Indian Economy

Port led development is an integrated approach to modernise the ports and to integrate them with SEZs, port-based smart cities, industrial parks, warehouses, and logistics parks and transport corridors in the country.

The Sagarmala project was launched in 2015, with the objective of promoting port-led direct and indirect development and to provide infrastructure for the same. Sagarmala project would be leading to port led development in following ways

• Port modernization and new port development, port connectivity enhancement, port linked industrialization as well as coastal community development.
• Optimizing the multi-modal transport to reduce the cost of domestic cargo.
• Improving export competitiveness by locating discrete manufacturing clusters near ports.

So far, the impact of the Sagarmala project has seen mobilization of over US$ 61.6 billion of infrastructure investment, doubling the share of inland and coastal waterways in the modal mix, boosting the merchandise exports by US$ 110 billion. Owing to India’s extensive coastline of 7,500 kilometres covering 13 states and union territories and a significant portion of India’s trade being moved by sca, port-led development envisaged under Sagarmala project would be beneficial for India in following ways:

• Development of coastal communities: With 42 per cent of India’s population living in the coastal states, the project can promote their wellbeing through skill development, fisheries development and livelihood generation activities.
• Port-linked industrialisation: Currently, India’s logistics cost is around 30% higher than global benchmarked costs, which is an impediment for indigenous manufacturing. The project will help reduce it by developing port-proximate industrial clusters and Coastal Economic Zones (CEZS). It would also augment the ‘Make in India’ program of the government.
• Coastal shipping & Inland waterways: The project can promote movement of cargo through sustainable and environmental-friendly mode of transportation, such as through the development of 111 inland waterways. Also, cost of moving cargo by inland waterways is 60- 70 per cent lower than the road or railway mode.
• Boost to international trade: Indian ports handle more than 90 per cent of India’s total EXIM trade volume. By linking major and non-major ports, industrial clusters and evacuation infrastructure into a single system at a larger regional level, the project will enable seamless and efficient movement of cargo through gateways. This will allow the ports to enhance competitiveness and offer multiple freight options to customers.
• Promote tourism industry: Multiple cruise tourism centres have been launched including Mumbai, Chennai and Cochin. These would provide a significant boost to the tourism industry in India.

However, there are certain issues, which need to be addressed in terms of huge investment needed, projects viability for the private sector, impact on the fragile coastal ecosystem such as erosion and pollution etc. Thus, there is a need to take various steps to sustain the progress through port-led development. Some of which includes establishing a port regulator at all ports to monitor and regulate services and technical and performance standards, undertaking the environmental clearance process seriously for port projects, accommodating coastal communities engaged in traditional fishing and establishing a special purpose vehicle for making investments in ports.