Launched in July 2015, the Sagarmala programme is geared towards port-led development. It is harnessing the coastline, potentially navigable waterways and strategic locations on key international maritime trade routes. The maritime sector has benefited from the government’s strong intent and increased support for port-led development. While the potential of coastal shipping and inland waterways largely remains untapped, two segments have received the much-needed attention under the programme. Going forward, the effective and efficient implementation of the programme is expected to provide an impetus to the country’s maritime sector.
Project background and progress so far
The flagship programme of the Ministry of Ports, Shipping and Waterways (MoPSW), Sagarmala aims to reduce the logistics costs for export-import (exim) and domestic trade with minimal investments in infrastructure. The concept of Sagarmala was approved by the union cabinet in 2015, and it became a part of the National Perspective Plan released in 2016. The four pillars of this programme are port modernisation and new port development, port connectivity improvement, port-led industrial development and coastal community development.
As of January 20, 2020, the MoPSW has released funds worth Rs 11.02 billion for 70 projects under the programme. Of the total funds released, about 52 per cent pertain to the port modernisation component, while 33 per cent account for coastal community development.
Overall, the programme has 513 projects at different stages of implementation. These entail an investment of about Rs 4,477 billion. Of this, around 50 per cent is envisaged for port connectivity, 32 per cent for port-led industrialisation, and 18 per cent for port modernisation and development of new ports. The projects will be undertaken by the respective implementing agencies, with investments coming through central and state government sources, public-private partnerships (PPPs) and private investments. As of May 2020, of the 513 projects, 142 projects worth Rs 871 billion stood completed. Component-wise, port modernisation and new port development has witnessed significant progress in the past few years. Meanwhile, the port connectivity component has witnessed the least progress, with only 37 out of 214 projects completed, representing a 17 per cent share.
A look at the progress made under the four components of Sagarmala…
Port modernisation and new development
In a bid to cater to the growing traffic, Sagarmala envisions increasing the capacity of ports from the current level of 1,500 million tonnes per annum (mtpa) to more than 3,500 mtpa by 2025. As of May 2020, a total of 208 projects worth Rs 789 billion are at various stages of development under the modernisation and new port development component. Of these, 62 projects entailing an investment of Rs 248 billion are currently under implementation. Meanwhile, 80 projects have been completed at an investment of Rs 238 billion. Of the completed projects, 63 were carried out on an engineering, procurement and construction (EPC) basis, 12 on a PPP basis and five on a non-PPP basis.
The union cabinet gave a major impetus to new port development with its in-principle approval for the development of a major port at Vadhavan, near Dahanu, in Maharashtra. The port will be developed on a landlord model and is estimated to entail an investment of Rs 655.45 billion. The development of the new port will enable call of container vessels with a capacity of 16,000-25,000 twenty-foot equivalent units.
The port connectivity component includes the construction of coastal berths at various major and non-major ports, connectivity to dedicated freight corridors, last-mile rail and road connectivity projects, freight-friendly expressway projects connecting major ports, and development of multimodal logistics parks. As of May 2020, a total of 214 projects worth Rs 2.2 trillion were being implemented under this component. Of these, 185 projects worth over Rs 1.8 trillion pertain to road and rail connectivity, whereas projects worth over Rs 200 billion are part of the waterways- and pipeline-based port connectivity component.
Port connectivity projects under Sagarmala have witnessed moderate progress in the past few years. So far, 37 projects entailing an investment of Rs 167.04 billion stand completed, whereas 94 projects worth Rs 1.2 trillion are currently under implementation. Meanwhile, the detailed project reports of another 70 port connectivity projects are currently being prepared.
Port-rail connectivity received a further boost with the incorporation of Indian Port Rail Corporation Limited (IPRCL) under the MoPSW. IPRCL’s main objective is to aid rail connectivity to major ports. As of December 2020, IPRCL had completed 16 projects entailing an investment of Rs 3.49 billion. Meanwhile, work on 16 projects worth Rs 14.89 billion is in progress.
Port-led industrial development
A total of 14 coastal economic zones (CEZs) have been identified in Gujarat, Maharashtra, Andhra Pradesh, Karnataka, Tamil Nadu, Kerala, Odisha and West Bengal under the port-led industrial development component. Each CEZ will comprise multiple coastal economic units (CEUs), with each CEU capable of housing more than one industrial cluster. As of May 2020, there are 32 projects worth Rs 1.4 trillion at various stages of development.
Project implementation under the port-led industrial development component has picked up pace in the past few years, with eight projects worth Rs 453 billion completed and another 22 projects worth Rs 957 billion under implementation. Hence, more than 99 per cent of the projects (in terms of cost) have either been completed or are under implementation.
Coastal community development
Coastal community development through marine sector-related activities such as fisheries, maritime tourism and corresponding skill development is a key component of Sagarmala. The development of cruise tourism and lighthouse tourism is a key activity in the purview of this component.
As of May 2020, there are 59 projects worth Rs 53 billion pertaining to coastal community development. Of these, 17 projects worth Rs 13.84 billion have been completed. Moreover, 19 projects (Rs 9.23 billion) are currently under implementation. As far as the mode of implementation is concerned, 47 projects are being implemented on an EPC basis, five on a PPP basis and six on a non-PPP basis. The implementation mode for one project is yet to be decided.
Maritime India Vision 2030
The Maritime India Vision 2030 is a 10-year blueprint for the Indian maritime sector. The vision document, which would supersede the Sagarmala programme, is being developed to build waterways, encourage cruise tourism and give a much-needed fillip to the shipbuilding industry. It will include several policy initiatives and development projects under its ambit, entailing an investment of Rs 3.5 trillion, to double cargo volumes to 2,600 million tonnes. It is expected to unlock additional annual revenue of about Rs 200 billion for the major ports.
In terms of funding, a Rs 250 billion maritime development fund will be created to provide low-cost, long-tenore financing to the sector, with the central government contributing Rs 25 billion over seven years. Moreover, the Riverine Development Fund will be created for extending low-cost, long-term financing for inland vessels, and extending the coverage of the tonnage tax scheme to inland vessels to enhance the availability of such vessels.
In other developments, a pan-India port authority will be set up under the new Indian Ports Act to enable oversight across major and non-major ports, enhance institutional coverage for ports and provide structured growth to the port sector to improve investor confidence. Besides, an eastern waterways connectivity transport grid project will be implemented to improve regional connectivity with Bangladesh, Nepal, Bhutan and Myanmar. All such initiatives are expected to increase efficiency in the sector and improve the competitiveness of Indian shippers in international trade.
The way forward
The multidimensional approach of the Sagarmala programme and the promising scope of the Maritime India Vision 2030 have the ability to revolutionise not only the maritime sector, but the logistics sector as a whole. These initiatives have been successful in generating an encouraging response from the sector. However, their timely and effective execution will be a key factor in driving the sector’s actual growth. Going forward, it will be critical to ensure that the maritime policies and initiatives are translated into fruitful actions to facilitate the sector’s holistic growth.