The Hindu Editorial Analysis- 4th February 2025 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Some Wind Behind the Sails of India’s Shipping Industry

Why in News?

• The Indian government has made significant investments in the maritime sector through the Sagarmala Programme, but Indian shipping remains stagnant and faces various challenges.
• The 2025 Budget has introduced reforms, but key tax disparities persist, affecting competitiveness.

Government’s Commitment to Maritime Development

• Sagarmala Programme. The government is focused on developing the maritime sector through this programme, which plans to complete 839 projects with an investment of ₹5.8 lakh crore by 2035.
• Investment Breakdown. Within Sagarmala, the investment is allocated as follows: ₹2.91 lakh crore (50%) for port modernization, ₹2.06 lakh crore (35%) for port connectivity, and ₹55.8 thousand crore (10%) for port-led industrialization. The remaining 5% is for coastal community development, infrastructure for coastal shipping, and inland water transport.

India’s Economic and Trade Growth

• GDP Growth. India’s GDP increased from ₹153 trillion in 2016-17 to ₹272 trillion in 2022-23, with a compound annual growth rate (CAGR) of 7% despite the COVID-19 pandemic. The economy is expected to reach $3.7 trillion in 2024, $5 trillion by 2027, and $7 trillion by 2030.
• EXIM Trade Growth. India’s export-import trade grew from $66 billion in 2016-17 to $116 billion in 2022, marking a 12.83% annual growth rate. The country aims to increase exports to $2 trillion by 2030 to enhance global trade.

Challenges in the Indian Shipping Industry

• Capital Constraints. High borrowing costs, short loan tenures, and strict collateral requirements make it difficult for shipowners and shipbuilders to secure financing.
• Tax Disparities. Indian-flagged vessels face higher taxes, such as the Integrated Goods and Services Tax (IGST) on ship purchases and Tax Deducted at Source (TDS) on seafarer salaries, making them less competitive than foreign-flagged ships.
• Aging Fleet. Many Indian vessels are outdated, impacting their efficiency and global competitiveness, despite recent improvements.
• Shipbuilding Challenges. There is limited infrastructure for constructing large vessels, high input costs, and weak ancillary industries, increasing reliance on imports.
• Regulatory Hurdles. Strict regulatory requirements and delays in fund repatriation for ship acquisitions impede sector growth.
• Competition from Foreign Ships. Foreign-flagged vessels have easier access to capital, lower costs, and more lenient regulations, reducing the market share of Indian shipping.
• Lack of Domestic Cargo Preference. Indian shipping struggles to compete with rail and road transport for domestic cargo movement.
• Slow Implementation of Reforms. Policies like the Maritime Development Fund (MDF) and granting infrastructure status for large vessels need proper execution and funding clarity to be effective.

Government Initiatives for Maritime Growth

• The Union Budget 2025 introduced several measures to support the maritime industry, including:
• Establishment of a ₹25,000 crore Maritime Development Fund (MDF), with 49% funding from the government and the rest from major ports.
• Granting infrastructure status for large vessels to facilitate their construction and financing.
• Promoting shipbuilding clusters and extending customs duty exemption on shipbuilding spares for an additional 10 years.
• Revamping the financial assistance policy for shipbuilding and providing credit incentives for shipbreaking.
• Extending the tonnage tax scheme to inland vessels to encourage their use and development.

However, concerns remain within the industry:

• The funding mechanism for the ₹25,000 crore MDF is unclear, particularly whether it will be allocated in a single year or over multiple years.
• There is an urgent need to replace the aging fleet to align with green technology goals and emission reduction targets.
• Long-term financing options with lower interest rates and repayment tenures of 7-10 years are essential for the industry’s growth.

Need for Further Reforms

• Strategic use of the Maritime Development Fund (MDF) is needed to attract low-cost external commercial borrowings (ECBs).
• Additional investments are required for the modernization of shipyards and construction of large vessels.
• Addressing tax disparities that impact the competitiveness of Indian shipping is crucial.
• While the government’s efforts are a positive step, more decisive actions are necessary to ensure substantial growth in the shipping industry.

