Story: Clustering for growth

Maritime industry grew by leaps and bounds during the last 100 years due to the rapid growth in the world trade. Some countries,in this process,like Singapore, Denmark, England, etc. have made a name for themselves by adopting cluster-based approach as a strategy to grow and flourish. Taking a leaf from their success stories, Gujarat Maritime Board has now implemented the cluster strategy in India through Gujarat Maritime Cluster, which is now attracting global maritime service providers to set up their businesses in this cluster.

Business clusters bring together related businesses to operate within a geography and benefit from the resulting savings in costs as well as efficiency gains. All this is made possible due to being together and working in proximity.

Following in the footsteps of these maritime giants, Gujarat Maritime Board (GMB) has envisaged to develop a maritime services-based cluster that would eventually bring together the global maritime service providers under one roof. GMB is promoting this project through its subsidiary Gujarat Ports Infrastructure Development Company Ltd. (GPIDC).

Ideally located in the GIFT city near Gandhinagar in Gujarat, the Gujarat Maritime Cluster (GMC) will stand to benefit from the maritime legacy of Gujarat state’ maritime activities and the proactiveness of the Gujarat government to attract stakeholders to establish their shop there.

Why Gujarat?

It is no coincidence that the first maritime cluster (of this nature and size) is coming up in Gujarat. In addition to the location advantage that Gujarat enjoys, there are several reasons that establish Gujarat as the top contender for establishing the first maritime cluster. Some of the key reasons are listed as below:

  • One of the highly industrialized states in India with 12% of India’s factories
  • 17% of India’s total industrial output comes from here
  • More than 20% of India exports are from Gujarat
  • Presence of 49 ports along its coastline (one major port and 48 non-major ports)
  • 41% of India’s total maritime cargo is handled by Gujarat ports
  • First state in India to invite private sector participation in ports
  • It is the state with highest investment potential
  • One of the most proactive state governments in India in attracting investments

Rationale behind the GMC

A need for a maritime cluster is felt in India since many decades. However, not much traction was gained in this direction due to various reasons like policy issues and bureaucratic hurdles among others.

India’s taxation regime has been one of the most complicated in the world, resulting in higher tax rates that make significant dents in profits. On top of this, the rigid regulatory structure makes it very difficult for any policy change that hopes to bring in reforms in the maritime sector. As a result of this, many top-end players like ship owners, ship charterers and operators had shifted their businesses to business-friendly maritime nations like Singapore and Dubai.

The Indian maritime sector had grown in an unorganized manner and due to this, there is a lack of professional approach to doing business – which in turn has led to underdeveloped maritime services sector. The maritime services industry has a sizeable presence in the country, but is extremely unorganized and disjointed. This has limited the scale of operations and stunted the growth in terms of specialization.

These reasons highlight the urgency to stop further damage to the industry and try to undo the damage that has already been done. In this scenario, establishing a maritime cluster comes as a breath of fresh air that brings along with it a new hope and new future for the maritime services in India. The advantage of having a services-based maritime cluster can attract top players from ship financing, charterers, ship brokers, ship management companies, port-based service providers, logistics service providers, maritime law firms, marine insurance firms, manning agencies and educational institutions among others.

The cluster-based approach adopted by the Gujarat Maritime Board is, indeed, a long-term strategy to put this state on the international map of maritime trade and help it grow to become a global maritime hub in future.

Why does India need a maritime cluster?

  • In spite of handling 10% of the overall global seaborne trade, India is not recognized as a major maritime power

  • Only two ports – Mundra and JNPT – figure among top 50 ports across the world.

  • Due to lack world class maritime services in India, we have become a net importer of maritime services

  • Indian shipping industry as such is fragmented and spread across the country without delivering any synergy

  • So, to build synergy and competitiveness of the sector, there is a dire need to bring all the stakeholders under one roof

Prospective participants of Gujarat Maritime Cluster:

  • Regulators: Central Govt., State Govt., Regulatory agencies like DG Shipping, GMB, MMD, etc.
  • Intermediate Services: Ship finance, Ship insurance, Maritime law firms, Arbitrators, Consultants, IT services providers, Marine surveyors, P&I Clubs
  • Core Shipping / Logistics: Ship owners, Ship operators, Chartering firms, Ship management, Shipping lines, NVOCC, Shipping agents, Ship brokers, Freight forwarders, Customs brokers, Port operators, Stevedors, Ship chandlers, Multimodal transport operators.
  • Support Services: Maritime Educational Institutes, Manning agencies, Event Managers, Publishing houses,.
  • Industry / Trade Associations: INSA, FFFAI, AMTOI, FIEO, NISAA, MANSAA Etc.

Gujarat Maritime University

For a maritime cluster to survive and thrive, it is extremely crucial to have readily available skilled manpower. GMB has already worked out a solution for this in the form of Gujarat Maritime University. Commenced in 2019, Gujarat Maritime University is located in the vicinity of GMC. This university is a first of its kind in India with focus on becoming a Centre for Excellence in Maritime Education. It has already started collaborations with some of the finest education institutions in the world. It has tied up with Denmark’s Copenhagen Business School, Erasmus University and Netherlands based STC International for collaboration and knowledge sharing.

It offers the following courses:

  • LLM in Maritime Law
  • LLM in International Trade Law
  • PG Diploma in Maritime Law
  • PG Diploma in International Trade Law
  • MBA in Shipping & Logistics (course designed by Copenhagen Business School)

Upcoming courses

  • Short term EDP / MDP Programmes for executives and working professionals with foreign collaboration including Erasmus University and STC International of Netherlands.

