All you need to know about Sagarmala projectMay 26, 2018
Indian ports and coastal regions are set to witness a sea change, thanks to the ambitious Sagarmala project mooted by the Centre. There is already enough wind under its sail — the National Perspective Plan for the scheme was released in April and a start has been made with three rail port connectivity projects worth ₹38 crore awarded.
What is it?
The Sagarmala is a series of projects to leverage the country’s coastline and inland waterways to drive industrial development. It was originally mooted by the Vajpayee government in 2003 as the waterways equivalent of the Golden Quadrilateral. Sagarmala, integrated with the development of inland waterways, is expected to reduce cost and time for transporting goods, benefiting industries and export/import trade.
The project is mammoth with 150 initiatives with a total outlay of ₹4 lakh crore, spread across four broad areas. One, modernise port infrastructure, add up to six new ports and enhance capacity. Two, improve port connectivity through rail corridors, freight-friendly expressways and inland waterways. Three, create 14 coastal economic zones or CEZs and a special economic zone at Jawaharlal Nehru Port Trust in Mumbai with manufacturing clusters to enable port-led industrialisation. Four, develop skills of fishermen and other coastal and island communities.
To implement this, State governments would set up State Sagarmala committees, headed by the chief minister or the minister in charge of ports. At the central level, a Sagarmala Development Company (SDC) will be set upto provide equity support to assist various special purpose vehicles (SPVs) set up for various projects.
Why is it important?
India is located along key international trade routes in the Indian Ocean and has a long coastline of over 7,000 km. Yet, capacity constraints and lack of modern facilities at Indian ports tremendously elongates the time taken to ship goods in and out of the country and has held back India’s share in world trade.
Developing rivers as inland waterways can also help save domestic logistics costs too. Transport costs are high in India – 18 per cent of GDP, compared to less than 10 per cent in China.
Port infrastructure and linkages have been frankly a sinking ship and initiatives such as Make in India cannot take off without better port infrastructure. This has led to expectations that Sagarmala could boost India’s merchandise exports to $110 billion by 2025 and create an estimated 10 million new jobs (four million in direct employment).
Why should I care?
Promise of any immediate benefits from grand government plans should typically be taken with a load of salt, but Sagarmala seems to be cruising already and the project timeline has been reduced from 10 to just five years.
Such a project looks promising, going by the example of Shenzhen in China. Since 1978, it helped create an estimated seven million jobs and the city’s GDP grew 50 times to $180 billion after the development of ports. If Indian port development takes off similarly, local and foreign funds would flow in and coastal regions may become good bets for real estate too, as they will see industry and job growth. Logistic costs savings of over ₹35,000 crore per year can also help the Centre spend on development and possibly reduce taxes.