The kind of jobs needed for the ‘Viksit Bharat’ goal

Why is it News?

• The Union Budget 2024 of India highlights the importance of creating jobs that are sustainable in the long term, focusing on areas like climate resilience, adaptation to AI changes, and meeting the aspirations of the workforce.
• This approach aims to foster inclusive economic growth and ensure that the job market is robust and future-ready.

Introduction

• The recent Union Budget 2024 has sparked a discussion on the types of jobs that India should prioritize for creation.
• While reviving urban consumption in the short term is important, the focus should also be on long-term job creation and genuine wage growth.
• One of the key initiatives in the budget is the Employment Linked Incentives (ELI) scheme, which aims to generate over four crore jobs in five years with a substantial budget of ₹2 lakh crore.
• However, there are concerns about the implementation of this scheme and others, as seen with the Prime Minister’s Internship Scheme, which received a high number of applications for a limited number of positions.
• To realize India’s ambition of becoming a developed nation, a clear and effective strategy for job creation is crucial.

Climate-Resilient Jobs

• India faces significant challenges due to climate change, being the seventh most affected country in 2019 and suffering substantial economic losses.
• The Reserve Bank of India projects a need for nearly $1 trillion for climate adaptation by 2030.
• Climate change adversely impacts agriculture, labor productivity, and livelihoods, necessitating increased investment in adaptation strategies.
• Job creation should align with climate goals and aim for maximum co-benefits, as outlined by the IPCC.
• Potential strategies include:
• State-Subsidized E-Rickshaws: Deploying e-rickshaws in rural areas to create approximately two million jobs, particularly for women.
• Compressed Biogas Plants: Promoting private investment in biogas plants to meet the target of 5,000 plants for FY23-24, addressing the current shortfall.
• Non-Fossil Energy Capacity: Accelerating the target of 500GW non-fossil energy capacity to generate over one million jobs.
• Decentralized and Rooftop Solar Projects: Supporting these projects, which are significantly more labor-intensive, to create additional jobs.

AI-Resilient Jobs

• The rise of generative AI poses a threat to many jobs, with a 50% risk of automation.
• McKinsey Global Institute anticipates that India could adopt 50% automation within a decade.
• Sectors like IT and business services, crucial for service exports, may face challenges due to increasing labor costs and AI advancements.
• Future job strategies should emphasize roles that require creativity and physical presence, which are less susceptible to AI takeover.
• Solutions for creating AI-resilient jobs include:
• Education and Health Budgets: Increasing funding to address shortages of teachers and healthcare professionals in India.
• National Rural Livelihood Mission: Strengthening financial support to help rural artisans and farmers access broader markets.

Aspiration-Centric Jobs

• Rural youth often lack confidence due to inadequate education and resources, leading to reliance on government jobs and coaching centers.
• As their aspirations evolve, non-farm job creation must align with their changing needs and expectations.
• Measures to foster aspiration-centric jobs include:
• Integrated Pack-Houses: Developing around 70,000 pack-houses to fill infrastructure gaps and create over two million jobs.
• Productivity Enhancement: Improving productivity and value addition in high-import/export goods and agricultural input manufacturing.
• Edible Oils Mission: Promoting the National Mission on Edible Oils – Oilseeds to reduce the high dependence on imported edible oils.
• Native Oilseed Processing: Revitalizing the processing of native oilseeds like soybean and sunflower in rural areas.
• Rural Job Rebranding: Utilizing technology and social media to rebrand rural jobs and attract youth to off-farm employment opportunities.
• Public-Private Partnerships: Encouraging collaborations to support large-scale rural enterprises and businesses.

Conclusion

• While temporary tax relief may boost urban demand, sustainable job creation requires fundamental structural reforms.
•  The government should prioritize jobs that are resilient to climate change, adaptable to AI advancements, and aligned with the aspirations of the workforce. 
•  By focusing on these areas, India can progress towards its vision of Viksit Bharat, ensuring stable and meaningful employment for its population.