AN ANALYSIS OF IMPACT OF INDIAN GOVERNMENT
ON PORTS IN INDIA
-SUBMITTED BY: ANISH KAUL
DISSERTATION PREPARED FOR THE DEGREE OF
BSH NAUTICAL SCIENCE
LIVERPOOL JOHN MOORES UNIVERSITY
(Department of Nautical Science)
CHAPTER 1: INTRODUCTION
1.1 Background information
The recent improvement in technology and infrastructure has resulted in the development of better and modern ports in a majority of nations. The port sector as per Ng and Gujar (2009) refers to a location in the shore where ships dock and carry cargo and people to and from the land. The location of ports depends on the accessibility to land and water for shelter from waves and also for commercial demand. The port sector is a major economic contributor to most countries. It is this notion that countries are now opting for ways to enhance their ports and reap from the new technology. However, Panigrahi and Pradhan (2012) argue that development and improvement of ports often requires huge sums of money that can only be provided through government initiatives. The main areas in the port sector that promote the effectiveness of ports are port modernisation, development of new ports and attraction of foreigners with the aim of improving infrastructure.
Port modernization is the improvement of the existing port infrastructure and technology to incorporate modern machines, tools and technology solutions such as RFID (Sanchez and Garcia-Alonso, 2011). On the other hand, when it is impossible to modernize old ports or due to traffic reasons, the only option is to develop new ports. Development of new ports is advantageous in that it reduces traffic, allows for the incorporation of new technology and improves cargo handling among others (Joc.com, 2017). Besides new port development and port modernisation, it is also vital to attract foreign investors in the port sector as they encourage technological transfers and recommend better infrastructure (Lam and Notteboom, 2014). As earlier stated, these operations often depend on government policies or government budget because they are capital intensive. It is on this notion that this paper discusses the impact of government initiatives of foreign Direct Investment, port modernization and new port development in the port sector.
India has been selected as a case study because its coastline spans 7516.6 kilometres forming one of the biggest peninsulas in the globe (Panigrahi and Pradhan, 2012). Besides that India is currently in the face of improving its port sector. Besides that, the Indian shipping industry with the emergence of liberalization and globalization is firmly ready to take a new turn in terms of infrastructural and demand development (Lam and Notteboom, 2014). The aim of this study is to investigate how the Indian government has impact on FDI, port modernization and new port development in the Indian Port Sector.
While it’s true that the shipping industry is a major economic sector in India, it remains not fully untapped. According to Haralambides and Gujar (2011), increasing connectivity with inland transport network is a huge challenge facing Indian Port Sector. Then there is the issue of traffic that was estimated to reach 877 million tonnes in 2012 and a 15.5% of containerized cargo over the next seven years. The current infrastructure in Indian ports is not sufficient to handle increased loads. This implies that expansion of the Indian Port Sector is a necessary prerequisite to further economic growth. It is, therefore, necessary to critically investigate what the Indian Government is doing to address this issues. Besides that, there exists gap in the literature on this topic. Previous researchers majorly focussed on issues affecting Indian Port Sector and failed to assess government initiatives. For example, Haralambides and Behrens (2000) researched on Indian port restructuring, while Gujar et al. (2014) only studied the impact of government policies on FDI on Indian Port Sector. Although Ng and Gujar (2009) investigated on efficiency and competitiveness of government policies on Indian dry ports, they did not talk much about the effect of these policies on the port sector. As such, there are no holistic studies on the impact of the government on the Indian Port Sector. The current study aims to fill this gap.
1.3 Rationale of Research
This research is significant as it will enable port authorities to identify the impact of government initiatives in form of port modernization, development of new ports and foreign investors. Additionally, it will help both the government officials and the port authorities to identify the issues faced in the Indian Port Sector and come up with more policies to improve infrastructure in this sector. The research is vital because it will enable Port operators to appreciate the vitality of the Indian Port Sector and rekindle the motivation of striving to improve the services in this sector. Additionally, the final report of this study will be used as a reference for the government and port authorities as they learn ways of improving the Indian Port Sector.
1.4 Research Aim and objectives
The aim of this study is to investigate the impact of Indian government on ports in India.
This study will be guided by the following objectives:
1. To investigate the impact of the Indian government on port modernization on the Indian Port Sector.
2. To find out how the Indian government has influenced new port development in the Indian Port Sector
3. To determine the effect of the Indian government policies on FDI on the Indian Port Sector.
1.5 Scope and limitations of the Study
The study will be limited by both thematic and geographic factors. Thematic scope means that the researcher will only focus on the government and the port sector. All other factors that affect the port sector will not be discussed. As such, the researcher will only focus on the impact of government on the port sector. Geographically, the study will be limited to India; India is one of the Asian countries located in South Asia. All other countries whose governments have influenced the port sector will not be studied.
The researcher intends to use both primary and secondary data collection method. Primary data collection involves using interviews and questionnaires as instruments of data collection. Preparing and administering questionnaires and interviews is both time consuming and resource based. This limitation will be delimited by sourcing products from the most affordable providers and only buy the necessary items to avoid financial problems. Then there is the problem of uncooperative respondents. It will be solved by educating the participants of the vitality of the study to both the government and the port sector.
1.6 Structure of this dissertation
This dissertation will be organized into five sections that will be referred to as ‘chapters.’ The first chapter is the introduction chapter which discusses the background information on the topic and states the problem to be addressed. Previous researches on the same topic, relevant theories that explain variables, explanation of concepts and determination of the gaps that exist in literature will be discussed in chapter 2. Chapter three will involve the methods used to carry out the research and findings will be presented in the fourth chapter. Analysis of secondary and primary data will be done in chapter 5. The final section will entail summaries of the major findings, conclusions (answers to research questions) and recommendations for future researchers.
CHAPTER TWO: LITERATURE REVIEW
2.0 Chapter introduction
The aim of this chapter is to review the literature on the impact of government on the port sector. The chapter will be divided into three sections namely, theoretical, conceptual and empirical. The conceptual review will present a discussion of concepts while the empirical review will analyse previous studies on this topic. The theoretical review will discuss theories that are relevant to the topic and which will be used to explain the relationship between variables. Also, gaps in literature will be identified.
2.1 Conceptual review
2.1.1 Port modernization and the impact of the government
Port modernization as per Lee, Song and Ducruet (2008) refers to the development of ports using the most recent technology and infrastructure. As such, existing facilities are upgraded to handle traffic and containers. The changes in cargo handling that has been brought about by the new technology in shipping and the need to maximize the utilization of existing facilities has resulted in port modernization. Most marine transport in the world is challenged by inefficient port operations and inadequate provision of infrastructure. These delays have resulted in increased costs. Ng and Liu (2010) argue that this problem can only be solved through port modernization. Port modernization is advantageous in various ways. According to Padilha and Ng (2012), it enables reliable, safe and cost-effective port operation. Use of technology allows for interconnection of port activities such as cargo handling which in turn stimulates the performance of the overall port operation. Secondly, poor modernization enhances resiliency thus enabling facilities to survive extreme seismic events (Hameed et al., 2012).
A majority of traditional ports with obsolete technology and infrastructure lack shape and the capacity to recover quickly from seismic events. It is, therefore, imperative to modernise them. Thirdly, modernised ports have improved operational efficiency and can accommodate modern shipping operations such as support larger vessels. Besides that, port modernization is essential to accommodate the changing market and economic needs. For example, shipment of petroleum products is increasing significantly than cargo growth thus necessitating port modernization (Wang and Ducruet, 2012). Therefore, new ships to shore cranes are advantageous as they allow for larger container vessels. However, Lai et al. (2011) argue that port modernization is an expensive initiative that requires adequate funding.
