What is Sagarmala Project?

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02 Aug, 2017

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What is Sagarmala Project?

How Sagarmala project with boost GDP by 2 pc?

 

 

Sagarmala Project, envisaged by the Ministry of Shipping, proposes fourteen Coastal Economic Zones (CEZ) across major and non-major ports of India.

The proposal comes at a time when India is lagging far behind in port-led industrialisation than China – its key economic competitor. The CEZs are expected to increase India’s merchandise exports by 110 billion by enhancing industrial competitiveness.

The prime objective of the Sagarmala project is to promote port-led direct and indirect development and to provide infrastructure to transport goods to and from ports quickly, efficiently and cost-effectively.

Sagarmala Project, aims to develop access to new development regions with intermodal solutions and promotion of the optimum modal split, enhanced connectivity with main economic centres and beyond through expansion of rail, inland water, coastal and road services.

It is a concept towards Blue Revolution, as its initiative will address challenges by focusing on three pillars of development:

  • Supporting and enabling Port-led Development through appropriate policy and institutional interventions and providing for an institutional framework for ensuring inter-agency and ministries/departments/states’ collaboration for integrated development,
  • (ii) Port Infrastructure Enhancement, including modernization and setting up of new ports,
  • (iii) Efficient Evacuation to and from hinterland.

 

Background:

Presently, Indian ports handle more than 90 percent of India’s total EXIM trade volume. However, the current proportion of merchandize trade in Gross Domestic Product (GDP) of India is only 42 percent, whereas for some developed countries and regions in the world such as Germany and European Union, it is 75 percent and 70 percent respectively. Therefore, there is a great scope to increase the share of merchandising trade in India’s GDP. With the Union Government’s “Make in India” initiative, the share of merchandise trade in India’s GDP is expected to increase and approach levels achieved in developed countries. India lags far behind in ports and logistics infrastructure. Against a share of 9 percent of railways and 6 percent of roads in the GDP the share of ports is only 1 percent. In addition high logistics costs make Indian exports uncompetitive. Therefore Sagarmala project has been envisioned to provide ports and the shipping the rightful place in the Indian economy and to enable port-led development.

Amongst Indian States, Gujarat has been a pioneer in adopting the strategy of port-led development, with significant results. While in the 1980’s the state grew at only 5.08 percent per year (National average was 5.47 percent), this accelerated to 8.15 percent per annum in the 1990’s (All India average 6.98 percent) and subsequently to more than 10 percent per annum, substantially benefitting from the port-led development model.

The growth of India’s maritime sector is constrained due to many developmental, procedural and policy related challenges namely, involvement of multiple agencies in development of infrastructure to promote industrialization, trade, tourism and transportation; presence of a dual institutional structure that has led to development of major and non-major ports as separate, unconnected entities; lack of requisite infrastructure for evacuation from major and non-major ports leading to sub-optimal transport modal mix; limited hinterland linkages that increases the cost of transportation and cargo movement; limited development of centres for manufacturing and urban and economic activities in the hinterland; low penetration of coastal and inland shipping in India, limited mechanization and procedural bottlenecks and lack of scale, deep draft and other facilities at various ports in India.

An illustrative list of the kind of development projects that could be undertaken in Sagarmala initiative are (i) Port-led industrialization (ii) Port based urbanization (iii) Port based and coastal tourism and recreational activities (iv) Short-sea shipping coastal shipping and Inland Waterways Transportation (v) Ship building, ship repair and ship recycling (vi) Logistics parks, warehousing, maritime zones/services (vii) Integration with hinterland hubs (viii) Offshore storage, drilling platforms (ix) Specialization of ports in certain economic activities such as energy, containers, chemicals, coal, agro products, etc. (x) Offshore Renewable Energy Projects with base ports for installations (xi) Modernizing the existing ports and development of new ports. This strategy incorporates both aspects of port-led development viz. port-led direct development and port-led indirect development.

 

 

Latest on the Plan

As per the plan, coastal states will have one or more CEZs. The industrial clusters within these zones will enjoy the benefit of lower cost of movement by waterways. It has been observed that EXIM containers in India travel 700 to 1,000 kilometres between production centres and ports. The plan attempts to decrease it substantially by facilitating port-led industrialisation.

Three energy clusters to meet the future power requirements of the country have been planned in proposed Poompuhar CEZ in Tamil Nadu and North Konkan CEZ in Maharashtra.

Two refining clusters in proposed Mannar CEZ in Tamil Nadu, Soth Konkan CEZ in Maharashtra or in Poompuhar CEZ in Tamil Nadu.

The plan also proposes four petrochemical clusters in proposed CEZs to be built up in Gujarat, Karnataka, Odisha and Tamil Nadu.

Furthermore, it aims to enhance steel and cement production by 40 MTPA each by 2025 by creating coastal capacity and thus reduce logistic cost by Rs 1,000 per ton and make domestic manufacturing more competitive.

As per an analysis, six discrete manufacturing sectors – food processing, automotive, electronics, apparel, leather products, footwear and furniture – will be set up. Separate industrial clusters are also proposed in the CEZs to be built in the coastal states of the country.

The proposed Coastal Economic Zones are named Kachch, Suryapur and Saurashtra in Gujarat, North Konkan and South Konkan in Maharashtra, Dakshin Kanara in Karnataka, Malabar in Kerela, Mannar, VCIC South and Poompuhar in Tamil Nadu, VCIC North and VCIC central in Andhra Pradesh, Kalinga in Odisha and Gaud in West Bengal.

The plan admits that there is a gap in demand and supply of skilled manpower to implement the project successfully in the coastal districts and required to be plugged using special skill development program. The Sagarmala Project proposes a massive  training drive among the people in the coastal regions to meet the requirement.

Sagarmala project aims to invest Rs 70,000 crore in facilitating economic growth by enhancing coastal shipping of goods.

 

Six megaports are planned in Sagarmala project.

S.No. New Port Location State Present Status
1. Sagar Island West Bengal Approval obtained for setting up Major See Port Sagar Port at Sagar Island. DPR prepared.Viability being re-examined in view of announcement of new port  Tajpur Port at Tajpur by State Govt. of West Bengal.
2. Paradip Outer Harbour Odisha DPR under preparation.
3. Sirkhazi Tamil Nadu Techno Economic Feasibility Report(TEFR) prepared.
4. Enayam Tamil Nadu In principle approval obtained for setting up Major Port at Enayam. DPR under preparation.
5. Belikeri Karnataka Techno Economic Feasibility Report (TEFR) prepared.
6. Vadhavan Maharashtra DPR under preparation.

How Sagarmala project with boost GDP by 2 pc?

Logistics solutions provider Global Ocean Group today said the government’s ambitious Sagarmala project will add 2 per cent to the country’s GDP.

The Sagarmala project, a progamme aimed at economic development of the country through port-led activities, will boost the GDP by 2 per cent, the company said in a statement.

Managing Director, Ocean Group, Brijesh Lohia said, “This project will boost economic activity near coastal locations and establish Coastal Economic Zones (CEZs).”

Kandla Port has been identified as a potential CEZ. The project will redevelop existing port infrastructure through upgrade in port handling equipment and extensive use of IT in improving monitoring and operations of port activity, he said.

The project is expected to enhance shipping and port handling capacity, the company said.

“India offers great potential for developing offshore renewable energy and government has accorded due priority to attract investment in this area. The power generated will feed the coastal activity and also contribute to the national grid,” Lohia said.

 

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