The maritime industry in India is on a notable upward trend. Major ports are witnessing an increase in cargo handling, and the demand for containers is also likely to rise in the future. Among other major developments, the government has laid the foundation stone for the development of Vadhavan port in Palghar district in Maharashtra, driven by the need for additional capacity in the state and a deep draught facility. The port can cater to the states of Maharashtra, Gujarat, the western parts of Madhya Pradesh, and northern states such as Haryana, Uttar Pradesh and Himachal Pradesh.
Pressing need
The two major ports of Maharashtra, Mumbai port and the Jawaharlal Nehru Port, are increasingly facing capacity constraints. Urban development around these facilities and their limited harbour depth further hinder expansion possibilities. Owing to these roadblocks, the need to locate a new port site in the state that could cater to the increasing need for port capacity and handle future deep draught ships became essential. To meet these requirements, the development of Vadhavan port was taken up under the Sagarmala programme. It was proposed by the Jawaharlal Nehru Port Authority (JNPA), supported by the Government of Maharashtra and the Maharashtra Maritime Board (MMB). An MoU for the setting up of this new major port was signed in June 2015, to be notified under the Indian Ports Act, 1908, by the Government of India. The selected site possesses various natural and strategic advantages. With a natural depth of around 20 metres, this deep draught port can tackle the growing size of container ships.
Key features
Vadhavan port is located about 140 km from Mumbai, 150 km to the north of JNPA, 180 km to the south of Surat and 160 km west of Nashik. It is about 34 km away from the Delhi-Mumbai National Highway (NH-8), and about 22 km from the Mumbai-Baroda Express Highway. It is also located in close proximity to the national railway grid, at a distance of 10 km.
The port is slated to feature nine container terminals spanning 1,000 metres each, four multipurpose berths including the coastal berth, four liquid cargo berths, a roll-on-roll-off berth and a coastguard berth. With a natural depth of 20 metres, the port will have a capacity of 298 mtpa, including a container handling capacity of 23.2 million twenty-foot equivalent units (TEUs).
Additionally, the port will feature advanced cargo handling equipment, automated systems and efficient transportation links to ensure smooth operations. These modern facilities could make India a more attractive destination for international shipping companies, potentially increasing trade to
Indian shores.
Among other notable features, the port site offers various benefits such as doing away with the need for capital dredging in the navigational channel and harbour area due to the naturally available draught. The port is also strategically planned to have adequate road and rail connectivity, with the cabinet having recently approved road connectivity between the port and the national highways, and rail connectivity to the existing network and the upcoming dedicated rail freight corridor.
In 2035, the port is expected to add a container capacity of 15 million TEUs, which is targeted to rise to over 23 million TEUs by 2040.
Current status and recent developments
The port has been witnessing gradual progress in approvals and other works. In February 2024, it received approval from the Public Investment Board and clearance from the Maharashtra Coastal Zone Management Authority. Later, in June 2024, the project received approval from the union cabinet. Soon after, it achieved a notable milestone, with the central government laying its foundation stone in August 2024.
Various MoUs have also been signed for works at the port. APM Terminals signed an MoU worth Rs 200 billion with JNPA in January 2024 for the development of a new container terminal. Later, in June 2024, JNPA signed two MoUs worth Rs 400 billion with PSA (India) and CMA CGM.
With the rising focus on connectivity, the 32 km highway stretch between the port and NH-48 was declared a national highway by the Ministry of Road Transport and Highways in August 2024. The road, in addition to other benefits, is expected to enable the movement of quarry material from quarry sites to the port. A tender for the construction of the initial 20 km stretch of the road is expected to be issued soon.
Further, in September 2024, Vadhavan Port Project Limited (VPPL) invited bids for monitoring the environmental management plan of the project for compliance with the conditions required for environment clearance and coastal regulation zone clearance. A total of six firms submitted bids. The work is expected to be completed in three years at an estimated cost of Rs 40.64 million.
In terms of the project timelines, Phase I is likely to be completed by 2029, while the second phase is expected to be completed by 2037.
Funding plans
The Vadhavan port project will be developed under the landlord port model in two phases by VPPL, a special purpose vehicle under JNPA and MMB. JNPA will be the lead partner with equity participation of 74 per cent, while MMB will have a 26 per cent share. The project will be developed at an estimated cost of Rs 762.2 billion under the public-private partnership mode.
The total debt requirement for the project is estimated to be Rs 272.83 billion, which includes Rs 215.98 billion in Phase I and Rs 56.85 billion in Phase II. Sources indicate that Power Finance Corporation Limited has offered to underwrite the total debt of Rs 272.83 billion, and this is likely to be one of the biggest debt financings for a port project in India, once finalised. Moreover, the Japan International Cooperation Agency has expressed interest in providing funding support.
Recently, the Rural Electrification Corporation (REC) and JNPA signed an MoU whereby REC is to provide up to Rs 450 billion for the infrastructure of JNPA which also includes the development of the Vadhavan port.
More interestingly, JNPA has recently proposed changes to the hybrid annuity mode (HAM) for dredging, offshore reclamation and shore protection works under Vadhavan port. This will be the first time that a port project in the country adopts HAM for such works. In November 2024, JNPA approved a proposal to undertake works entailing an estimated Rs 206.47 billion in two phases. The proposal seeks to adopt a 60:40 payment structure, instead of the 40:60 model used by NHAI. Under this, the first 60 per cent of the project cost will be paid over three years to align with the construction period. Around 800 hectares of land will be reclaimed in Phase I and 400 hectares in Phase II. The remaining 40 per cent will be paid during the maintenance period, spanning around 10 years. The proposal is soon to be submitted to the Ministry of Ports, Shipping and Waterways, which will then forward it to the Public-Private Partnership Appraisal Committee for approval.
Challenges
In the past few years, the port project faced protests at every step, becoming a sensitive issue in Palghar district, which is located just outside Mumbai. While the port will boost the logistics efficiency and economy of the region, the local population fears displacement and substantial harm to the environment. The affected population requires sensitive handling and compensation. The construction of the port could also impact local marine ecosystems and coastal areas, necessitating the implementation of effective mitigation measures. Additionally, the port is likely to face land acquisition issues for road and rail connectivity.
The project has also faced legal challenges, including a public interest litigation (PIL) filed by the Conservation Action Trust, citing environmental concerns. However, the Mumbai High Court has dismissed the PIL.
The way ahead
The Vadhavan port project, being aligned with the objectives of the PM Gati Shakti programme, is expected to spur economic activity and generate direct and indirect employment opportunities for around 1.2 million individuals, thereby contributing to the local economy. Once completed, Vadhavan Port is anticipated to rank among the top 10 container ports of the world. The long-term success in the port will require a balance between economic development and environmental sustainability, while addressing the concerns of all stakeholders.
Going forward, the port is expected to aid export-import trade through the India-Middle East-Europe Economic Corridor and the International North-South Transport Corridor. The world-class maritime terminal facilities at the port will leverage modern technologies to handle mainline vessels plying on the international shipping routes between the Far East, Europe, the Middle East, Africa and the US.