In a world where globalization and open economies are becoming the rule, the public sector ports still continue to operate in accordance with an outdated model characterised by inefficiencies and labour regimes. As such, a larger part of the port system is still lagging behind ion responding to the new demands of the world economy. Moreover, the sector tends to hinder full incorporation into the world economy due to its inadequate technology, slow operations and bureaucracy. For nations to be successful, it is essential for governments to intensify port modernization process which has already started in some nations. As earlier stated port modernization is a costly adventure that requires adequate funding. As such, it is imperative of governments to allocate finances to port labouring training (Rodrigue, 2010). These labourers should be equipped with IT knowledge and information on equipment operation that is required in port modernization. Ducruet, Lee and Ng, (2010) also contend that while doing so, the government should take care not to interfere politically as this will limit the ability of the port authority to operate efficiently.
Governments in different countries in the world have taken initiatives to modernize ports in their country. In Tanzania, the government has initiated second port modernization to provide a more reliable and cost effective transport link for the neighbouring landlocked countries and as such facilitate their overseas trade activities (Jacobs and Notteboom, 2011). Countries like Estonia and Iceland have also been ranked higher than the USA in port infrastructure and this has enabled them to gain a competitive advantage in an export-driven economy (Ducruet and Notteboom, 2012). In Ecuador, there are nine private port terminals, six oil terminals and four open port installations. The government took advantage of this and decided to modernize the public ports (Lam and Yap, 2011). In Philippines, the government plans to expand the capacity of Davao seaport due to the rapid growing volume of cargo (Nam and Song, 2011).
2.1.3 New port development and the impact of the government
New port development in overall is the development of new ports. Lam and Yap (2011) argue that real estate needs of importing companies have resulted in tremendous congestion in the port sector due to the amount of goods manufactured and exported. It is estimated that in the next five years, a majority of ports will triple their freight throughout and the containership capacity. To address this issue, the maritime industry is taking a shift to focus more on the development of new ports. Furthermore, the increased and continuous demand for bulk commodities of raw materials has created demand for shipping transport requiring for the development of new ports to sustain this demand. According to Sakhuja (2011), seaway transportation is mostly used to transport loads of heavy capacity because it is the cheapest and most effective. As such, governments in different countries have established policies to expand their port capacity by developing new ports. Government policies to develop new ports has benefited the port sector in various ways. Firstly, development of new inland ports that are in close proximity to the ‘traditional’ ports has enhanced efficient access to the transportation system and logistic services. This has also helped to reduce workload at major ports. Secondly, new ports have helped to extend the parking for containers and trailers as in the case of Europe (Chin and Low, 2010). Thirdly, development of new ports in countries such as China has resulted in increased capacity in that it increases the intermodal capacity for inland freight distribution (Wang et al., 2014). This additional capacity can be used for off-site storage. Pallis et al. (2011) posit that governments such as that of Canada have sought new port development as a way of taking advantage of the new available infrastructure and improved technology. Examples of new port initiatives by the government include the Sagarmala project in India, the proposed New Port of Galway in New Zealand, among others.
2.1.5 FDI in port sector and the impact of the government
FDI plays a vital role in the economic development of man nations. The reason behind pioneering for inward FDI is to promote productivity gains through sharing of managerial skills, technology and enhancing access to markets (Lu, Shang and Lin, 2012). The port sector, just like any other sector has challenges of sustaining its growth in an efficient and cost effective manner. As stated earlier, development of ports requires both port modernization and port development and these two can only be achieved through inward FDI. According to Poelhekke and van der Ploeg (2010), allowing 100% FDI into the port sector helps to supplement technology and skills and domestic capital for an accelerated economic growth.
Othman, Bruce and Hamid (2011) outline various advantages of FDI to the port sector of the involved countries. FDI stimulates economic development by creating a more conducive environment for investors while at the same time benefiting the domestic nation. Also, it promotes international trade by breaking the bonds on import tariff and increasing the international presence of the involved country. Furthermore, inward FDI helps to create more jobs for people in the port sector due to the development of new infrastructure and expansion of the sector. More importantly, FDI enhances the development of the human resources in the port sector as people get training on new port technology and procedures. The port sector also experiences high productivity because FDI results in improved infrastructure which greatly reduces the production cost. Although FDI in the port sector has many benefits, Arnold et al. (2012) argue that it hinders domestic investment and is at risk of political changes.
Weak operational performance in major seaports of different countries couples up with low levels of investments in port infrastructure have triggered governments in such countries to come up with policies to attract inward FDI (Meersman, Van De Voorde and Vanelslander, 2014). Governments can attract foreign investors in the port sector by permitting 100% FDI through automatic route and also through joint venture formations. This FDI has been used by the port sector in countries such as Europe to create an optimal port infrastructure, foster strategic alliance and expedite implementation of skills.
Governments can permit FDI to be used in both port connectivity and port infrastructure. Improvement of infrastructure involves activities such as the construction of additional assets, container terminals, construction of cargo handling facilities and warehouse facilities, ship repair facilities and construction of dry docks among others. For example in the UK and China port sector, FDI has supplemented technology and skills and domestic capital. According to the World Bank, positive FDI policies on the port sector by governments promote economic growth in the manufacturing sector and leads to rapid growth in the port throughput (Meersman, Van De Voorde and Vanelslander, 2014). Besides infrastructure, permission of 100% FDI by the government in the port sector has led to port connectivity in most nations, there is a lot of traffic caused by trucks on both roads and railways. Port connectivity allow for the development of Dedicated Freight Corridors (DFC) which provide additional truck capacity thus easing traffic.
In China, the government has allowed foreign investors in the port sector and recently launched a new door-to-door cargo service goods service between Europe and China with the aim of expanding the sector (Xu and Yip, 2012). In the UK, the government permitted the privation of the UK port sector and this led to the development of infrastructure e and expansion of the sector making it one of the best developed port sector in the world. In India, the government permitted a 100% FDI on the port sector (Lu, Shang and Lin, 2012).
2.2 Theoretical review
Theories are vital in research because they provide a well-substantial explanation of aspects of the natural world based on facts that have been confirmed through experiments and observations. This research will be guided by the modernization theory and the Solow-Swan model.
2.2.1 Modernization theory
The theory of modernization posits that modernization is a continuous transition from ‘traditional’ or ‘pre-modern’ to a modern society (Warner, 2010). It originated from the ideas of Max Weber (1864-1920) who was a German sociologist. The theory explores the internal characteristics of a country and assumes that with assistance, the ‘pre-modern’ nations can be developed just like the more developed countries. The theory attempts to determine the social variables which contribute to development and also explores social evolution. Warner (2010) contends that modernization theory stresses on both the change process and responses to that change. Besides that, the theory also assumes that the traditional societies will develop when they adopt more modern practices. Developments such as new technology and improved transport make modernization essential. However, critics of the theory argue that it encourages the adoption of western culture leading to a destruction of the domestic culture.
This theory can be applied to the impact of the government on port modernization in the Indian Port Sector. The Indian Port Sector can be said to be ‘pre-modern’ as per the theory. The sector still uses traditional systems and infrastructure which result in slow production, inefficiencies and traffic (Warner, 2010). In order for the Indian Port Sector to transit from its ‘pre-modern’ way to a modern way, it will have to modernize. According to the modernization theory, modernization of the Indian Port Sector will involve the adoption of the most recent or ‘modern’ technology. This will enable it to develop like the developed nations.
