India’s maritime sector has significant unrealised potential, hampered by outdated regulations and high logistics costs. Despite boasting an extensive coastline of over 11,000 km and an additional 14,000 km of navigable waterways, the country sees only 7% of freight transported by sea or inland waterways. In contrast, road transport accounts for 65%, while rail takes up 22%. This discrepancy highlights the sector’s underutilization compared to more developed logistics networks.
Recent investments have sparked optimism, particularly noticeable during the 2025 India Maritime Week, where Prime Minister Narendra Modi emphasized India’s emergence as a global maritime power. His announcement coincided with extensive international participation, including over 85 countries and significant agreements worth several lakh crore rupees to enhance port, shipbuilding, and inland waterway partnerships. This initiative aims to modernize infrastructure and improve the integration of sustainability and technology into India’s maritime future.
However, the sector faces numerous hurdles. Regulatory fragmentation and infrastructural bottlenecks remain critical problems, compounded by an ageing domestic fleet and a shortage of skilled labor. Furthermore, growing competition from established maritime hubs like Singapore and the UAE poses an additional challenge.
Geopolitical tensions in the Indian Ocean further complicate matters. The maritime industry is still governed by many outdated laws, some traceable to the 19th century. A proposed resolution is the new Indian Ports Bill, 2025, aimed at modernizing regulations to enhance transparency and streamline operations. Nonetheless, critics express concerns regarding the potential centralisation of authority and the impact on state autonomy, questioning whether the bill’s dispute resolution mechanisms will suffice to attract investment.
Logistics costs in India remain high, at around 13%, compared to the global average of 8-9%. A significant factor contributing to these costs is the heavy reliance on foreign shipping lines, which transport 90-95% of the country’s cargo. This dependency limits India’s influence over freight rates and overall trade dynamics. A report from NITI Aayog further emphasizes that non-major ports suffer from poor infrastructure, skilled labor shortages, and connectivity issues, hampering their contributions to national trade.
The challenges do not end there; many port development projects encounter excessive delays due to land acquisition and environmental clearances. The progress of inland waterway development also lags, adversely affecting the efficiency of multimodal logistics systems. In contrast, China has achieved a more robust maritime network, with 34% of its freight moving by water, compared to India’s mere 7%.
In summary, while India’s maritime sector is on the cusp of transformation via significant investments and policy reforms, it must address structural challenges, outdated regulations, and competition from established global players to realize its full potential and improve its global competitiveness.
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