India’s port capacity and strategy

Sea of Opportunities

Business & Politics

News - Biz@India

April 19, 2016

/ By / New Delhi



Anchored for very long port development in India has began to look promising after its Prime Minister Narendra Modi announced a comprehensive plan to increase India’s port handling capacity to 3,000 million tonnes (mt) by 2025, from the present 1,400 mt. With this India envisages an investment worth IRN 1 lakh crore to meet this target, Modi announced during his inaugural speech at the maiden Maritime India Summit.

Inaugurating the first Maritime India Summit in Mumbai on 14 April, Modi said over the last two years major ports have awarded 56 new projects with an investment of more than IRN 250 billion. According to PM, this will help create an additional capacity of 317 million tonnes per annum.

“Five new ports are planned to meet the increasing demand of the export-import trade, which will rise in proportion with the fast-growing Indian economy. New ports are also being developed by several coastal states of India,” Modi said.

India’s port sector like other infrastructure sectors is in need of revitalisation. Now this is being under taken “Project Sagarmala” that aims to modernise India’s ports. This is essential if India wants to boost not only maritime trade but also higher economic growth. It envisages massive infrastructure spending of INR 70,000 crore to upgrade 12 major ports, and of over INR 1 trillion for capacity enhancement, modernisation and port-led industrial development.

The Sagarmala programme will involve more than 150 projects related to modernisation of existing ports, setting up 5-6 new ports, port connectivity through heavy haul rail corridor, inland waterways, freight-friendly expressways, coastal Special Economic Zones and industrial clusters, and so on.

The perspective plan of Sagarmala Project, released at the summit, aims at dozen benefits, namely promote port-led development, improve the coastal economy, modernise ports, integrate them with special economic zones, create port-based smart cities, industrial parks, warehouses, logistics parks, transport corridors, boost merchandise exports to $110 billion by 2025, and create 4 million direct jobs and indirect employment for 6 million people.

As Prime Minister Modi said in Mumbai, apart from the length of the coastline, 7,500 km, “India’s maritime potential also lies in its strategic location on all major shipping highways.”

Diplomatic and strategic issues

Besides the Sagarmala Project, India must prioritise SAGAR (Security And Growth for All in the Region) initiative, as it is all inclusive, involving economic, diplomatic and strategic issues. Economic initiative is the best route to address strategic concerns. Building maritime infrastructure involves investing and assisting in the development of maritime infrastructure in the Indian Ocean Region, and especially in Bangladesh, Myanmar, Sri Lanka Maldives, Oman and Iran.

So SAGAR should be accorded top priority to balance the heavy presence of China, in terms of maritime infrastructure development and investment.

Beijing has partnered with a dozen countries in port projects and facilities from Malacca to the Indian Ocean to the east coast of Africa – the “string of pearls” construct: Gwadar (in Pakistan), Hambantota (in Sri Lanka), Chittagong (in Bangladesh) and Sittwe (in Myanmar). China has offered $500 million in soft loans for infrastructure and housing projects to the Maldives, and over $700 million to Mauritius for expansion of its airport and special economic zone.

So to counter Chinese over drive into the Indian Ocean Region, India must participate and subsidise, the infrastructure projects in India’s strategic neighbourhood.

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