Developing Ports: Sagarmala Project

27 Days agoAs India turns to its ports and coasts, know how the upcoming Sagarmala Project propels the Make in India vision.

India has a 7,500 km long coastline and 14,500 km of potentially navigable waterways. 12 major and 200 non-major ports located along the Western and Eastern coastlines have so far been responsible for 90% of India’s trade by volume. Over 1 billion tonnes of cargo was handled across Indian ports in Financial Year FY 2015-16. Projected cargo volume by 2025 is estimated to be over 2.5 billion tonnes – this massive increase calls for substantial capacity augmentation of the existing ports and building of new ports in the next 10 years. Facilitating swifter and superior connectivity is key to cargo handling for which efficient modes of evacuation of both Export/Import cargo is required. There is also an immense scope for reduction in transportation and logistics costs and boosting export competitiveness through developing port-proximate industrial clusters.1

There are multiple challenges that need to be addressed and at the same time substantial opportunities that need to be captured as far as port-led development is concerned. This is what the Sagarmala Programme intends to do. Through this initiative, the Ministry of Shipping (MoS) aims to further utilise India’s vast coastline and potentially navigable inland waterways to boost trade, spur industrial growth in coastal regions and develop coastal communities.2

Spearheaded by the Sagarmala Development Company (SDC), 415 projects have been identified across India for port modernisation and new port development, port connectivity enhancement, port-linked industrialisation and coastal community development under the Sagarmala Initiative. The projects are to be implemented in phases at a projected cost of USD 123 Billion over 10 years, from 2015 to 2025.3 4 India’s strategic location along international trade routes, high-speed supply chains and improved port capacity will be used to boost port-led development in the country.5

The initiative revolves around 4 key pillars -

While logistics costs in India currently stand at 19% of GDP, the Sagarmala Programme aims at unleashing the potential of Indian ports to reduce costs and hence boost the country’s trade competitiveness.6

As per the National Perspective Plan, the programme envisages the following:

  • Port modernisation and new port development

    Augmenting the capacity of current port infrastructure and creating new ports is important to promote export driven growth. With massive cargo volume growth anticipated by 2025, there emerges a need for port upgradation and new infrastructure.7

    Under the Sagarmala initiative, the Government plans to develop six new ports across five coastal states of India. 189 projects with a projected cost of USD 21 Billion have been identified. Currently, 42 projects worth around USD 3.6 Billion are under implementation. The MoS is also pushing for improved transshipment capacity by developing transshipment ports and hubs. This is likely to bring down operations costs for shipping lines for exporters and importers. Vizhinjam (Kerala) and Enayam (Tamil Nadu) have been identified for development due to their geographical proximity to international shipping routes.8

  • Port connectivity enhancement

    Enhancing port connectivity is quite a challenge in India, where trade connectivity is mostly based on road and rail infrastructure. Considering that improved port connectivity can provide the much needed boost to internal trade as well as Export and Import,170 port connectivity enhancement projectshave been identified as a part of Sagarmala at a projected cost of USD 35 Billion. In addition, the new National Waterways Act, 2016 aims to facilitate the use of 111 inland waterways across 24 states as sustainable mode of transport. With the law’s enacment, several inland waterways would become National Waterways and come under the stipulated regulations for development.9 10

    Government projects such as inland container depots, Jal Marg Vikas Project, Dedicated Freight Corridors (DFCs), Bharatmala initiative and the plan for pipeline expansion will provide an impetus to development of multi-modal transport hubs, helping reduce the cost of freight transportation.11 With this approach, India can import and export goods at a faster rate with minimum investment.

  • Port-linked industrialisation

    The 33 port-linked industrialisation projects at a projected cost of USD 65 Billion, anchored by the Sagarmala Project will complement the Make in India vision.14 Coastal Economic Zones (CEZs) have been proposed as economic regions hosting industrial clusters. CEZs are aimed at reducing time and costs required for Export/Import movement and domestic cargo, thus becoming a focal point of Port- linked industrialisation.12 13 In addition, they have the potential to create direct and indirect employment of 4 million and 6 million respectively.14

    CEZs along India’s Eastern and Western coastlines will reduce logistical costs for 12 industries identified on the basis of suitability of ocean mode of transportation for import/export. These will cover energy, material and discrete manufacturing. The energy clusters containing refineries and petrochemicals industries can reduce India’s import dependence on the crude oil products. There is a potential to develop two refinery and four petrochemical clusters along the coasts of India by 2025.15

    They will also be aligned to industrial corridors such as the Delhi Mumbai Industrial Corridor and Chennai Bangalore Industrial Corridor. India targets boosting exports from USD 465 Billion in 2014- 15 to USD 900 Billion by 2020 through Port-linked industrialisation. These port-proximate manufacturing clusters will help increase India’s competitiveness in food processing, automotive, apparel, leather products, furniture, and footwear exports.16

  • Coastal community development

    Coastal communities are important stakeholders of developmental activities within coastal regions. With 72 coastal districts hosting 18% population of India, the development of these communities becomes an integral aspect of overall socio-economic development of the country. Under the Sagarmala initiative, the plan is to involve these communities in the overall progress of the region. 23 projects have been identified so far under this aspect of the initiative, which will be funded by MoS and Department of Animal Husbandry Dairying & Fisheries (DADF).

    Skilling of coastal communities, livelihood enhancement and employment-creation opportunities are at the core of the Government’s agenda- USD 648 Million projected as costs relating to skill development, cold chain development, fisheries, aquaculture, local tourism and recreational facilities.17 The development of marine fisheries sector is getting a push through creation of fishing harbours, fish processing centres and deep sea fishing vessels.

Various sub-projects under Sagarmala are in sync with the Central Government’s Industrial Corridors, Dedicated Freight Corridors (DFC), National Highway Development Programme (NHDP) and Special Economic Zones (SEZs). Upon completion, it will result in annual savings of USD 5 Billion in logistics costs. By making available best-in- class manufacturing infrastructure, the Sagarmala Project gives much impetus to the Make in India initiative and making Indian manufacturers globally competitive.18