2.2.2 Solow-Swan Model
Developed by Trevor Swan and Robot Solow in 1965, the Solow-Swan model describes the long-run economic growth based on technological progress, population growth, productivity and capital accumulation (Anguibi, 2015). In this case, the capital accumulation in Solow’s model is substituted by FDI and the population presents the port traffic. According to the model, FDI is more valuable than the domestic capital due to the belief that FDI promotes technological development ultimately increasing production (Guerrini, 2012). The model posits that output can be affected by governments’ policies such as subsidies and tax but not the long run growth rate. The growth rate will be influenced by the technological progress such as the replacement of inefficient port equipment (Guerrini, 2010). Therefore, according to the model, inward FDI will boost technological progress in the Indian Port Sector resulting in an increase in the production levels. In the short-run, growth in the Indian Port Sector will be determined by the steady level created by capital investment. On the other hand, in the long run, growth in the sector will be achieved through technological progress. As such, it is imperative for the Indian government to encourage inward FDI in order to improve port technology and increase production.
2.4 Empirical review
Gujar et al. (2014) studied the effect of government policies on FDI in the India Port Sector. The aim of the paper was to identify how inward FDI affects the Indian Port Sector. The study used secondary data methodology by reviewing data on the Indian Port Sector, current government policies and the challenges faced by the foreign investors. The authors used the Solow-Swan model to explain the link between variables. The findings of the study show that India is an attractive destination for FDI and especially in the infrastructure area. Also, the researchers note that although the Indian Port sector has attracted a Custom Dissertation Writing Assistance substantial amount of FDI in the past, it is still not adequate compared to other port sectors like Australia and China. The researchers conclude that total productivity of the port sector is greatly influenced by the presence of the government in the market which slows down the FDI inflows. However, the study is limited to secondary sources which are not always reliable.
Mukundan (2007) undertook a comparative study of the maritime operations in India. The aim of the study is to compare the maritime operations in India with those of China. The researcher used a secondary data methodology to discuss the strong economic maritime growth in China and the current scenario of the maritime sector in India. Secondary data was the best choice for the researchers because it was impossible to carry out a primary survey in both countries. The researcher used descriptive design to compare the maritime sector of the two countries. The findings of the study show that India lags behind in port growth as compared to China because most of the maritime sector such as shipping, ports and shipbuilding is still owned by the government. As such, this has resulted in inadequate funding from the government for growth, high bureaucracy levels leading to slow implementation and a lack of accountability. Furthermore, India has a poor maritime infrastructure. The findings of this study are reliable and generalizable to the whole country.
Another study is that by Ng and Gujar (2008) on the impact of government policies on India’s Dry Ports. The aim of the research was to investigate how the government of India has tried to solve dry port issues and how political influence can shape the competitive structure of an industry in developing countries. The study was guided by the Porter’s Competitive Diamond model. The methodology of the study included desk research, and an in-depth interview with 26 companies that had operated, invested and/or managed dry ports in India. The interviewees were carefully selected and involved persons with key strategic decisions. The study found out that the Indian dry port is characterized by inefficiency. The government has addressed this problem by introducing foreign investors through joint ventures and Build-Operate-Transfer (BOT) arrangements.
Ammar Jouili and Anis Allouche (2016) also studied how investment in the seaport affects the economic growth and infrastructure in the port sector. According to the paper, seaports are considered by governments to be vital factors in strengthening economies. The study was based in Tunisia and sought to evaluate how the government of Tunisia has allocated funds to develop infrastructure in the seaports. The methodology of the study involved a secondary data analysis on the infrastructure in Tunisia port sector. The findings of the study show that government investments in the seaport infrastructure has positively influenced the economy of Tunisia. This study is crucial in our current study as it contribute on the knowledge of the importance of government initiatives to improve port infrastructure.
Hiranandani (2012) focussed his study on “sustainable development in the maritime industry using a multi-case study of seaports.” The aim of the study was to analyse the sustainable port practices that governments have implemented in the port sector as well as identify challenges and opportunities faced by seaports. The researchers studied four ports by evaluating secondary data. These ports include Port of Rotterdam Authority in Netherlands, Transnet Ltd. In South Africa, Sydney Ports Corporation and the Port of Long Beach in the USA. The findings of the study showed that favourable government policies on public-private partnership, port sustainability and environmental-friendliness boosted the port sector. Also, all ports apart from South Africa’s Transnet were found to be in public-private partnerships. This study is relevant to the current study because it provides adequate knowledge on the impact of government policies on the port sector.
De and Ghosh (2003) undertook a study on the link between performance and traffic in the Indian ports. The study methodology employed econometric tests in order to determine the causal relationship between traffic and performance. Also, the port performance index (PPI) was used to measure the performance of the major ports in India. The findings of the study show that an improvement in asset and operational performance of a port results in higher traffic. As such, the Indian government has taken initiatives to address this issue by expanding the capacity of their ports. The study recommends that the Indian government should formulate policies by giving a priority to performance enhancing facilities so as to reduce traffic caused by high inefficiency. This study provides insights on the need for port expansion to reduce traffic and the role of government policies in port capacity. However, the findings of the study would have been more substantial if the external factors that influence performance and traffic such as technology, navigation channel and vessel size were considered.
Researchers such as Haralambides and Gujar (2011) evaluated the pricing policies and opportunities for public-private partnership in the Indian port sector. According to the study, the Indian port sector has a substantial overcapacity. This has led to the reduction of supply despite the increased demand. Both the Indian government and the private sectors view the Indian Port Sector as a pivot of export-led growth. However, the post sector is still majorly dominated by the public sector and conditions that make participation of the private sector to be risky. In order to solve this problem, the researchers recommend that the government should come up with strategies to attract foreign investment as well as maintain the domestic industry.
2.5 Gaps in literature
There still exist gaps in the literature on the impact of the Indian government on the Indian Port Sector. Gujar et al. (2014) only studies the impact of government policies of FDI on the Indian Port Sector and failed to discuss other government initiatives. Furthermore, the study was limited to secondary sources. Mukundan (2007), on the other hand, only compared the maritime operations of Chia with India and although he pointed out the problems facing Indian maritime and the need for government interventions, he did not focus much on government policies in the Indian sector. Ng and Gujar (2008) was close to the current topic but he majored on the dry ports and did not touch on other sections in the India Port sector. Ammar Jouili and Anis Allouche (2016) study’ contributes to the knowledge ion how government policies can attract investment in the port sector which can ultimately lead to improved infrastructure. However, the study was based in Tunisia. Hiranandani (2012) expounded on sustainable development and the practices that governments of Australia, South Africa, Netherlands and the USA have done towards sustainable development in their port sectors. Again, India was not included in the multi-case study. De and Ghosh (2003) only emphasized on the correlation between performance and traffic in the Indian port sector while Haralambides and Gujar (2011) reviewed policies on pricing and public-private partnership in the Indian port sector. Although all these studies contribute bits by bits in forming the current topic. None holistically addresses the current topic. The current research strives to fill this gap that exists in the literature on the impact of Indian government o the India Port sector.
2.6 Conceptual framework
The following framework was developed based on the variables of the study. The Indian Port Sector is the dependent variable because it cannot thrive without the independent variables. The independent variables are government policies of FDI, port modernization and new port development.
Figure 1: Conceptual framework
Independent variables Dependent variable
(Source: Researcher, 2017)
2.7 Chapter summary
The aim of this chapter was to critically review the literature on the impact of the government on the port sector. According to the literature port modernization and new port development are capital-intensive activities that require adequate funding from the governments. As such, governments in different nations such as Europe and China have established initiatives to address these issues. Additionally, different governments have allowed inward FDI in the port sector with the aim of improving infrastructure through new technology. The theory of modernization has been used to explain the importance of pot modernization while Solow-Swan economic model explains the benefits of inward FDI in the Indian port sector.
CHAPTER THREE: METHODOLOGY
3.1 Chapter introduction
The methodology chapter outlines and critically discusses the techniques used by the researcher in collecting data. The section is divided into other subdivisions which include the research philosophy, research choice, research strategy, research approaches, and the horizon of the research, collection and presentation of data, time scale, ethical consideration and reliability and validity. These subdivisions were adopted from the research onion that was developed by Saunders, Lewis & Thornhill (2012). Convenient sampling was used to select the biggest port in India. The research onion adopted by the researcher is illustrated below.