Mr. Freddy Svane, His Excellency, The Danish Ambassador to India

The launch of a maritime cluster has been long over due in India. Coming from Denmark, I would say that Denmark Maritime Cluster was established long ago and it has helped our country to grow and become a respected nation in the maritime world – which we call as Blue Denmark. What I see today in India with respect to the developments and buzz around the Gujarat Maritime Cluster is exactly the same what we did in Denmark back then.

To achieve proven capabilities and capacities, you need a maritime cluster. If you want to grow your economy to 5 trillion euros size, you need to be connected logistically and you need to build the right infrastructure. Denmark is very happy to be partnering with the GMC as well as the Gujarat Maritime University.

During the end of September 2020, the prime ministers of India and Denmark respectively had a virtual summit and had agreed upon to develop a strategic partnership. One part of this partnership is shipping, which includes infrastructure, ship repairing and ship recycling.

Mr. Anil Mukhim, IAS, Chief Secretary, Government of Gujarat

Since independence, Gujarat has been at the forefront of development in all aspects of shipping. The formation of GIFT city in IFSC has now provided us this unique opportunity to expand the service offerings to the shipping community. This has been made possible by the regulatory carve-out which will provide a stable regulatory and tax environment for the maritime cluster.

We have worked in parallel on many of the aspects like developing the Gujarat Maritime University, which is now collaborating with the prestigious Copenhagen Business School. I am also happy to note that the Government of India is very actively considering to set up the regional office of the Director General of Shipping in the Gujarat Maritime Cluster.

Another very important component coming up in the Gujarat Maritime Cluster is the Alternate Dispute Resolution Center.

I once again invite the industry – both in India and overseas – to seize the maritime growth story of Gujarat and become a member of the GMC. As chief secretary of Gujarat state, I assure all the possible support to all the stakeholders of GMC from Government of Gujarat.

Mr. Amitabh Kumar, IRS, Director General of Shipping, Government of India

I would like to take this opportunity to congratulate the Government of Gujarat and Gujarat Maritime Board for visualizing and implementing a cluster for maritime services at GIFT city in Gandhi Nagar – which is a first of its kind in India.

While cluster approach to industrial development is not new, growth and development of maritime clusters still remains special due to the unique attributes of this industry. Even though the maritime industry is a global one, it still draws its strengths from the core competencies inherent in a region, state or nation.

GMC, like Bergen in Norway has the capacity to create functional and cross-functional synergies for its members. Government of India has also taken a conscious decision to promote and develop clusters to foster growth and development. Ministry of Small and Micro Enterprises has a scheme for financing for cluster-based growth in MSME sector. Similarly, Sagarmala programme also has a scheme for development of maritime clusters. Recently, we worked towards forming a cluster of nearly 100 SMEs working in shipbuilding and ship repairs in Goa with the aim of creating some common facilities, testing centres and administrative facilities. The cluster received full support from Government of Goa and Government of India. Goan shipyards can now invest in latest technologies that can bring more productivity and efficiency in to their work.

GMB has led the way in bringing together maritime services to one place to form a maritime cluster. It is now in the hands of the industry to make use of this opportunity to grow and excel. We are also seriously considering setting up our regional office at the Gujarat Maritime Cluster. My best wishes to GMB for taking this initiative.

Avantika Singh, IAS, Vice-chairperson & CEO, Gujarat Maritime Board

To have a competitive edge and to actually take advantage of the vast coastline that India enjoys is to have a services-based cluster. The heart and soul of a maritime nation would always be the quality of maritime services.

We envisage the agglomeration of maritime services to reap the benefits of cost reduction and enhanced efficiencies. Gujarat enjoys a 41% share in the total maritime cargo handled in India. Therefore, Gujarat Maritime Cluster aims at building synergies by co-locating the services providers to one place.

Another important aspect is skilled manpower. Gujarat Maritime University is ideally positioned to provide skilled, industry-ready manpower to meet the growing needs of the cluster over time.

GMC is trying to address all needs and aspects of the sector and in this regard, I request all the participants to give suggestions for improvement. GIFT city is one of the top three emerging business hubs in the world.

We have also envisaged an Alternate Dispute Resolution Centre for which we trying to tie up with one of the global arbitration centres like Singapore. GMC is also working on the proposal of bring back to the country services like ship chartering, leasing and operating (which have negligible presence in India).

Mr. Sharad Sarangadharan, Member Secretary, Gujarat Maritime Cluster

The concept of maritime cluster originated from the vision of our honourable prime minister Shri Narendra Modi (when he was the chief minister of Gujarat). His vision was to integrate the soft as well as hard maritime infrastructure under one umbrella.

In a cluster, the economic value generated by the cluster as a whole is greater than the sum of values generated by individual companies (residing in that cluster) when they operate individually.

Singapore is an excellent example for a maritime cluster. It did not develop by itself, but through the increased participation of service providers from the other Asian countries.

Key learnings from other global maritime clusters include: (i) the presence of any port or shipping-related activity is not a pre-requisite for the success of a maritime cluster, (ii) skilled manpower is key to the success of the maritime cluster, and (iii) any inorganic or semi-organic cluster do not have any major shipping related company dominating the cluster.

GMC currently has two types of memberships – physical and virtual. This financial year, physical membership fee is waived off, while the virtual membership fee, which is a very nominal amount is applicable.