi recently announced that he was placing the Project Monitoring Group directly under his control. Execution and not mere clearance of projects is the mantra to make the Modi’s “Make-in-India” a success. Experts say that India badly needs a pro-active approach to executing the projects involving, particularly, infrastructure development to unleash the economic dynamics and increase overall demand. With Modi’s office now directly controlling the PMG, experts hope that some 180 pending projects in the coal, power, steel and infrastructure sectors, would be implemented soon.

A representative of the Confederation of Indian Industry (CII), the industry’s apex organization, talking to the American Journal of Transportation on the condition of anonymity, averred that “things will now move faster than with the previous government (of the ousted Congress Party)”. Modi belongs to the Bharatiya Janata Party (BJP). Modi, a pro-business former chief minister (equivalent to a governor of a state in the U.S.) of Gujarat, is expected to appoint a bureaucrat confidante from Gujarat to head the PMG which was established to monitor and expedite project clearances and execution. The PMG, established by Modi’s predecessor, former Prime Minister Manmohan Singh, did not set the much-needed pace; red tape has been, partly, blamed for the meager 5% economic growth in the last two years despite the much-greater inherent growth potential.

Although some big projects were cleared, many projects continued to languish in India’s notoriously slow bureaucratic grind. One of the high-profile – and still pending – projects is that of South Korean steel giant POSCO whose chairman and chief executive Joon-Yang Chung, interviewed by this correspondent on the sidelines of the Steel Success Strategies conference in New York in June 2013, had said that his company faced delays in land acquisition. But Chung also said then that his company would go ahead with its $12 billion greenfield steel plant in Odissa state – the largest FDI project in India - despite the decade long delay and hurdles in getting environmental clearances and land to set up the steel project. Other big companies also waiting for official clearances include Tata Power Limited and Adani Power Limited. Nevertheless, Sunil Kanoria, the president-elect of the India’s Association of the Chambers of Commerce (ASSOCHAM), recently told journalists that while business confidence in India had improved since Modi’s election seven months ago, this confidence would have to be translated now into project implementation if greater foreign direct investment (FDI) was to be attracted to India and if consumer demand was to be increased. However, a few positive steps have already been taken to make India an attractive shipping and distribution center. The Central Board of Excise and Customs (CBEC), which is lodged within the Department of Revenue attached to Ministry of Finance, recently announced what Indian traders and logistics providers call a “New Year’s gift” by extending the round-the-clock Customs’ clearance facility to more airports for export shipments, and more seaports for certain categories of import and export shipments. In a circular, the CBEC notified that effective December 31, 2014 “the facility of 24x7 Customs clearance for specified imports such as goods covered by ‘facilitated’ Bills of Entry and specified exports, factory-stuffed containers and goods exported under free shipping bills will be made available, at 18 sea ports”. The 18 sea ports are: Chennai, Cochin, Ennore, Gopalpur, JNPT, Kakinada, Kandla, Kolkata, Mumbai, New Mangalore, Marmagoa, Mundra, Okha, Paradeep, Pipavav, Sikka, Tuticorin, and Vishakapatnam. The 17 air-cargo complexes to be provided 24x7 Customs clearance, also effective that date, for specified imports, are: Ahmedabad, Amritsar, Bangalore, Chennai, Coimbatore, Cochin, Calicut, Delhi, Goa, Hyderabad, Indore, Jaipur, Kolkata, Mumbai, Nashik, Thiruanantapuram, and Vishakhapatnam. India’s trade circles and industry groups have welcomed the CBEC’s announcement, saying that the move would augment India’s competitiveness in the global markets. Anil Swarup, a top Indian bureaucrat with the PMG, described the move as going “beyond mere clearances of underlying projects to the execution part as well”. Swarup pointed out that a government portal set up in Uttar Pradesh, for example, enabled the tracking applications at each stage to provide greater transparency and expedite the processes. Modi, who created a strong infrastructure base in Gujarat when he was the state’s chief minister, has also directed his key ministries to compile a list of outstanding projects, which have not been implemented because of state bureaucratic hurdles. Nripendra Misra, Modi’s principal secretary, has urged the ministries to sort out the issues relative to outstanding projects awaiting execution in a “time-bound manner”. This initiative has produced