On 25 March 2015, the Union Cabinet, chaired by Prime Minister Narendra Modi, gave the final nod to proceed with the Sagarmala Project and prepare the concept and institutional framework. It was a significant development in India’s growth story. Taking ex-PM Atal Bihari Vajpayee’s dream project forward, Modi has rightly identified Sagarmala as a crucial infrastructure initiative whose development has the potential to boost India’s GDP by 2%.
Why is Sagarmala Project So Crucial for India?
India is bound by sea on three sides and has a 7,516.6 km coastline, making it the 7th largest in the world. Therefore, it is only natural that Indian ports handle 90% of the export-import trade volume. But that does not tell the entire story. The railways contribute 9% to the GDP, the road sector contributes 6%, whereas the ports’ share of GDP is only 1%! This contradiction reflects the vast potential for development of coastal cities and ports.
India suffers from poor port linkages, under performance of existing port infrastructure and lack of developed infrastructure near ports, for value addition of inbound or outbound merchandise. Along with this, an inefficient inter-modal transport connectivity results in high cost of logistics and exports. The share of merchandise trade in GDP for Germany is 75%, and for European Union it is 70%. For India, it is 42%. The Sagarmala project aims to improve this.
The present government has therefore prioritised the development of coastal cities, along with existing and new port development, as growth drivers.
The Sagarmala Project Stands on Three Pillars of Focus
Supporting port-led development with pro-active policy initiatives and providing institutional framework to assist all stakeholders.
Modernising port infrastructure.
Developing integrated transport infrastructure for connecting the coast to the hinterland.
The Current Infrastructure Scenario
Unfortunately, the country has not focussed on developing the coastal and port infrastructure in an integrated manner that would have realised its full potential. Today, most ports lack adequate cargo handling infrastructure. The ship turnaround time is poor compared to most other developed ports in China, Japan, Korea, Dubai, Netherlands, etc. The loading-unloading processes are cumbersome. The rail and road connectivity to the hinterland is inadequate. Industrial centres near port locations that can offer value addition are also lacking.
Integrated Development at the Core of Sagarmala Project
Under the project, 12 smart cities will be developed near ports with an investment of Rs 50,000 crore. These will be integrated townships that will have affordable housing and implement green initiatives for sustainable living. The government has identified 1,208 islands for development along with 189 light houses. This is likely to boost both domestic and international tourism significantly.
Giving boost to economic activity near coastal locations, Coastal Economic Zones (CEZs) will be established. These CEZs will be planned with modern support infrastructure and adequate fiscal incentives to attract investment. Kandla Port in Gujarat, for instance, has around two lakh acres of land in its possession and has been identified as a potential CEZ.
The project will undertake redevelopment of existing port infrastructure through upgrade in port handling equipment and extensive use of IT in improving monitoring and operations of port activity. Jawaharlal Nehru Port Trust, which is one of the 12 major ports in India, will receive Rs 4,000 crore to develop its SEZ.
The project will identify suitable port locations with deep drafts to enhance shipping and port handling capacity. Specialised ports with focus on handling coal, energy, chemicals, commodities, etc., will be developed.
Development and linking of short-sea shipping, coastal shipping and inland waterways transportation will get the due attention. Further development of ship building, ship repair and ship recycling industry will also be a priority. Enhanced development of offshore drilling and storage platforms is another objective of the project. It also aims at developing logistics parks and warehousing near coastal locations to support port activity.
With its long coastline, India offers great potential for developing offshore renewable energy and government has accorded due priority to attract investment in this area. The power generated will feed the coastal activity and also contribute to the national grid.
The Government Means Business
The government is planning a comprehensive National Perspective Plan (NPP) to be prepared in six months. The NPP will identify suitable geographical locations along the coast to develop as CEZs. The NPP will endeavour to synergise and integrate the CEZs with various existing government development initiatives like the National Highways Development, Inland Waterways, Smart Cities, SEZs, Industrial Corridors and Dedicated Freight Corridors.
Sagarmala Coordination and Steering Committee
To plan, initiate, supervise and monitor the Sagarmala project at the apex level, A Sagarmala Coordination and Steering Committee (SCSC) will be constituted under the chairmanship of the Cabinet Secretary and will have on board Secretaries from the Ministry of Shipping, Road Transport and Highways, Industrial Policy and Promotion, Environment, Forest & Climate Change, Revenue, Expenditure, Defence, Home Affairs, Chairman Railway Board and the CEO of NITI Aayog. The SCSC will ensure fund availability and oversee smooth coordination among various arms of the central government and state governments and agencies.
Under the Federal structure, the states will play a major role in implementing and facilitating development in their respective areas. Each stakeholder state will have a State Sagarmala Committee (SSC) that will be headed by the Chief Minister or the Minister in charge of Ports. The panel will comprise members of relevant departments and agencies. The State Maritime Board or the State Port Development will report to the SSC and monitor and implement projects in the state. To facilitate investments in CEZs and port development activities, the government is open to setting up of Special Purposes Vehicles (SPVs). The SSC will coordinate with the SPVs for speedy implementation of individual projects.
The central government proposes to establish Sagarmala Development Company (SDC), under the Companies Act 1956, that will extend equity support to SPVs operating in various states. The SDC will be mandated to prepare Detailed Master Plans for various proposed zones within a period of two years and submit a business plan within six months.
The central government has allocated Rs 692 crore for FY ’15-’16 for launching of the initial phase.
Sagarmala Could Well Emerge a Jewel in the NDA Crown
The need exists as does the opportunity to develop India’s coastal potential and while it was Atal Bihari Vajpayee who dreamt of it, the credit for its launch and implementation will remain with PM Modi. If successfully implemented, this will be yet another success story for the PM to flaunt at the time of the next general elections.