Figure 2: Research onion
Source: (Saunders, Lewis & Thornhill, 2012)
3.2 Research philosophy
A research philosophy as per Bryman and Bell (2015), refers to a set of beliefs about what is being studied. The research philosophy used for this study was both interpretivism and positivism. Positivists posit that it is possible to know the world by just observing and making deductions. As such, information is obtained through manipulation of mathematics and logistics. Since the researcher wanted to collect information based on empirical evidence, positivism was the best philosophy. Under this philosophy, the researcher assumed that the Indian community operates under rules and regulations just like any other community. Besides that, the researcher decided to use this philosophy because the collected data was expected to be generalizable to the whole nation.
Interpretivists, on the other hand, posit that reality is obtained from various people thus implying that there are multiple realities (Venkatesh, Brown and Bala, 2013). For example, the way that port authorities and staff view port modernization may involve studying their impact on port modernization instead of facts about how various factors promote or undermine port modernization. As such, the researcher will be interpreting how the world works. It is beneficial to use interpretivism because it uses qualitative techniques which allow the researcher to evaluate realities instead of solely reporting on them (Wilson, 2014).
3.3. Research approach
This study utilized a deductive research approach. Easterby-Smith, Thorpe and Lowe (2008) describe this approach as testing or comparing results against already known or existing knowledge. Deductive approach basically allows for the use of quantitative methods and works from a general point of view to a more specific one. The other alternative that the researcher did not consider was the inductive approach. An inductive approach is more of working from a general to a specific point of view. However, the objective of this study was to confirm the hypothesis that the government has impacted on the Indian Port Sector. It was, therefore, logical to use the deductive approach because the researcher came up with the topic and developed questions and objectives with the purpose of making conclusions and theories based on the research findings.
3.4 Research strategy
The researcher adopted both a literature review and survey strategy. The objective of the study was to investigate the impact of the Indian government on Indian Port Sector. The information required to fulfil this objective can only be accessed through randomly selected port staff and secondary sources. Therefore, use of interviews, questionnaires and secondary sources is the most appropriate tool to collect such data.
3.5 Time horizon
The time horizon that was employed for this research was cross-sectional time horizon. The research was only done at one point in time making cross-sectional horizon to be the only appropriate choice. The researcher intended to find out the impact of the Indian government on the Indian port sector. The study happened in January 2017. Such time of research requires the cross-sectional time horizon. A longitudinal time horizon was an inappropriate choice for this study because it involves studying changes in a certain pattern over a long period of time. This was not the case for this study.
3.6 Research choice
The researcher choices used were secondary studies, qualitative and quantitative studies. Questionnaires were used in the case of quantitative studies. Qualitative studies involved the use of interviews. It was imperative to use interviews because questionnaire items were closed-ended (Matthews and Ross, 2014). Interviews allowed for the collection of more information from the port authorities. Additionally, the researcher was able to compare the interview explanations with the questionnaire items. Doing this made quantitative data to be more meaningful.
3.6 Data collection and presentation
Collection of data involved sampling technique, questionnaire, interviews and secondary sources.
3.6.2 Sampling technique
The researcher used convenient sampling in order to select subjects that were convenient and in proximity (Given, 2008). The study was based on the port of Mumbai and Jawaharlal Nehru Port. The researcher randomly selected 90 port staff from the two ports and administered questionnaires to them. The number of questionnaires administered was 90 but only 70 were filled and returned. Therefore, the sample size was N=70. This sample was manageable and allowed for efficient use of both time and resources. Furthermore, it guaranteed a high degree of reliability and validity when making generalisations.
A government list was used to access all ports in India and the larger ones in terms of operation were selected. Systematic sampling was used to select four port authorities who participated in the interview. This form of sampling involves selecting the 1st, 5th, 10th and 15th port authorities. All fears of occurrence of biases were eliminated by using systematic sampling. The researcher assumed that the study sample is made up of people with accurate information concerning the government and the Indian port sector. This implies that all collected information will be treated as true to the word and a true representation of reality. Besides that, the researcher will assume that the participants are of sober mind during data collection and their responses will be treated as a clear presentation of the best of their knowledge.
A pilot study was done prior to the actual study by administering 10 questionnaires and interviewing one randomly selected port authority. The pilot study was advantageous in that it allowed for evaluation of the study feasibility, time, cost and statistical variability (Fowler Jr, 2013). After the pilot study, it was discovered that the questionnaire items were too many and the planned number of 10 interviewees would be unmanageable. The number of items in the questionnaire were reduced from 25 to 11 and interviewees from 10 to 4. The pilot study as such provided insights on the ambiguity of the questionnaires and they were corrected appropriately. Questionnaires were administered to participants to be filled at their own free time because they had different break times. Using self- administered questionnaires increased the possibility of accessing many respondents in different ports in India. However, questionnaires were costly to produce and distribute to a large number of respondents in different locations.
The items in the questionnaires involved Likert Scale questions in which the respondents revealed their level of agreement or disagreement with the availed statements. According to Sekaran (2006), Likert scale questions allow for assessment of the level of attitude and opinions held by the sample towards specific aspects. The criteria used was a scale of 1-5 in which 1 implied strongly agree, 2 for disagree, 3 for neutral, 4 for agree and five for strongly agree.
5 interview questions were used during the study and were administered to four systematically sampled port authorities in India.
3.6.4 Secondary sources
Secondary methodology involved use of data that was already collected for another purpose and is readily available, the secondary sources used for this study were government records, trade associations, the library and the internet. The information that was collected from this sources included journals, country reports, publications, official statistics, industry statistics and websites that had information on the government initiatives on the Indian Port Sector.
The researcher used secondary data because it was hard to collect information from government officials. Silverman (2016) argues that government officials do not readily discuss issues or conduct interviews with anyone, therefore, interviewing or distributing questionnaires to them would be unrealistic and would have compromised reliability and validity. Secondary data is cost effective, high quality time-saving and allows for re-analysis of findings. While searching for secondary sources over the internet, the researcher used words such as ‘Indian port sector,’ ‘marine industry’ and ‘government in marine industry.’ These key words were critical as they allowed for the collection of the most convenient data. The inclusion and exclusion criteria were used to determine the articles to be subjected to critical analysis (Sekaran and Bougie, 2016). This criterion was based on the year of publication, the significance and expertise of the author and the study topic. The sources that were included involved those that had the key words and a topic about the impact of government on the port sector. Also, the researcher used journals not older than 5 years and old not older than 10 years. In selecting books and journals, the researcher chose those with authors who had experience in the subject of government and/or Port Sector in India. Therefore, sources that did not involve these components were excluded.
3.6.4 Data analysis
Collection of data was done using qualitative, quantitative and secondary sources. Quantitative data was collected using questionnaires and analysed using statistical methods. SPSS statistical software was used to analyse this data and feedback presented in percentages and rates by coding data through real numbers such as 1,2,3… for easy analysis. The analysed data was presented using tables, charts and figures. Qualitative data, on the other hand, was analysed using recursive abstraction. This method as per Fowler Jr (2013) does not involve coding. Instead datasets are summarised and distilled to obtain the required information.
3.7 Limitations, validity and reliability
The research was carried out in one country only, India. The researcher only used a sample size of 120 respondents and 4 interviewees. Despite this limitation, the researcher ensured that there was validity and reliability in ore r to achieve generalizable findings. Validity as per Hair (2015) refers to the truthfulness and accuracy of the findings. To ensure high validity, the researcher used percentages to calculate and compare the number of participants for and against a specific statement. These percentages were obtained from SPSS software. Involving the port authorities also ensured collection of accurate information.
