Sagarmala

Presently, Indian ports handle more than 90% of India’s total EXIM trade volume. However, the current proportion of merchandize trade in Gross Domestic Product (GDP) of India is only 42%, whereas for some developed countries and regions in the world such as Germany and European Union, it is 75% and 70% respectively.  Therefore, there is a great scope to increase the share of merchandising trade in India’s GDP.  With the Union Government’s “Make in India” initiative, the share of merchandise trade in India’s GDP is expected to increase and approach levels achieved in developed countries.  India lags far behind in ports and logistics infrastructure.  Against a share of 9% of railways and 6% of roads in the GDP the share of ports is only 1%. In addition high logistics costs make Indian exports uncompetitive.  Therefore Sagarmala project has been envisioned to provide ports and the shipping the rightful place in the Indian economy and to enable port-led development. 

Amongst Indian states, Gujarat has been a pioneer in adopting the strategy of port-led development, with significant results.  While in the 1980’s the state grew at only 5.08% per year (National average was 5.47%), this accelerated to 8.15% per annum in the 1990’s (All India average 6.98%) and subsequently to more than 10 percent per annum, substantially benefitting from the port-led development model. 

OBJECTIVES OF SAGARMALA

            The growth of India’s maritime sector is constrained due to many developmental, procedural and policy related challenges viz.  involvement of multiple agencies in development of infrastructure to promote industrialization, trade, tourism and transportation; presence of a dual institutional structure that has led to development of major and non-major ports as separate, unconnected entities; lack of requisite infrastructure for evacuation from major and non-major ports leading to sub-optimal transport modal mix; limited hinterland linkages that increases the cost of transportation and cargo movement; limited development of centres for manufacturing and urban and economic activities in the hinterland; low penetration of coastal and inland shipping in India, limited mechanization and procedural bottlenecks and lack of scale, deep draft and other facilities at various ports in India.

The Sagarmala initiative will address  these challenges by  focusing on three pillars of development, namely (i) Supporting and enabling Port-led Development through appropriate policy and institutional interventions and  providing for an institutional framework for ensuring inter-agency and ministries/departments/states’ collaboration for integrated development, (ii) Port Infrastructure Enhancement, including modernization and setting up of new ports, and (iii) Efficient Evacuation to and from hinterland.

Sagarmala will also lead to large scale employment generation of skilled and semi-skilled manpower. Employment generation will be in industrial clusters and parks, large ports, maritime services, logistics services, and other sectors of the economy that will be directly and indirectly impacted by port-led development under Sagarmala.  Manufacture of ships, vessels, cruise ships, barges and tugs will also increase industrial output and also contribute to employment generation.

Implementation of Sagarmala will also result in effective steps to ensure sustainable development of the population living in the Coastal Economic Zones (CEZ) by synergising and coordinating with State Governments and line Ministries of Central Government through their existing schemes and programmes such as those related to community and rural development, tribal development and employment generation, fisheries, skill development, tourism promotion etc.  Today about 70 lakhs persons are dependent on fisheries for their livelihood.

The Sagarmala Project therefore intends to achieve the broad objectives of enhancing the capacity of major and non-major ports and modernizing them to make them efficient, thereby enabling them to become drivers of port-led economic development, optimizing the use of existing and future transport assets and developing new lines/linkages for transport (including roads, rail, inland waterways and coastal routes), setting up of logistics hubs, and establishment of industries and manufacturing centres to be served by the ports in EXIM and domestic trade.  In addition to strengthening the port and evacuation infrastructure, it also aims at simplifying procedures used at ports for cargo movement and promotes usage of electronic channels for information exchange leading to quick, efficient, hassle-free and seamless cargo movement.

CONCEPT OF PORT-LED DEVELOPMENT

A prime objective of the Sagarmala project is thus to promote port-led direct and indirect development and to provide infrastructure to transport goods to and from ports quickly, efficiently and cost-effectively.  Therefore, the Sagarmala Project shall, inter alia, aim to develop access to new  development regions with intermodal solutions and promotion of the optimum modal split, enhanced connectivity with the main economic centres and beyond through expansion of the rail, inland water, coastal and road services. 

In order to do a comprehensive and integrated planning for “Sagarmala”, a National Perspective Plan (NPP) for the entire coastline shall be prepared within six months which will identify potential geographical regions to be called Coastal Economic Zones (CEZs). While preparing the NPP, synergy and integration with the planned Industrial Corridors, Dedicated Freight Corridors, National Highway Development Programme, Industrial Clusters and SEZs would be ensured. Detailed Master Plans will be prepared for the identified Coastal Economic Zones leading to identification of projects and preparation of their detailed project reports.