some visible results: India’s aviation secretary V Somasundaran has asked all agencies under his ministry such as Airports Authority of India, Directorate General of Civil Aviation and Bureau of Civil Aviation Security to compile the list and submit it to his office. There is considerable frustration amongst India’s business circles over the inordinate delay in getting the Navi Mumbai airport, hailed as “the future jewel of Indian aviation”, off the ground. U.S. President Barack Obama’s forthcoming India visit is not just full of symbolisms – he is the first U.S. President who will be the chief guest at India’s Republic Day celebrations on January 26, besides being the first sitting President to twice visit India – but will also provide a strong impetus to improving bilateral economic ties, with infrastructure and transportation forming an important segment of bilateral economic cooperation. An important milestone in bilateral cooperation is the continued dialogue for the World Trade Organization’s implementation of the Trade Facilitation Agreement (TFA). “This agreement represents a way forward for both countries which will allow for the enactment of the TFA,” Diane Farrell, the Acting President of the US-Indian Business Council in Washington DC, had said in a statement, adding that it sets the stage for increased economic activity in India with potential to add $1 trillion to the global economy.” An area of interest to U.S. businesses is India’s shipping infrastructure development; Indian port experts say that the largest container ship handled by an Indian port was the 14,000 TEU capacity vessel MSC Valeria at Mundra in 2013 which is considered to be a record. India’s economic growth has suffered because of inadequate or anachronistic infrastructure; India’s state-owned ports – often referred to as “official ports” – have steadily lost their market share which has declined from some 91% in 1995 to 57% in early 2014, thanks to shallow draft, congestion and inept use; private ports, on the other hand, have been able to increase their market share. There have been attempts to privatize the “official” ports but fierce trade union opposition has frustrated the move. Modi, who as chief minister had aggressively pushed Gujarat’s infrastructure development, is trying to upgrade the existing terminals, expand berths and build transport networks across India. The Jawaharlal Nehru Port, also known as Nhava Sheva, India’s largest container port, is located south of Mumbai; major exports from Jawaharlal Nehru Port are textiles, sporting goods, carpets, textile machinery, boneless meat, chemicals and pharmaceuticals. The main imports are chemicals, machinery, plastics, electrical machinery, vegetable oils and aluminum and other non-ferrous metals. The port handles cargo traffic mostly originating from or destined to states such as Maharashtra, Madhya Pradesh, Gujarat, Karnataka and much of North India. Nhava Sheva’s facilities will get a $654.6 million facelift, while a stimulus package will help develop other port areas in Mumbai. Bridge and roadway improvements, which are also on the cards, could boost competitiveness. India can grow at an average rate of 7%-8% per annum in the next decade, according to a recent Barclays research report. But experts call for quick modernization and expansion of India’s ports to accommodate the next generation of larger container ships which are being built. India’s port sector has looked, not without envy, as transshipment hubs in Colombo and Singapore have taken away a significant chunk of its business. Colombo port, which handled 616,000 TEUs in the first eleven months of 2014, is capitalizing on its transshipment strength, seizing a large chunk of India’s cargo volume. The bigger cargo vessels, handling west-bound huge volumes from Asia, particularly China, do not stop at Indian ports because of either inadequate volumes or infrastructure. Indian ports, currently handling ships with 5,000 box capacity, need to quickly upgrade themselves to meet the future demand for larger vessels. If India’s ambitious Maritime Agenda 2020, which provides the roadmap for future port development, is aggressively translated into action, it would set the stage for transshipment-capable mega ports , according to transport and logistics experts at Frost & Sullivan. Indian Minister for Shipping, Road Transport and Highways, Nitin Gadkari, recently announced massive investment in India’s ports and road network. The Kolkatta Port Trust, together with the Indian government, plans to construct a port in the Sagar Islands at a cost of more than $ 1.8 billion. Gadkari also announced that additional investments of more than $520 million would be earmarked for floating storages and a dry bulk cargo-handling terminal. Gadkari also announced that additional investments of more than $520 million would be earmarked for floating storages and a dry bulk cargo-handling terminal.