Sagarmala Programme : Concept and implementation

 
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.

Under Sagarmala Programme,  415 projects, at an estimated investment of approximately  Rs.8 Lac Crore, have been identified across port modernization & new port development, port connectivity enhancement, port-linked industrialization and coastal community development for phase wise implementation over the period 2015 to 2035. As per the approved implementation plan of Sagarmala Programme, these projects are to be taken up by the relevant Central Ministries/Agencies and State Governments preferably through private/PPP mode. The details are as below.

 As part of the Sagarmala Programme, 6 new port locations have been identified, namely – Vadhavan, Enayam, Sagar Island, Paradip Outer Harbour, Sirkazhi and Belekeri. The current status of each of the proposed new port locations is as follows:

Increasing the share of coastal shipping and inland navigation  in the transport modal mix is one of the key objectives of the Sagarmala Programme.   In order to equip ports for movement of coastal cargo, the scope of coastal berth scheme has been expanded and merged with Sagarmala Programme. Under the scheme, the financial assistance of 50% of  project cost is provided to  Major Ports/State Governments for construction of Coastal Berths,  Breakwater, mechanization of coastal berths and capital dredging. Rs. 152 Cr has been released for 16 projects under this scheme.  In addition, Cabotage has been relaxed for a period of 5 years for specialized vessels like RO-RO, RO-PAX etc.

Components of Sagarmala Programme are:

• Port Modernization & New Port Development: De-bottlenecking and capacity expansion of existing ports and development of new greenfield ports
• Port Connectivity Enhancement: Enhancing the connectivity of the ports to the hinterland, optimizing cost and time of cargo movement through multi-modal logistics solutions including domestic waterways (inland water transport and coastal shipping)
• Port-linked Industrialization: Developing port-proximate industrial clusters and Coastal Economic Zones to reduce logistics cost and time of EXIM and domestic cargo
• Coastal Community Development: Promoting sustainable development of coastal communities through skill development & livelihood generation activities, fisheries development, coastal tourism etc.

To augment transhipment capacity in the country, Vizhinjam (Kerala) and Enayam (Tamil Nadu) are being developed as transhipment ports. Vizhinjam is being developed as transhipment hub under PPP mode by Government of Kerala with Viability Gap Funding from Government of India. In principle approval has been obtained for setting up a Major Port at Enayam and its DPR is under preparation.

For promoting port-led industrialization, 14 Coastal Economic Zones (CEZs) covering all the Maritime States and Union Territories have been identified as part of the National Perspective Plan under the SagarmalaProgramme. The Perspective Plans for all 14 CEZs have been prepared in consultation with relevant State Governments and Central Ministries. The list of 14 proposed CEZs identified in the National Perspective Plan for Sagarmalais as follows:-

Need for Port-Led Development in India

India is one of the fastest growing large economies in the world with a GDP growth rate of 7.5% in 2015-16 and ports play an important role in the overall economic development of the country. Approximately 95 % of India’s merchandise trade (by volume) passes through sea ports. Many ports in India are evolving into specialized centres of economic activities and services and are vital to sustain future economic growth of the country such as JNPT, Mundra Port, Sikka Port, Hazira Port etc.
However, Indian ports still have to address infrastructural and operational challenges before they graduate to the next level. For example, operational efficiency of Indian ports has improved over the years but still lags behind the global average. Turnaround time (TAT) at major ports was approximately 4 days in 2014-15, whereas global average benchmark is 1-2 days. Some of the private sector ports in India like Mundra and Gangavaram, have been able to achieve a turnaround time of around 2 days.
Secondly, last mile connectivity to the ports is one of the major constraints in smooth movement of cargo to/from the hinterland. Around 87% of Indian freight uses either road or rail for transportation of goods. A significant share of this cargo experiences “idle time” during its transit to the ports due to capacity constraints on highways and railway lines connecting ports to production and consumption centers. Although water-borne transport is much safer, cheaper and cleaner, compared to other modes of transportation, it accounts for less than 6% of India’s modal split. By comparison, coastal and inland water transportation contribute to 47% of China’s freight modal mix, while in Japan and US, this share is 34% and 12.4% respectively. Significant savings can be achieved by shifting movement of industrial commodities like coal, iron ore, cement and steel to coastal and inland waterways.

However, more than 90% of coal currently moves via railways. The constraints on connectivity and sub-optimal modal mix results in higher logistics cost thereby affecting the manufacturing sector and export competitiveness.
The third factor is the location of industries / manufacturing centres vis-à-vis the ports. While cost differential between India and China is not significant on a per tonne km basis, China still has a lower container exporting cost, than the cost in India, due to lower lead distances . Presence of major manufacturing and industrial zones in coastal regions in China, which were developed as part of the Port-Led Policy of the government is the main reason for lower lead distances.
Any programme for port-led development needs to consider the above mentioned factors to effectively harness the potential of India’s long coastline.