An illustrative list of the kind of development projects that could be undertaken in Sagarmala initiative are (i)            Port-led industrialization (ii) Port based urbanization (iii) Port based and coastal tourism and recreational activities (iv) Short-sea shipping coastal shipping and Inland Waterways Transportation (v) Ship building, ship repair and ship recycling (vi) Logistics parks, warehousing, maritime zones/services (vii) Integration with hinterland hubs (viii)  Offshore storage, drilling platforms (ix) Specialization of ports in certain economic activities such as energy, containers, chemicals, coal, agro products, etc. (x) Offshore Renewable Energy Projects with base ports for installations (xi)  Modernizing the existing ports and development of new ports. This strategy incorporates both aspects of port-led development viz. port-led direct development and port-led indirect development. 

Improvement of operational efficiency of existing ports, which is an objective of the Sagarmala initiative, shall be done by undertaking business process re-engineering to simplify processes and procedures in addition to modernizing and upgrading the existing infrastructure and improved mechanisation.  Increased use of information technology and automation to ensure paperless and seamless transactions will be an important area for intervention.  Under the Sagarmala Project, the use of coastal shipping and IWT are proposed to be enhanced through a mix of infrastructure enhancement and policy initiatives. 

The Sagarmala initiative would also strive to ensure sustainable development of the population living in the Coastal Economic Zone (CEZ).  This would be done by synergising and coordinating with State Governments and line Ministries of Central Government through their existing schemes and programmes such as those related to community and rural development, tribal development and employment generation, fisheries, skill development, tourism promotion etc.  In order to provide funding for such projects and activities that may be covered by departmental schemes a separate fund by the name ‘Community Development Fund’ would be created.

INSTITUTIONAL FRAMEWORK

The Institutional Framework for implementing Sagarmala has to provide for a coordinating role for the central government.  It should provide a platform for central, state governments and local authorities to work in tandem and coordination under the established principles of “cooperative federalism”, in order to achieve the objectives of the Sagarmala Project and ensure port-led development.

A National Sagarmala Apex Committee (NSAC) is envisaged for overall policy guidance and high level coordination, and to review various aspects of planning and implementation of the plan and projects.  The   NSAC shall be chaired by the Minister incharge of Shipping, with Cabinet Ministers from stakeholder Ministries and Chief Ministers/Ministers incharge of ports of maritime states as members.  This committee, while providing policy direction and guidance for the initiative’s implementation, shall approve the overall National Perspective Plan (NPP) and review the progress of implementation of these plans.

In order to have effective mechanism at the state level for coordinating and facilitating Sagarmala related projects, the State Governments will be suggested to set up State Sagarmala Committee to be headed by Chief Minister/Minister in Charge of Ports with members from relevant Departments and agencies. The state level Committee will also take up matters on priority as decided in the NSAC. At the state level, the State Maritime Boards/State Port Departments shall service the State Sagarmala Committee and also be, inter alia, responsible for coordination and implementation of individual projects, including through SPVs (as may be necessary) and oversight.  The development of each Coastal economic zone shall be done through individual projects and supporting activities that will be undertaken by the State Government, Central line Ministries and SPVs to be formed by the State Governments at the state level or by SDC and ports, as may be necessary.

Sagarmala Coordination and Steering Committee (SCSC) shall be constituted under the chairmanship of the Cabinet Secretary with Secretaries of the Ministries of Shipping, Road Transport and Highways, Tourism, Defence, Home Affairs, Environment, Forest & Climate Change, Departments of Revenue, Expenditure, Industrial Policy and Promotion, Chairman, Railway Board and CEO, NITI Aayog as members.  This Committee will provide coordination between various ministries, state governments and agencies connected with implementation and review the progress of implementation of the National Perspective Plan, Detailed Master Plans and projects.  It will, inter alia, consider issues relating to funding of projects and their implementation. This Committee will also examine financing options available for the funding of projects, the possibility of public-private partnership in project financing/construction/ operation.

At the Central level, Sagarmala Development Company (SDC) will be set up under the Companies Act, 1956 to assist the State level/zone level Special Purpose Vehicles (SPVs), as well as SPVs to be set up by the ports, with equity support for implementation of projects to be undertaken by them.  The SDC shall also get the Detailed Master Plans for individual zones prepared within a two year period. The business plan of the SDC shall be finalised within a period of six months. The SDC will provide a funding window and/or implement only those residual projects that cannot be funded by any other means/mode. 

PROJECT IMPLEMENTATION & FUNDING

In order to kick start the implementation of projects it is proposed to take up identified projects covered in the concept of Sagarmala for implementation forthwith.  These identified projects for implementation in the initial phase will be based on the available data and feasibility study reports and the preparedness, willingness and interest shown by the State Governments and Central Ministries to take up projects.

            All efforts would be made to implement those projects through the private sector and through Public Private Participation (PPP) wherever feasible. Funds requirement for starting the implementation of projects in the initial phase of Sagarmala Project is projected at Rs. 692 crores for the FY 2015-16.  Further requirement of funds will be finalized after completion of Detailed Master Plan for Coastal Economic Zones for future years.  These funds will be used for implementation of projects by line ministries in accordance with approvals by the SCSC.