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"India wants to be an alternative to China in global trade, but still needs to build better ports"

2024-08-21

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【Text/Guaguanzhe Liu Chenghui】As the competition between China and the United States intensifies, some Western media have repeatedly praised India as China's "alternative". But they often find that this is not an easy task...

"Global trade needs an alternative to China, but India needs better ports." The New York Times published an article with this title on August 20, saying that India hopes to become a manufacturing and export giant that can replace China, but its logistics operations face the problem of inefficiency. Although the container traffic of Indian ports has increased significantly in the past two decades, it is still not comparable to that of Chinese ports.

The article noted that in order to solve the problem, India is currently actively expanding its port and highway infrastructure. However, this is a costly and complex project, and whether it can keep up with the growing logistics demand in time remains an unresolved issue. In addition, the strike threats issued by port workers in recent days due to the breakdown of salary negotiations are also a problem that India has to face.

The article wrote that as Sino-US trade relations become tense and the COVID-19 pandemic hits the supply chain, some multinational retailers that have long relied on Chinese factories hope to find factories in India. Unmesh Sharad Wagh, chairman of the Nehru Port Authority, said, "The world does not want to be completely dependent on China." "Of course, the best choice is India. Now, people are shifting their bases to India."

But the New York Times said that whether this trend will continue, bringing more factory orders to India and creating more much-needed jobs may depend on whether Indian ports can play their role.

Jawaharlal Nehru Port, located on the west coast of India, is an important logistics hub in the country. About one in every four containers passing through India is loaded and unloaded at Jawaharlal Nehru Port.

The Panama-flagged Rishiri Galaxy had just arrived from the Persian Gulf, carrying industrial chemicals needed by Indian factories to produce medicines, auto parts, cosmetics, building materials and other items.

At another terminal near the freighter, overhead cranes lifted containers from a ship operated by Danish shipping group Maersk and placed them on trucks that will haul the goods — electronics from South Korea, palm oil from Indonesia and machinery from Europe — to warehouses in the world’s most populous country.

Container traffic at Jawaharlal Nehru Port has roughly tripled over the past two decades, to 6.4 million twenty-foot equivalent units last year. However, it is still small compared with the world's largest ports, including many in China.

Due to the limited port transportation capacity, sea transportation between India and Europe or East Asia is often not direct, and about 25% of containerized goods need to be transshipped through ports in Singapore, Dubai or Colombo, Sri Lanka. At these ports, the goods are transferred to smaller ships that can dock in Indian ports.

As a result, Indian shippers had to pay an extra $200 per box of goods, and the voyage took three more days. Wager said the extra three days of delivery time weakened India's competitiveness as a source of goods.

The New York Times said that India is now actively catching up, preparing to build new ports while expanding existing docks. Whether these plans can be implemented and how fast they can be advanced will determine whether India can realize one of its most ambitious aspirations: to develop into a mature manufacturing and export giant.

At Jawaharlal Nehru Port, construction workers are expanding one of the terminals, doubling its size and adding two more berths.

In the Wadwan Industrial Zone, 100 miles (160 km) from the coast, the Port Authority is planning a new large-scale port facility that can handle 20 million twenty-foot standard containers per year, about three times the current Jawaharlal Nehru Port. The project, which was recently approved by the Indian cabinet, is expected to cost more than $9 billion and will be built in two phases by 2035.

The advantage of the new port is its deep waters, which can accommodate the world's largest cargo ships with a capacity of 24,000 TEUs, while other ports in India can only accommodate cargo ships with a capacity of 18,000 TEUs at most.

The New York Times article also pointed out that in the long run, India's trading partners are calling on the country to take more aggressive action to dredge existing port channels, but this is a costly and complex project.

“Indian ports have to be dredged,” said Dushyant Mulan, president of the Federation of Indian Freight Forwarders Associations, which represents trucking companies, customs brokers and other firms. “China definitely has an advantage over India.”

Another challenge is the strike of port workers. In recent days, due to the breakdown of long-term salary negotiations, dock workers at India's 12 largest ports announced that they would launch an indefinite strike from August 28. Some Indian media warned that this indicates that the operation of ports across the country may be paralyzed and the logistics chain will face serious challenges.

In addition to ports, the current situation of road and rail transportation in India is not optimistic. In Wager's view, the country's congested and bumpy highways hinder logistics transportation, while the railway system prioritizes passenger transportation needs.

"The pace of railway and road (repair) must be accelerated," said Wag.

Indeed, the Indian government is now pushing forward the construction of expressways.

"The question is how long it will take to complete these projects and whether they can keep up with the growing logistics needs," the article said. "If India becomes an alternative to Chinese industry, the (logistics) demand will only be greater."

On April 1 this year, Indian Foreign Minister Subrahmanyam Jaishankar said at an event organized by the South Gujarat Chamber of Commerce and Industry that in order to compete with China, India needs to focus its development on manufacturing, "which is the only economic response."

But on the same day, the US Consumer News and Business Channel (CNBC) poured cold water on India's ambitions in manufacturing. CNBC said that although India hopes to compete with China in manufacturing, it needs to beat Vietnam first.

In addition to the tariff issue, CNBC also mentioned India's infrastructure difficulties. The article said that India's backward infrastructure has led to long transportation times. "In Singapore, a cargo ship can be unloaded within 8 hours and then loaded onto a truck for transport to the factory. But in India, the same cargo ship will be stranded in a customs warehouse for several days." Mukesh Aghi, chairman and CEO of the US-India Strategic Partnership Forum, said that these delays have reduced India's attractiveness.

"China is a decade ahead of India in infrastructure, so the country needs to make more efforts to ensure the continued construction of infrastructure," said Aghi.

This article is an exclusive article of Observer.com and may not be reproduced without authorization.