Marine Containers: India’s Next Growth Story
The Government of India announced that ₹11,000 crores PLI can be earmarked for marine container handling.
Marine containers would have an impact on all Indian economy for the ₹700 trillion economy idea by 2030s.
The proposal was not taken forward after 3 studies, as it is mentioned in newspapers that it requires more investigation and information. China holds a monopoly of containers in the world, and an Indian economy deserves it that the containers are held, owned, and leased from Indian soil.
Special Economic Zones as the Foundation
The ideal situation would be that it is from a Special Economic Zone, and all the operations can be offshore for the Indian operators. The special economic zone is called a foreign territory on Indian soil.
So, IFCI can pull it off if, instead of a PLI, it can be a soft loan from the Government of India to IFCI at, say, 2.75% per annum, with an agreement that it is a rolling fund for about 25 years. The concept for a rolling fund or revolving fund can be that the depreciation and evolving will be a continuous process.
The Government of India can arrive at MOU that for all Departments of Government of India Agribusiness – Produce and Products – it can develop a Validation and Verification centre for “information” with raw data.
Developing India’s Corten Steel Capability
What is the Indian angle here? It is the development of a process in steelmaking called Corten steel. India can develop it from scratch with all the steel companies in India, developing the precise kind of Corten steel that goes into container making.
All of this can be an ecology that will add, probably, X amount of crores of rupees for different players. So, the steel players can get part of the fund at, say, 5.25% interest, which will match the global dollar interest today in rupees.
If they are encouraged to do this Corten steel every year, then it goes to the fabricators, who will rapidly make all kinds of marine containers in Special Economic Zones. From Special Economic Zones, it is then owned by wealthy individuals or consortiums.
They need not be financed per se, they can get access to world finance. But the important thing is that they must be leased through all the other companies in the world.
India’s Role in Global Container Leasing
So, IFCI can use its leverage that it can encourage all the 9 major shipping lines who operate containers to, say, have 100,000 containers owned in India, but operated as their own containers and repositioned in India as a base.
It would be economical for them to run the show from Indian ports; they will be backed up in yards and so on. Therefore, the idea is that 11,000 crore will earn IFCI, a net income of 1.75% without risks.
Management costs will be minimal for a huge base based out of all the centres in India which are responsible for marine containers, which are port cities.
A South Initiative Under G20
Therefore, it creates a sort of a South initiative under G20, that all the containers will move around, but India can do the value additions in container handling that will reach the remote corners of different places on earth.
The Prime Minister mentioned that India’s food surpluses will ultimately mean something to all the nations of the world, as well as items like pharmaceuticals.
The news is that Adani is ordering 1,000 ships. Building ship-building capacities means that India will be moving around.
So, swift and nimble should be the word for India, as small is beautiful, and the Indian resource meant for India will expand.
From PLI to Long-Term Development Finance
So, this idea can be processed within the current live situation, that what is frozen; the PLI can turn into, like, say, preference shares or long-term bonds, but it is like the development stories in the 1970s and 80s where it is not given away as subsidy, but it is given away for congruence.
Therefore, the biggest growth story in India will be fuller utilisation of capacities and reduction in inventories, quicker turnaround in manufacture, and better utilisation of working capital. That is the convergence that IFCI needs to do.