The Sagar Mala project

Print edition : April 09, 2004

ON August 15, 2003, Prime Minister Atal Bihari Vajpayee announced an ambitious plan christened `Sagar Mala', a la the national highway development programme, for the development of India's maritime sector. The project proposes to cover all areas of maritime transport, including ports, shipping and inland waterways, and is aimed at realising the potential of trade.

According to Shipping Minister Shatrughan Sinha,"Sagar Mala will not only encompass the seas of the subcontinent but will have glittering ports connected to vibrant inland waterways." He said India had been a leading maritime nation, but over the years its position on the maritime map had slumped. "Sagar Mala offers a golden opportunity to compete successfully with the best of the maritime world," he said. The project assumes significance as India strives to raise its share in the global trade, currently pegged at 0.67 per cent, to at least 1 per cent by 2007. In absolute terms, this would translate into adding around Rs.180,000 crores a year of international trade within the next four years. Besides, the Tenth Plan has targeted an 8 per cent growth in the gross domestic product (GDP). At present, about 90 per cent of India's international trade by volume and 70 per cent by value are carried through its ports.

Sagar Mala will lay emphasis on developing India's ports to levels comparable with the best global ports in terms of infrastructure, efficiency and quality of service, increasing the tonnage capacity, upgrading and creating ship-building and ship repair facilities and increasing the use of inland waterways for transportation.

The project envisages the setting up of new ports along the coastline where required draft is available. The Centre along with the State governments will create basic facilities at these ports and offer them to the private sector for further development and operation.

In order to cater to the anticipated increase in maritime traffic, which is likely to touch 565 million tonnes by 2006-07 as against the actual traffic of 412 mt handled in 2002-03, existing ports are planned to be upgraded by deepening the harbours, creating additional capacity, and modernising cargo handling equipment.

The government plans to develop a world-class container trans-shipment port at Vallarpadam in Kochi, in view of its proximity to the international sea route, in order to attract trans-shipment cargo. The Jawaharlal Nehru Port Trust and the Chennai Port Trust will be upgraded to make them hub ports.

These initiatives will enable bigger mainline vessels to call at Indian ports resulting in faster and economic movement of Indian cargo. At select ports, additional facilities will be created for the export of iron ore.

Under Sagar Mala, all major ports will be connected with the Golden Quadrilateral through high-speed expressways. The rail connectivity to such ports will also be strengthened so that adequate line capacity and speed of movement are available. A big chunk of the total project cost of more than Rs.100,000 crores is expected to come from the private sector through foreign direct investment (FDI) in ports and other related activities. New projects will be offered for private investment at major ports with a view to improving efficiency and increasing productivity and competitiveness.

Yet another feature of Sagar Mala is that it seeks to promote commodity-based transportation whereby a commodity moves by the most efficient mode of transport.

Shatrughan Sinha said that the transport sector had a strategic importance in the Indian economy as it underpinned the activities in other sectors and also affected the competitiveness of EXIM trade. "It is therefore important that cost-effective transportation solutions are offered to customers. Keeping this in view, our endeavour will be to aim at commodity-based transportation planning whereby a commodity moves by the most efficient mode of transport. This will require the development of adequate infrastructure for different modes, particularly inland waterways and coastal shipping," he explained.

To drive home this point, the Minister illustrated the benefit of cargo movement by inland water transport. One litre of fuel moves 24 tonne kilometres by road, 85 tonne km by rail and 105 tonne km by inland water transport (IWT). The present inland transport quantum is of the order of 1,000 billion tonne km.

Out of this, IWT carries hardly 1.5 billion tonne km or 0.15 per cent of the total transport of the country. "If 20 billion tonne km or 2 per cent of the cargo is shifted from road to IWT, it will correspond to a saving of 6.44 lakh kilo litres of fuel or Rs.1,200 crores. The shift in cargo to the IWT mode would also result in benefits to the environment and enable increased economic activities in areas along the waterways," he observed.

In fact, the government plans to create a separate fund for the development of coastal shipping/IWT infrastructure.

The Shipping Ministry would provide the right fiscal environment for the shipping industry to increase tonnage, which includes the introduction of tonnage tax and the rationalisation of seafarer's taxation.

The presence of Indian seafarers, an important source of invisible earnings for the country, in the global market would be further strengthened. Through marketing efforts, the employment of Indian seafarers on foreign going vessels would be increased. Simultaneously, through policy initiatives, training of seafarers would be enhanced by encouraging the private sector to open state-of-the-art training institutes.

Considering the immediate and long-term benefits likely to accrue to trade and industry, part of the finances for implementing the project is proposed to be raised through a nominal maritime development cess for a period of 10 years on cargo passing through Indian ports.

This cess, which is proposed to be credited to the Consolidated Fund of India, will be administered by the Ministry of Finance for the exclusive purpose of funding Sagar Mala. The Shipping Ministry was not able to secure Cabinet approval for the project before the Lok Sabha was dissolved on February 6. Now it has to wait until a new government is formed.

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