Reliability refers to the ability of data to be dependable because of its consistency. The researcher is confident that if this research was carried out in the same place and using the same procedures by another researcher, they wold arrive to similar findings. Using a large number of respondents also ensured validity because patterns could be drawn from the questionnaire answers. Therefore, the findings of this study can be used by organizations to make critical decisions.
3.8 Ethical considerations
It is essential to observe ethics when undertaking a research. Security, confidentiality and consent were observed by the researcher. The researcher observed ethics by seeking permission from managers of the studied ports before initiating the research. Consent was also sought form individual respondents and no one was forced to take part I the study. Seeking permission involved wiring an introductory message to inform the respondents of the necessity of participating in the study. Collected data was protected from unwanted parties by sing passwords in secured computers. Also, collected data was only used for research purposes.
Table 1: Timescale
Jan Feb Mar Apr May
Developing an outline
Writing literature review
Preparation of questionnaires
Data analysis and discussion
Reviewing the dissertation
(Source: Researcher, 2017)
CHAPTER 4: ANALYSIS AND PRESENTATION OF FINDINGS (secondary data)
4.1 Chapter introduction
This chapter presents the analysis of secondary data. The data has been analysed in accordance with the objectives of the study. Figures have been used to illustrate the main points in the discussion. Also, the researcher refers to the literature to support the analysis.
4.2 The Indian Port Sector
The India is bestowed with a long coastline of about 7,517 km along both the eastern and western sides of the main land (Haralambides and Gujar, 2012). The country has one off the largest merchant shipping fleets as evidenced by its 187 minor ports and 12 major ports (Ng and Tongzon, 2010). As per the Ministry of Shipping, ports are very vital as they contribute in sustaining and developing the Indian economy. About 95% of all trade in India is done through maritime transport. De (2011) also contends that the current trend of Western nations of moving manufacturing goods to developing nations and the high likelihood of India to emerge as a manufacturing hub will greatly contribute to the growth of India’ s maritime industry. Besides that, the cargo volume of India as per the Ministry of Shipping increased from 850 million tonnes between 2009 and 2010 to 883 million tonnes in 2010-2011 (Dooms, van der Lugt and de Langen, 2013). The major ports in India are Cochin, Kolkata, Jawaharlal Nehru Port, Mumbai Port, Port Blair, Vishakhapatnam, New Mangalore, Paradip and Chennai, among others (Dooms, van der Lugt and de Langen, 2013).
There are several challenges faced by the Indian ports. There is a lack of easy financing options for the port projects which has been caused by delays in obtaining approval from the government and compliance with the coastal rules. There is a lack of private participation and green projects which are mostly in remote locations suffer much because they depend on government support to create infrastructure for access to the sites. Besides that, Prakash and Rao (2011) report that a majority of port projects are congested with untrained and unskilled staff which ultimately affects the development of such ports as they suffer from low labour productivity, inefficiency and industrial actions. Even if the government agrees to take part in implementing different strategies, Panigrahi and Pradhan (2012) argue that they fail to meet deadlines thus delaying growth. The other challenges facing the India Port Sector include poor technology, inadequate navigation aids, lack of equipment to handle large capacity, insufficient dredging capacity, inefficiency caused by poor connectivity and inadequate cargo-handling machinery and equipment.
4.3 The impact of the Indian government on port modernization on the Indian Port Sector
The modernization of the Indian ports remained amongst the top priority sections of the government in 2007. Traffic in the Indian ports has increased significantly and 2025, the ports will be required to handle 2500 MTPA while the current capacity is 1500MTPA. De (2011) asserts that around 10 MTPA can come from modernization of ports. The government of India has taken several measures to modernize the ports. There has been construction of new terminals and berths and also upgrading of projects for berths (Singhal, Newell and Nguyen, 2011). The government has also succeeded in installing new and modern equipment for handling cargo and the draughts have been deepened to handle larger vessels. For smooth movement of vessels, the government initiated the installation of Vessel Traffic Management System (VTMS).
The figure below shows the levels of cargo traffic at non-major ports in India and it is clear that traffic is accelerating since the financial year of 2007 and is expected to be at 815.2 in 2017 (Singhal, Newell and Nguyen, 2011). Use of new technology and infrastructure by modernising ports can help to reduce this traffic.
Figure 3: Cargo traffic at non-major ports
(Source: Singhal, Newell and Nguyen, 2011)
Additionally, there has been implementation of a port community system through websites. Kurniawan et al. (2013) also adds that the government has encouraged benchmarking activities aimed at upgrading the existing ports to meet international standards. Port modernization in India has majorly been conducted under the Sagarmala government project. The aim of this project is to modernise India’s ports and develop coastlines to contribute to the nation’s growth.
The project was approved on 25th March, 2013 and since then, there have been substantial changes (Vanelslander, 2014). The Sagarmala project has helped to modernize ports under three themes; mechanization, dredging and development of new terminals. In relation to mechanization, there has been low productivity due to use of low capacity equipment which are mostly out of date and as such they have been replaced with new ones as identified in ports such as Tuticorin, Kandle and Haldia. The government has introduced technology based solutions like OCR and RFID in the port sector. There has also been improvement of rake turnaround time in KDS and gate processing in Chennai. Concerning drenching, the government has recognized that there is need for draft enhancement in India if they are to compete with the accelerating growth in container and cargo traffic. Plans to increase the draft at Ennore and Paradip from 16 to 18 are already in motion (Vanelslander, 2014). The government has also developed new terminals to increase the capacity of the existing ports. As such, new edible oil terminals are being developed in Kochi, multipurpose cargo terminals in Uran and other terminals in Nhava and Ro Ro.
Some of the ports that have been modernised include the Port of Madras and Vishakhapatnam Port. Also, there has been development of a modern deep sea port in West Bengal to facilitate berth vessels that require a minimum draft of 18m. Rail connectivity to the International Container Transshipment Terminal at Vallarrpdam Cochin port India is also underway. Currently, the ports of Mormugao and Kamarajar are being expanded to increase their drafts by 18metres so that they can handle capsize vessels. The Sagarmala project, as per Patel and Bhattacharya (2010) is focussed on developing infrastructure so as to move goods quickly from ports by cutting the logistic costs. According to Kumar et al. (2014) the waste caused by poor infrastructure in the Indian cost contributes to about 4.3% GDP. Due to the poor infrastructure at the port, India transshipment cargo is being handled by other South Asia hubs like Singapore or Colombo and this costs the country almost $230 million (Patel and Bhattacharya, 2010). Furthermore, it forces India shippers to more to get their goods to the international market. Therefore, upgrading infrastructure through the Sagarmala project will help to reduce these costs significantly.
4.4 Indian government has influenced new port development in the Indian Port Sector
The India has twelve large ports which are administered by the government and other 200 small ports managed by the state governments (Kamble, Raoot and Khanapuri, 2010). According to the Ministry of Shipping, 69 of the small ports were documented to have ran cargo traffic between 2014 and 2015 (Kamble, Raoot and Khanapuri, 2010). Additionally, Patel and Bhattacharya (2010) assert that with the increase in domestic and international trade volumes, the maritime infrastructure sector is expected to significantly grow. India needs more ports to cater for the rising container volumes as shown below
As per the figure below, Twenty foot equivalent unit (TEUs) in India’s ports is increasing from 2013 and is expected to be 8.2 million in 2016. Therefore, there is need to develop ore ports to accommodate this increase.
Figure 4: Fiscal year throughput at major India Ports
There is, therefore, need to develop new ports to handle the increasing growth in the Indian’s port sector. Sahu and Patil (2013) contend that in the financial year 2014-2015, 44.75% of the major traffic was handled by the minor ports. As stated earlier, the ports will be expected to handle a capacity of 1500 MTPA and this extra capacity as per Vanden Bossche and Gujar (2010) will have to come from new ports. The table below shows traffic handled by both ports in India from 1992 to 1999. As per the table, traffic in both minor and major ports has improved significantly.
