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The Shipping Ministry is planning to impose a cess to develop
funds to build major and minor ports in India to double India’s
dismal share of global mercantile trade of .8% by 2009. The
proposed cess is 5 paise per kilogram of cargo from deep sea
vessels and 2 paise for low value coastal vessels. The Ministry
estimates this will net USD 565 million and also plans to add a
USD 650 million budgetary support.
What is surprising is the small steps taken here when China has
taken giant steps to increase share of shipping and has
invested billions of dollars to develop ports not only in China
but also in Pakistan and assistance to African nations.
India is expecting investments worth USD 8.7 billion this year
and most if it from private investment. In addition, there are
plans to connect ports by rail and road. The Indian Railways is
planning to build a dedicated freight corridor and has laid a
foundation to connect Mumbai and Kolkata ports to Ludhiana, the
industrial hub of Punjab.
However, this is nothing compared to the massive investments
China is making in shipping. Researchers say that it has
captured 20% global ship building market compared to South
Korean 35% and Japan's 32%. With its ships costing 20% less
than its competitors and facilities also lower by similar
percentage, analysts say that China will soon play a dominant
role in shipbuilding. According to some figures, Chinese ships
carried 86% more cargo than last year and that additional
capacity is already saturated. China ranks 3rd in the world in
terms of tonnage and 6th in terms of value.
While India is planning to invite foreign investments in
infrastructure development, it is not clear what the business
model will be for investors to plant vast sums of money when
opportunity to continue may be revoked by this or future
governments.
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