By Anshu Singh Rathore
Rex Legalis
Mumbai, India
www.rexlegalis.com
Vadhavan Port: India’s Ambitious Project to Augment its Maritime Sector
Introduction:
The Government of India (“GoI”) recently gave its approval for the mega port at the Vadhavan in the Palghar district, Maharashtra. This is an ambitious project that India has taken to spearhead, it will cost the exchequer Rs 76,220 crore and it will be operational by the year 2030. The port is situated 140 km from Mumbai, as well as it is within the proximity just 34 km from Delhi-Mumbai Freight Corridor. The port will be developed by the Vadhavan Port Project Ltd., in which 74 percent stake will be held by the Jawaharlal Nehru Port Authority (“JNPA”) and the remaining 26 percent stake will be held by the Maharashtra Maritime Board. The port will be built in phases, in the first phase the port will handle 15 million twenty-foot equivalent units (“TEUs”), and after the second phase its capacity will increase and then it will handle 23.2 million TEUs by 2040. Precisely, the significance of this port for the Indian shipping industry would be multifold as it can handle, as well as facilitate the calling of mega container ships capable of carrying 24,000 TEUs.
Recently India hosted the G20 summit, wherein the India-Middle East-Europe Economic Corridor (“IMEC”) was signed, the signatories included India, the US, Saudi Arabia, UAE, the European Union, Italy, France, and Germany. The proposed IMEC aims to establish a comprehensive transportation network, which will act as a corridor to facilitate trade among India, the Gulf, and Europe. In furtherance of the vision of the IMEC corridor, the development of this port would have a considerable impact on India’s maritime trade. The port has various strategic and economic advantages for India, as it is nestled on the western coast of India, and it aims to serve as a gateway for trade among the Gulf region, Central Asia, and even to a few African nations.
Need of a new port:
Currently, Maharashtra has two major ports; one is Mumbai and the other is JNPA, both of them are India’s premier ports for imports and exports. However, these ports are facing capacity constraints, as the port in Mumbai is facing issues because of the overall development of the city and also the depth constraints which limits the size of ships that can enter into it. Further, JNPA which is currently the biggest container shipping operation is also expected to reach its capacity by the year 2030. Thus, due to these technical and operational reasons, there is a need for a new port that will cater to India’s demand. Once the JNPA expanded capacity of 10 million TEUs is reached, the Vadhavan port is expected to cater to the remaining as well as spillover traffic. Considering the fact that the Vadhavan is closer to the South Gujarat, Madhya Pradesh as well as its proximity to Mumbai, the port will cater to the traffic from the hinterland, as well as the northern and central part of the country. Thus, it will be a doorway for freight movement and trade to the region.
Impact on India’s Geopolitics and Economy:
India is the sixteenth largest maritime country with a coastline of 7,500 Km. Indian ports and the shipping industry play a crucial role in sustaining the growth of the country as per the data put forth by the GoI, around 95% of trading by volume and 70% reading by value is done through maritime transport. However, India significantly lagged behind its biggest competition China in maritime trade as well as the development of new ports. Currently, China is home to more shipping ports than anywhere in the world including seven of the 10 busiest ports, namely the ports of Hong Kong, Shenzhen, Tianjin, Qingdao, Guangzhou, Ningbo-Zhoushan, and Shanghai.
To put things in perspective India has 12 major ports and around 200 intermediate ports;
- Despite its coastline and over 200 ports, in 2021, India accounted for only 2.4 percent of global container traffic;
- This is about the same as the United Arab Emirates which accounted for 2.3 percent, and is far less than Singapore which amounted to 4.5 percent of global container traffic.
In contrast, China’s maritime industry has significantly increased its capacity, efficiency, and competitiveness.
- For instance, in 2021, the total container throughput in China’s coastal ports amounted to 249 million TEUs;
- And, in the same year Cargo throughput of China’s seaports increased by nearly 10 billion metric tonnes.
In 2023, GoI outlined its aspirations for the maritime sector by 2047, which include increasing the port capacity by 10 billion tonnes, making India a foremost shipbuilder, and creating new trans-shipment hubs. Thus, to increase the competitive advantage in the maritime sector, the GoI in 2017, launched an ambitious Sagar Mala Program with a total investment of 8.5 trillion Indian rupees for the port development and creation of various logistics hubs. Once the Vadhavan port becomes operational, it is projected to handle 23.2 million TEUs of cargo. This shows India’s strategic intent to use its coastline to compete with the global ports and shipping industry. In the past decade, an enormous gain has been made in India’s maritime sector, as the capacity of the major ports in India has nearly doubled from 745 million tonnes to almost 1600 million tonnes, as well as the traffic at these ports has reached 46 percent to 795 million tonnes. Given the recent GoI push in manufacturing and making the country a manufacturing powerhouse, building ports such as Vadhavan is crucial to augment the process.
Conclusion:
Vadhavan port will have several benefits due to its advantageous, strategic location. Further, the port will be an all-weather and all-cargo port, which makes it more efficient compared to all other ports in India.
The port will eventually lead to the development of numerous warehouses, and connectivity via different dedicated freight corridors, and thus it will encourage employment and will ensure economic growth of the country.
References:
>Cabinet approves ‘Development of an all-Weather Greenfield deep draft Major Port at Vadhavan in Maharashtra, (https://pib.gov.in/PressReleaseIframePage.aspxPRID=2026695#:~:text=The%20Vadhavan%20Port%20will%20be,76%2C220%20Crore)
> Maritime ports in India – statistics & facts, (https://www.statista.com/topics/11584/maritimeports-in-india/)
> Shipping ports in China – statistics & facts, (https://www.statista.com/topics/9943/shippingports-in-china/)
> World Shipping Council: The Top 50 Container Ports, (https://www.worldshipping.org/top-50-ports)
> India has quietly transformed its ports, (https://www.economist.com/asia/2024/05/09/india-hasquietly-transformed-its-ports)
> Sagarmala: New Dimensions in Coastal Economy, (https://shipmin.gov.in/sites/default/files/sagarmala-eng.pdf)