Figure 5: Traffic handled by major and minor ports
It is this notion that the Indian government has took initiatives to develop new ports. According to the Indian government, the need for new ports has been propelled by capacity saturation, non-availability of ports and strategic locations. Ports such as Jawaharlal Nehru Port (JNPT) are saturated with traffic and have a limited capacity to expand (Vanden Bossche and Gujar, 2010). Therefore, building new ports is the only way to cater for increased traffic in such ports. Moreover, there are some specific spots along the coastline that lack an operational port forcing cargo to travel to longer distances to access alternative ports. The result is increased costs in handling cargo and waste of time. Creation of new ports at such locations will improve the movement of cargo. Most of transhipment cargo from India depends on the ports of Singapore and Colombo. As such, developing a transhipment hub at the southern tip of India will be of great help to the sector (Vanden Bossche and Gujar, 2010).
Currently, the government has already identified locations for the development of new ports and some are already underway. The Greenfield major ports that the government plans to develop are Maharashta, Paradip Satelite Port, Machilipatnam, Tamil Nadu (Rodrigue et al., 2011). Also an international container shipment hub is being developed at Vizhinjam (Kerala) and Enayam (Tamil Nadu). India’s Port of Kolkata has also proposed the development of a port at West Bangal in Sagar Island in order to reduce constraints such as high dredging cost, long river navigation and draft navigation. The new port in Enayam is also expected to be operational by 2020 (Rodrigue et al., 2011). The Enayam port is expected to be formed using a special purpose vehicle (SPV) that will be used as a major gateway container for cargo. According to the government, the new port in Odisha is expected to increase the port’s capacity from 140 to 250 million tonnes per year by 2020 (Kamble, Raoot and Khanapuri, 2010).
4.5 The effect of the Indian government policies on FDI on the Indian Port Sector.
According to Malhotra (2014), most of the developing nations are keen to attract foreign capital in order to promote their economic growth. Reports from the World Bank that date back to as far as 1990s show that India is a very attractive destination for FDI and especially in the infrastructure sector (Ravesteijn, He and Chen, 2014). The Indian port sector has been able to attract foreign investors. The table below show the throughput of major ports in India.
Figure 6: Throughput of major ports in India
(Source: Malhotra, 2014)
At the moment, most ports in India have old and poorly maintained equipment and a framework varies with the general economic goals of the government. The government has not yet focused on the resources that are required for port development. Although the private sector is the best option for the India port sector, it is unclear whether it will rise to the occasion. Besides that, it is imperative for the government to define the parameters for restructuring the port in a way that attracts national and international capital. To attract foreign investors, the Indian government has allowed 100% FDI through automatic route. Automatic route as per Malhotra (2014) entails that the port sector does not need prior approval from the government. As such, investors are exempted 100% income tax for 10 years. The government has also allowed for formation of joint ventures between foreign and major ports without tenders. This initiative is aimed at attracting new technology from the joint venture and introduce better management systems for the creation of efficient port infrastructure while at the same time improving confidence of private sector in funding ports (Hanaoka and Regmi, 2011). Joint ventures will allow for the expansion of port infrastructure. Foreign investments will also be in the form of port trusts and this is a huge deviation from the previous policy whereby foreign investors were only permitted to be Transfer Operations and Build own in pot trusts such as providing cargo handling facilities. As per the current government policy, Port Trusts will be the majority partners for all ventures in cargo handling facilities.
According to Malhotra (2014) Tariff Authority for Major Ports (TAMP) has power over for major ports and this results in an unhealthy competition between the major and minor ports. An induction of the FDI will further deepen and broaden the already existing intense competition between the minor and major ports. In such a case, it will appear unfair to subject the major ports to TAMP while allowing the minor ports freedom to adjust their tariffs. It is on this notion that the Ministry of Shipping issued new Guidelines in 2013 that confirm with the international practise. The permission of 100% FDI has also impacted on infrastructure in the port sector. The government has opened various areas of port functioning such as construction of cargo, warehouse facilities, and container terminals to the foreign and private investors. Furthermore, FDI will be able to supplement skills, technology and domestic capital for economic growth. Gaur, Pundir and Sharma (2011) contend US $ 1635 million FDI was received during 2000-2013. This FDI was used to develop terminals at JNPT and International Transhipment Terminal at Cochin Port.
According to the figure below, there has been an increase in FDI in ports since 2000 to 2009.
Figure 7: Foreign Direct Investment in Ports
(Source: Department of Industrial Policy and Promotion)
The government also plans to use for port connectivity. Currently, traffic in India is majorly carried by road and rail. However, the conditions of bot roads and rails is very poor resulting in higher costs and waste of time. Railways face capacity problems especially on the Delhi-Mumbai sector and this results in 130% congestion and delays at the ports (Gaur, Pundir and Sharma, 2011). The governments intends to use the inward FDI to construct two Dedicated Freight Corridors (DFCs) that will provide extra tracking capacity. Some of the foreign investors in the Indian port sector include Dubai Ports World (UAE), AP Moller Maersk (Denmark), Jan Del Nul NV (Belgium), PSA Singapore (Singapore), Royal Boskalis Westminister NV (Netherlands) and Hyundai Engineering and Construction Company Limited (South Korea).
4.6 Chapter summary
The Indian government has greatly impacted in the Indian port sector in various ways. The government has allowed 100% FDI through automatic rout and this has attracted foreign investors who have enhanced transfer of technology and skills. More importantly, the FDI has been used to develop port infrastructure. Besides that, the Sagarmala project that the government initiated is set to see modernization of ports. The Indian government has also embarked on the development of new ports to ease traffic and handle large vessel capacity.
CHAPTER 5 (a): DATA ANALYSIS AND PRESENTATION OF FINDINGS: QUESTIONNAIRES
5.1 Chapter introduction
The findings from the analysis of primary data are written in this chapter. The research entailed collection of data and then processing it in relation to research questions. Collection of data and its analysis was motivated by three main goals. The first is to identify how the government policies on FDI have impacted on the Indian ports. Second, to investigate the impact of government plans to modernise ports on the Indian port sector. Third, to determine the impact of government initiatives of new port development on the Indian port sector. All these aforementioned objectives were accomplished by the researcher.
4.2 Response rate
The response rate was 90%. 90 questionnaires were administered by the researcher but only 70 respondents filled and submitted the questionnaires. This response rate of 90% was desirable as it was above the expected rate of 75%. Additionally, it was enough to generate data.
4.2.1 Response according to gender
The researcher wanted to find out the sex that had taken a bigger portion of the staff. The males were 51.4% while the females were 48.6% as shown in the table below. The implication of this is that most staff in the Indian port sector are males. Generally, the port sector tends to be a male dominated sector.
Table 2: Response according to gender
Frequency Valid Percent
male 34 48.6
female 36 51.4
Total 70 100.0
4.2.2 Response according to age
Besides gender, it was imperative to find out the age of the port staff. Port modernization, new port development and the impact of FDI are all dependant on technology. Furthermore, technological transfer and development of new skills is also dependent on age. While generation Y workers are more open to changes and new system and infrastructure, generation X employees are a bit reluctant. The findings of the study show that a majority of the study population was between 30 an d40 years and was represented by 44.3%. Age group 20-30 were 32.9%, 40-50 were 15.7% while above the age of 50 were 7.1%. This implies that the Indian port staff is majorly composed of the generation Y. Therefore, they are more open to the changes in port infrastructure and introduction of new port technology.
