Making Headway: Progress report of the Sagarmala programme

Progress report of the Sagarmala programme

The central government released the National Perspective Plan (NPP) in April 2016 detailing the contours of its flagship programme Sagarmala, which is intended to promote port-led development in the country. This is the first time that the government’s focus has shifted from port development to port-led development. The NPP has unveiled a number of projects to be implemented under the four pillars of Sagarmala to unlock the potential of India’s vast coastline of over 7,500 km.

Background and scope

The Sagarmala programme, launched by the central government on July 31, 2015, aims to promote port-led development (both direct and indirect) and provide infrastructure to transport goods to and from ports in a quick, efficient and cost-effective manner. The four pillars of the programme are port modernisation and new port development, port connectivity

enhancement, port-led industrial development, and coastal community development. Thereafter, under the NPP more than 400 projects were identified to be implemented during 2015-35 across the four focus areas of Sagarmala. In September 2016, the Sagarmala Development Company was incorporated for effective implementation of these projects. Of the 415 projects, the Ministry of Shipping (MoS) has identified about 200 focus projects worth Rs 3.3 trillion targeted to be implemented under Sagarmala till 2019.

In terms of project funding, the central and state governments are expected to provide three-fourths of the total funding. Besides, the new sources of finance such as dollar-denominated loans are being explored to meet the huge requirement.

Progress under the four components Port modernisation and new port development

As per the studies carried out under Sagarmala, cargo traffic at Indian ports is expected to increase to 2,500 million tonnes per annum (mtpa) by 2025. To cater to the growing traffic, a roadmap has been prepared for increasing capacity at Indian ports from the present 1,500 mtpa to more than 3,500 mtpa by 2025. This includes operational efficiency improvement at ports, capacity expansion of existing ports and new port development.

For improving operational efficiency, a study to benchmark the performance of the major ports in the country to comparable international ports was undertaken and the recommendations are being implemented. The benchmarking study identified a total of 116 initiatives for implementation during 2016-18 to improve operational efficiency and profitability of the major ports. Of the 116 initiatives, 86 have already been implemented. In addition, enhancing the ease of doing business by streamlining procedures is also a major focus of the programme.

To bridge the demand-supply gap, six new ports have been planned for development for significant capacity expansion. The locations of the new ports were determined after detailed origin-destination studies of cargo commodities. The port locations were identified based on the cargo flow for key commodities and the projected traffic. The six greenfield ports are proposed to be developed at Vadhavan (Maharashtra), Sagar Island (West Bengal), Paradip Outer Harbour (Odisha), Cuddalore/ Sirkazhi and Enayam (Tamil Nadu), and Belikeri (Karnataka). While approvals for setting up the Sagar Island major port have been obtained, the viability of the project is being re-examined in view of the announcement of a new port at Tajpur by the West Bengal government. The techno-economic feasibility report has been prepared for the ports at Sirkazhi and Belikeri and the preparation of detailed project reports (DPRs) is in progress for the ports at Paradip Outer Harbour, Enayam and Vadhavan.

Port connectivity enhancement

Under the port connectivity enhancement component of Sagarmala, more than 150 connectivity projects at an estimated investment of over Rs 2,000 billion have been identified for implementation. The type of projects that have been considered under this component include coastal berths at various major and non-major ports, connectivity to dedicated freight corridors, last-mile rail and road connectivity projects, major rail connectivity projects, freight-friendly expressway projects connecting the major ports, and the development of multimodal logistics parks. These projects aim to improve road, rail and inland waterway connectivity to major and non-major ports.

As of October 2017, Indian Port Rail Corporation Limited had identified a total of 58 projects entailing an investment of Rs 168.21 billion, which are at various stages of implementation. Of these projects, 24 per cent (14 projects) are under construction, bids for 12 per cent (seven projects) are under process, 38 per cent (22 projects) works are under planning, discussion, development and review with the major ports, 14 per cent (eight projects) for rail connectivity to non-major ports are under planning and sanctions are awaited for the remaining 12 per cent (seven projects) works involving rail overbridges/rail underbridges works under the Setu Bharatam programme.

In addition, the scope of the Coastal Berth Scheme (CBS) has been expanded and merged with the Sagarmala programme. The MoS has taken up projects worth Rs 23.02 billion for financial assistance under the CBS. The MoS has extended the period of the scheme for three years, up to March 31, 2020 and in October 2017, expanded its scope to cover capital dredging at major ports and the preparation of DPRs for coastal berth projects.

With a view to boosting connectivity, Phase I of the roll-on, roll-off (ro-ro) ferry service between Ghogha and Dahej in Gujarat was inaugurated on October 22, 2017. The ro-ro ferry will ply between peninsular Saurashtra and South Gujarat in the Gulf of Khambhat. Allowing vehicles and passengers on board, the service is expected to save not only time but also fuel, and help decongest roads as more and more people avail of it.

Port connectivity enhancement

Under this component, 14 coastal economic zones (CEZs) have been identified in Gujarat, Maharashtra, Andhra Pradesh, and in the land bank of the Salt Department of Ennore in Tamil Nadu. Each CEZ will consist of multiple coastal economic units (CEUs) and more than one industrial cluster can be housed within a CEU. Based on a detailed origin-destination study of key commodities, a total of 29 port-linked industrial clusters have been identified across the energy, materials, discrete manufacturing and maritime sectors. As of January 2018, of the 14 CEZs, which were identified for implementation under Phase I, two are in advanced stages of implementation.

Coastal community development

The development of coastal communities through marine sector-related activities such as fisheries, maritime tourism and corresponding skill development is an essential objective of the Sagarmala programme. The development of cruise tourism and lighthouse tourism are other activities which have been included under the purview of Sagarmala.

In line with this, the foundation stone for the new international cruise terminal at Mumbai port was laid on January 11, 2018. The terminal will be constructed in accordance with global benchmarks to berth super-liner cruise ships and will have facilities such as shopping malls, duty-free shops, restaurants, hotels, etc. The terminal is expected to entail an investment Rs 3 billion and is scheduled to be completed by December 2019.

The way forward

The Sagarmala programme has a multi-pronged approach towards port-led development and is expected to revolutionise not only the maritime sector but the logistics sector as a whole. It is expected to increase export-import trade from the present 80 mtpa to 200 mtpa, thereby resulting in annual logistics cost savings of $4.5 billion-$6 billion and boost India’s merchandise exports to $110 billion by 2025. However, given the broad scope of the programme involving multiple stakeholders, effective coordination among them is essential. The factors which are critical for inclusive growth under the programme are the implementation of enabling policies, robust institutional structures and appropriate financing and funding mechanisms. Though Sagarmala is a welcome step, the timely and effective execution of projects will be key in driving growth.