Since its launch four years ago, Sagarmala, the government’s flagship programme for the maritime sector, has finally picked up pace. Progress under the port modernisation and port connectivity components has been quite visible. In the past couple of years, some key milestones have been achieved such as the start of container movement on inland waterways; completion of the multimodal terminal in Varanasi (as part of the Jal Marg Vikas Programme), the fourth container terminal at the Jawaharlal Nehru Port Trust (JNPT) and the port-based mega food processing park in Kakinada; and expansion of the Salaya-Mathura pipeline.
The successful and timely completion of the programme can be a game changer for the maritime sector. With its focus on port modernisation and mechanisation, development of new ports, improving port-road and port-rail connectivity, and promoting coastal tourism and coastal community development, it covers all possible aspects to facilitate multidimensional growth and take the sector beyond its traditional role.
However, execution is not that easy. Given the large variety of projects, the massive investments to be sourced from different agencies and the need for effective coordination between the central and state governments, the actual implementation of projects could take more time than targeted. This can be gauged from the fact that since its launch in March 2015, about 70 per cent of the projects are still at the feasibility or preliminary/planning stages.
Progress so far
As part of the programme, the Ministry of Shipping (MoS) has identified a total of 601 projects involving an investment of around Rs 9 trillion. Of this, 105 projects worth around Rs 166 billion, accounting for 17 per cent and around 2 per cent in terms of projects and investment, respectively, stand completed as of January 25, 2019. The progress under the four components is discussed below:
Component I: Port modernisation and new port development
Master plans for 12 major ports have been finalised so far. Based on this, 108 port capacity expansion projects at an estimated cost of Rs 678 billion have been identified for implementation till 2035. These projects are expected to add 785 million tonnes per annum (mtpa) of capacity to the major ports. Till January 2019, around 20 projects have been completed at an investment of Rs 80.79 billion, while 39 projects worth Rs 215 billion are under implementation.
Component II: Port connectivity
Under the second component of the Sagarmala programme, priority has been given to providing enhanced connectivity between ports and domestic production/consumption centres. Till January 25, 2019, over 213 projects, entailing an investment of over Rs 2.51 trillion, have been identified under the port connectivity enhancement component. Development of expressways with dedicated freight lanes accounts for the highest share of around 50 per cent in total investment under the component. This is followed by road connectivity projects for the major and non-major ports (22 per cent) and railway connectivity projects (19 per cent).
Around 14 per cent of the total 213 projects have been completed under the port connectivity enhancement component, while 30 per cent are currently under implementation. Besides, the remaining 121 projects are currently in the pipeline – in the planning, detailed project report (DPR) preparation and bidding stages. These projects entail an investment of around Rs 1.85 trillion.
Indian Port Rail Corporation Limited (IPRCL), a dedicated company set up to undertake last-mile connectivity projects, has taken up 33 projects, entailing an investment of Rs 183 billion, for providing port-rail connectivity. Of these, eight projects worth Rs 1.75 billion have been completed.
Further, around 23 rail connectivity projects are being undertaken by the Ministry of Railways at an estimated cost of Rs 248.77 billion. Of these, seven projects worth Rs 25 billion stand completed. In addition, 15 projects (worth Rs 42 billion) have been taken up by port operators or special purpose vehicles set up by them to provide connectivity to their respective ports. Of these projects, three, involving an investment of Rs 520 million, have been completed.
A total of 112 port-road connectivity projects have been identified. Of these, 54 projects worth Rs 221.58 billion are being implemented under the Bharatmala Pariyojana. Around 101 projects will be executed by the Ministry of Road Transport and Highways (MoRTH) and the National Highways Authority of India (NHAI), while the remaining 11 road projects will be executed by state public works departments, port authorities and the Sagarmala Development Company in coordination with the MoRTH and NHAI. As on January 25, 2019, six projects (Rs 2.83 billion) stand completed.
Meanwhile, the Coastal Berth Scheme (CBS) has been extended up to March 2020 and merged with the Sagarmala programme. Around 59 projects, costing Rs 26.46 billion, have been identified under the CBS. Five projects worth Rs 2.15 billion stand completed. So far, funds amounting to Rs 3.48 billion have been released to the major ports, state maritime boards and the state governments under the scheme.
Component III: Port-led industrialisation
Overall, 14 coastal economic zones (CEZs) have been identified under the port-led industrialisation component of Sagarmala. Each CEZ will comprise multiple coastal economic units (CEUs) and more than one industrial cluster can be housed within a CEU.