Table 3: Response according to age
Age Frequency Valid Percent
20-30 23 32.9
30-40 31 44.3
40-50 11 15.7
>50 5 7.1
Total 70 100.0
4.3 Response according to the impact of the government on new port development
The aim of this question was to determine whether the government had impacted on new port development in India port sector. Comparing this responses with the secondary data will enable the researcher to identify the impact of the government on new port development. A majority of the respondents (42.9%) strongly agreed that the government has impacted on new port development. 25.7% agree, 15.7% had neutral feelings, 8.6% disagree while 7.1% strongly disagreed. The high number of respondents who strongly agree plus those who agree may be the ones who handle cargo and have experienced port traffic and thus appreciate the government initiatives to develop new ports. According to the secondary data, demand for goods has resulted in huge volumes of cargo in turn leading to high traffic in ports (Hong, 2015). Some major ports such as the ones studied (Mumbai and JNPT) can no longer be expanded further and that is why the government has opted to develop new ports to ease traffic in this ports. According to Standard (2017), the total traffic handled at Mumbai Port increased from 27063 thousand tonnes in 200-01 to 59184 thousand tonnes in 2013-14. Similarly, Hong (2015) posits that JNPT accounts for more than half of the total container capacity thus resulting in high traffic. Therefore, the development of new ports that is currently underway is a major booster. The neutral respondents may be staff from other sectors that have not been affected in any way by development of new ports. Therefore, they have not really felt the government initiatives to develop new ports. Those who disagree or disagree are also small in number and can be said to be new staff who have not worked for long with the port sector and as such are not very versed with port issues and do not view the importance of new port development.
Table 4: Response according to the impact of the government on new port development
Frequency Valid Percent
strongly disagree 5 7.1
disagree 6 8.6
neutral 11 15.7
Agree 18 25.7
strongly agree 30 42.9
Total 70 100.0
4.4 Response according to whether the government policy of 100% FDI in automatic route has improved port infrastructure
The researcher was interested in determining whether the government policy of 100% FDI has helped to improve infrastructure in the Indian port sector. Most of the respondents strongly agree (38.6%) and agree (28.6%) that the government policies on FDI have improved port infrastructure. 17.1% had neutral response, 8.6% disagreed and 7.1 strongly disagreed. The table below presents the responses.
Table 5: Response according to whether the government policy of 100% FDI in automatic route has improved port infrastructure
Frequency Valid Percent
Strongly disagree 5 7.1
disagree 6 8.6
Neutral 12 17.1
agree 20 28.6
strongly agree 27 38.6
Total 70 100.0
According to Hong (2015), there are ongoing government projects that have attracted FDI in both Mumbai and JNPT port. For example, construction of a road from JNPT to Mumbai was initiated in July 2016 to enhance a smooth flow of cargo. Hanaoka and Regmi (2011) also contends that favourable investment climate, strong potential for growth and sops that have been provided by the Indian government have promoted both domestic and foreign players to enter India’s port sector. The fact that a majority of respondents strongly agree that foreign investment has helped to improve infrastructure also shows that this government policy is advantageous to the port sector. As stated earlier, most of the staff are generation Y and this also implies that a majority have readily adopted the new changes in infrastructure. The small portion who strongly disagree are most likely to be those above 50 who are reluctant to adapt to new organizational and physical structures and as such may not see their vitality in the port sector.
4.5 Response according to the impact of the government on port modernization
The researcher was interested in finding out what how port staff thought about the governments’ initiatives to modernize Indian ports. 47.1% strongly agree, 24.3% agree, 14.3% were neutral, 10% disagree and 4.3% strongly disagree. The researcher found out that the government as greatly impacted on modernizing ports. The studied ports have been modernized with recent infrastructure and technology. This implies better and larger container vessels, new terminals and improved cargo containerization. Furthermore, both JNPT and Mumbai Port use the latest technological solutions in handling port activities such as RFDI. The table below shows the degree to which the respondents agreed with this question.
Table 6: Response according to the impact of the government on port modernization
Frequency Valid Percent
strongly disagree 3 4.3
disagree 7 10.0
neutral 10 14.3
agree 17 24.3
strongly agree 33 47.1
Total 70 100.0
4.6 Response on factors that limit the growth of the Indian port sector
The researcher was interested in determining the factors that limit growth of the Indian port sector. Participants were to state their level of agreement or disagreement with port traffic, port technology, ownership by the government, Inadequate cargo-handling equipment and machinery and Inefficiency due to poor hinterland connectivity through Indian ports. For port traffic, 40% strongly agree, 28.6% agree, 12.9% were neutral, 10% disagree and 8.6% strongly disagreed as shown in the table below.
Table 7: Response on factors that limit the growth of the Indian port sector
Frequency Valid Percent
strongly disagree 6 8.6
disagree 7 10.0
neutral 9 12.9
agree 20 28.6
strongly agree 28 40.0
Total 70 100.0
Concerning poor technology in the port sector. 54.3% strongly agree, 22.9% agree, 15.7% felt neutral, 4.3% disagree and 2.9% strongly disagree. This is illustrated in the table below.
Table 8: Response on poor technology in the port sector
Frequency Valid Percent
strongly disagree 2 2.9
disagree 3 4.3
neutral 11 15.7
agree 16 22.9
strongly agree 38 54.3
Total 70 100.0
For ownership by the government, 41.4% strongly agree and 44.3% agree, 10% were neutral and 2.9% disagree while 1.4% strongly disagreed as represented below.
Table 9: Response on ownership by the government
Frequency Valid Percent
strongly disagree 1 1.4
disagree 2 2.9
neutral 7 10.0
agree 31 44.3
strongly agree 29 41.4
Total 70 100.0
Responses of the factor of inadequate cargo-handling and machinery were 21.4% for strongly agree, 35.7% for agree, 18.6% for neutral, 14.3% for disagree and 10% for strongly agree as shown below.
Table 10: Response on inadequate cargo-handling and machinery
Frequency Valid Percent
strongly disagree 7 10.0
disagree 10 14.3
neutral 13 18.6
agree 25 35.7
Strongly agree 15 21.4
Total 70 100.0
Responses on inefficiency due to poor connectivity through ports were 31.4% for those who strongly agree, 25.7% agreed, 18.6% felt neutral while 12.9% disagreed and 11.4% strongly disagreed.
Table 11: Responses on inefficiency due to poor connectivity through ports
Frequency Valid Percent
strongly disagree 8 11.4
disagree 9 12.9
neutral 13 18.6
agree 18 25.7
strongly agree 22 31.4
Total 70 100.0
CHAPTER 5 (b): DATA ANALYSIS AND PRESENTATION OF FINDINGS: INTERVIEWS
Information that was collected from the face to face interviews is presented in this section. The analysis is done based on the responses from the interviewees. The researcher used the letters A, B, C and E as the identities of the respondents. Letters were used to conceal identity so as to ensue confidentiality and privacy of responses obtained from the respondents.
5.1 Interviewee profile
Interviewee Gender Occupation Experience in the Organization Age
A Female Cargo handling manager 6 years 33
B Male Marine Engineer 7 years 30
C Male Naval Architect 4 years 27
E Female Shipbuilding engineer 6 years 35
Table 12: Interviewee profile
4.2 Response on the challenges and opportunities in the Indian Port Sector.
According to respondent A, the Indian port sector are low productivity and few road connections within the port area. Respondent B said that “the main challenge facing our ports is the over dominance by the government and the lack of equipment to handle large volumes of cargo.” As per respondent C, India port sector has very few trained labour and skilled employees. E said that there is inadequate navigational aids. All the respondents agreed that lack of latest technology is a major challenge facing the Indian ports. The response given by the interviewees all correspond to the literature review. According to the literature, India has poor roads connecting to the ports and his causes delays which slow down production (Haralambides and Gujar, 2012). B’s response is also similar to the findings of research by Ng, and Tongzon, (2010) which showed that most of the Indian ports are owned by the government and this slows down the decision making process of major projects. Also as B said equipment at the Indian ports can only handle small cargo capacity and as such it is unable to meet the accelerating growth in international trade that demands for more volume of cargo. As said by C, very few employees in the Indian sector are trained or skilled, as such, they do not have the necessary skills required to handle new technology and infrastructure and this further slows down production. Hong (2015) posits that it is indeed true that India has very few navigation aids (fog signals, buoys, lighthouses and day beacons). The consequences of this is increased risk of accident occurrence (Hong, 2015).
In response to the opportunities in the Indian port sector A said that the sector has a very high potential; to attract foreign investors. According to De (2011) India has the opportunity to partner with foreign companies if it improves its infrastructure. Improvement of infrastructure will make the sector attractive to investors. B contented that India has the opportunity to build its own transhipment hub. As per the literature, India depends on Singapore and Colombo transhipment hub and this causes the sector to incur further costs. Therefore, building a hub in the southern tip between the East and West Trade centres will be of benefit as proposed by the government. With the current policy on 100% FDI in the port sector, C stated that India can use this opportunity to expand the capacity at major ports. The current major ports are congested as they cannot handle large cargo and experience high traffic slows down production. E responded that the best available opportunity for India is to partner with foreign nations to allow for benchmarking in order to acquire the necessary knowledge and skills required to improve the port sector.
4.3 Respondents view on the government policy of 100% FDI in the port sector
Respondent A said that the FDI policy will help to improve the current old infrastructure in most Indian ports. As per the secondary analysis, the government is already implementing this by using the inward FDI for modern cargo handling facilities and also for improving the conditions of existing ports (Panigrahi and Pradhan, 2012). Obsolete infrastructure in the Indian ports has led to inefficiencies in the daily port operations such as cargo handling. Furthermore, the infrastructure cannot support large vessels despite the current demand for transportation of large volumes of cargo. Through FDI, which will be obtained from joint ventures, foreign companies can easily introduce and recommend modern infrastructure to the domestic companies (Singhal, Newell and Nguyen, 2011). Respondent B, on the other hand views that FDI will increase the international presence of the Indian port sector. This is because most companies will be investing in India and this will increase their recognition in international trade (Panigrahi and Pradhan, 2012). The advantages of international presence as per Vanelslander (2014) are a diversification of the revenue stream, increase on return capital and increased productivity. B also added that FDI will be used to improve the poor connectivity at the port sector. The roads leading to ports in India are still very poor and the railways which are the main transport system that connect with water transport are very few resulting in high traffic in ports. The size of vessels is increasing dramatically and this demands for environmentally sound and efficient transport by expanding port facilities and improving infrastructure in railways and road that lead to the airport. Therefore, the government plans to connect roads, railways and marine transport will promote a smooth flow of goods to and from the port sector.
According to respondent C and E, FDI is vital because it will enable the port sector to acquire the latest technological skills from the foreign companies. It has been argued by Vanelslander (2014) that lack of foreign relationships delays the adoption of modern technological skills. Therefore, engaging with foreign investors can expose he port sector to the current technology used in marine industry. For example, the Indian government has implemented the use of technological solutions such as RFID in the port sector. Additionally, according to the modernization theory, ‘traditional’ or ‘pre-modern’ nations and in this case, the Indian port sector can become modernised by modelling the practises used by the modernised economies. Furthermore, all the respondents shared similar views of the fact that FDI will be beneficial in training the unskilled staff and untrained labour. FDI entails creation of a relationship with multinational companies and as earlier stated, such ventures result in transfer of technology and skills. As such, it is only imperative that the untrained labour be trained on how to handle the modern infrastructure while the rest of the staff be mentored on how to use the recent shipping technology.
4.4 Responses on the impact of government initiatives to modernize ports
On responses on the impact of the government initiatives on port modernization, respondent A stated that this move will help to enhance the mechanization in both major and minor ports. A’s view can be backed up by Standard (2017) reports on the low capacity equipment used at many berths in India. These equipment are mostly worn out and were traditionally designed to meet the productivity at that particular time. With the current increase in production, this old equipment which are also poorly maintained are unable to meet the increased growth. Therefore, modernization of ports will help to replace this old machinery with modern ones. B and E shared views on the fact that port modernization initiatives by the government will enhance draft. It is evident that most Indian ports have low drafts which cannot be equated to the current increase in shapes and sizes of ships. Although the average draft ranges between 12-14 meters, a majority of ports worldwide have increased their draft up to 23 metres (Malhotra, 2014). This increased height allows the ports to handle the new vessels that have a capacity of 15,000 TEUs (Malhotra, 2014). Therefore, the efforts of the government of India to modernize ports will help them to be at par with the recent developments in the world maritime industry. Respondent C stated that port modernization will enable the Indian government to develop new terminals. The current infrastructure does not allow the existing ports to handle high traffic. Therefore, modernizing this ports will enable new berths and terminals to be built. The government has already initiated plans on this whereby a coastal berth is being built at Kandla to handle fertilizer and food grains.
4.5 Respondents view on whether the government’s plan to develop new ports will help the port industry
Respondent A asserted that the government initiatives to develop Indian ports will help to reduce the current volume congestion. From the literature review and secondary analysis, it can be stated that high capacity increases traffic at the port sector because it implies use of limited resources to handle huge values of cargo. Therefore, developing new ports as per A is the only way to clear this saturation. According to Hanaoka and Regmi (2011), major ports in India have reached the maximum capacity for expansion implying that it is impossible to expand them further, as such, developing new ports will allow for distribution of this volume of cargo and ultimately reduce traffic. Respondents B, C and E view the government’s plan to modernise new ports as a way of making ports more available. From the literature review, there are many strategic positions at the Indian port sector that can be used to develop new ports, most cargo is usually forced to travel for long distances to access the port and this consumes both time and adds to the cost incurred in handling cargo. Therefore, creating more ports can help to increase the points for cargo handling, or cargo lifting and offloading. Respondent E also stated that the government initiative to develop new ports will impact on the sector by reducing the costs incurred in using Singapore and Colombo trasnsshipment hub. According to the secondary analysis, India a lacks a transhipment hub. Therefore new port development initiatives by the government will enable India to have its own trasshipment hub at its Southern tip. C also contended that with the 100% FDI, it is only logic that the government develops new ports in order to attract more investors. Furthermore, India has one of the largest coastline and development of new ports is one way of taking advantage of this. All the respondents also agreed that development of new ports is an opportunity for India to introduce and exercise modern infrastructure and recent technology. This is true as per Ravesteijn, He and Chen, 2014) who argues that India can take advantage of this development by using latest technology in developing this ports which will even be better than modernization of ports. Besides that, new port development will enable India to source the best and most modern infrastructure for its new ports (Sahu and Patil, 2013).
4.7 Response according to how has the government impacted on you port
Respondents A and E who came from similar ports, the Port of Mumbai gave similar responses on the government impact on their ports. Both respondents agreed that the government has impacted on development of automatic gate, improvement of infrastructure and cargo handling facilities and the use of new technological systems. Patel and Bhattacharya (2010) also contend that the government has implemented the development of gate automation which will enable traffic to be controlled through computer systems. Respondent B and C stated that the government plans to connect ports with inland waterways at JNPT port, has improved connectivity at JNPT, introduced technological solutions and enhanced drafts. All the respondents also contended on the 100% FDI in their ports and how there has been increased foreign investments. As per respondent B and C, JNPT, which is India’s largest container handling port signed an agreement with State Bank of India to improve the infrastructure that is required to increase its capacity. The government as per C is also underway in building a satellite port at Wadhwan that will help to ease congestion of ships at JNPT. C also stated that the government is building a new terminal at their port (JNPT).
4.8 Chapter summary
According to the findings from the interviews and questionnaires, most respondents agree that the government has impact of infrastructure, modernization of ports and the development of new ports in India. However, respondents also view port traffic and old infrastructure as the main factors limiting the Indian Port Sector.
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