As of January 2019, perspective plans for CEZs have been prepared and detailed master plans are being prepared for four pilot CEZs in Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh under Phase I of development. Besides, based on the recommendations of Inter-Ministerial Committee for CEZ Development, NITI Aayog is currently in the process of finalising a policy framework for the development of CEZs.
Based on the detailed origin-destination study for key commodities, a total of 38 potential port-linked industrial clusters have been identified across the energy, materials, discrete manufacturing and maritime sectors. Of these, two projects have been completed. These entail an investment of Rs 5.12 billion. Meanwhile, 14 industrial clusters are currently under implementation – three power clusters (Rs 765.47 billion) in Krishnapatnam, Ennore and Tuticorin, eight electronics manufacturing clusters (Rs 17.04 billion) in Andhra Pradesh, Gujarat, Odisha, Kerala and West Bengal, and three food processing parks (Rs 13.48 billion) in Andhra Pradesh and Kerala. Further, development of a special economic zone (SEZ) at JNPT and smart industrial port cities at Paradip and Kandla are also under implementation, and DPRs are being prepared for CEUs at V.O. Chidambaranar and Kamarajar ports.
Component IV: Coastal community development
As on January 25, 2019, the MoS had identified 23 skill development projects, entailing an investment of Rs 12 billion. Of these, funds worth Rs 984.4 million have been released by the ministry for undertaking nine projects.
Around 1,987 people have been trained and 1,123 people have been placed in jobs. Besides, the MoS is also funding the fire safety training project for workers at the Alang-Sosiya shipyard. Till now, over 5,745 workers have been freshly trained and 9,722 workers have been given refresher training under the project.
Centres of Excellence in Maritime and Shipbuilding have been set up at Visakhapatnam and Mumbai in coordination with the Indian Register of Shipping and Siemens Limited. With a view to achieving 100 per cent skilled manpower at ports, multi-skill development centres are being developed at all the major ports. One center at JNPT has already been set up, while those at Chennai, Visakhapatnam and Cochin ports are currently under implementation.
The MoS has also set up the National Technology Centre for Ports, Waterways and Coasts (NTCPWC) at IIT Madras. Currently, 10 projects are being undertaken at the NTCPWC.
In order to support development of the fisherman community, the MoS, along with the Department of Animal Husbandry, Dairying and Fisheries, is part-funding selected fishing harbour projects to improve the livelihood of fishermen. As of January 2019, around Rs 1.99 billion has been released by the MoS for 14 projects.
The Sagarmala programme envisages an investment of over Rs 8.78 trillion during 2015-35. Around 54 per cent of the total investment is envisaged for the port-led industrialisation component, followed by 29 per cent for port connectivity and the remaining for port modernisation and coastal community development. The projects will be undertaken by the respective implementing agencies, with investments coming from central and state government sources, public-private partnerships, etc.
Of the total planned investment of Rs 8.78 trillion, the MoS has released a total of Rs 10.18 billion for 70 projects till 2018-19 (as of January 2019). Around 55 per cent of the total funds released is for the port modernisation component, while 29 per cent is for coastal community development. The remaining 16 per cent of the funds released is for the port connectivity component.
Challenges and the way forward
Sagarmala, with its multi-pronged approach towards port-led development, can revolutionise not only the maritime sector but the entire logistics sector. Though the programme has generated lot of optimism, its timely and effective execution will be a key factor in driving growth of the sector. So far, only 2 per cent of the projects (in terms of cost) have been completed and 29 per cent are under implementation; the remaining 69 per cent are still under feasibility assessment and at the planning/preliminary stages.
Further, there are still legal and procedural delays, as well as the usual issues in terms of land acquisition, clearances, etc., affecting project execution. Financing is another major issue. Under the 2019-20 budget, a modest allocation of Rs 5.5 billion has been made for Sagarmala, though it is higher than the revised estimates of Rs 4 billion in 2018-19. Considering this, there continue to be major challenges in terms of mobilisation of funds, especially for the two components – development of industrial clusters and coastal communities – where progress has been limited.
To conclude, given the broad-based scope of the programme involving multiple stakeholders, effective coordination among them needs to be ensured. Enabling policies, robust institutional structures and appropriate financing and funding mechanisms will be critical for inclusive growth under the programme.