IAS Gyan

Daily News Analysis

VIZHINJAM PORT

20th October, 2023 Economy

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Picture Courtesy: india.mongabay.com

 

Context: The Vizhinjam International Seaport Project aimed at building India's first international deepwater transhipment port.

Details

  • The Vizhinjam International Seaport Project, with a total investment of Rs 7,600 crore and constructed by Adani Ports and SEZ Private Limited, has received substantial support from the Kerala government, which allocated 500 acres of land for its development.

Significance of the Project

Addressing Infrastructure Gap

‚óŹIndia lacked deepwater ports capable of handling ultra-large container ships, leading to a reliance on foreign ports for such operations.

‚óŹVizhinjam offers a natural depth of over 18 meters, scalable to 20 meters. This depth is crucial for accommodating large vessels and mother ships effectively, making it an ideal port for handling significant maritime traffic.

Transshipment Traffic

‚óŹHistorically, India relied heavily on transhipment services provided by ports in Colombo, Singapore, and Klang, leading to substantial forex expenditure.

‚óŹDeveloping Vizhinjam as a transhipment hub allows India to retain its transhipment business domestically. This reduces the need to divert traffic to foreign ports, leading to forex savings and boosting the national economy.

Economic Impact

‚óŹThe project's modern infrastructure attracts FDI, injecting capital into the economy and fostering economic growth.

‚óŹVizhinjam generates revenue through transhipment operations, taxes, and fees, contributing significantly to the state and central government finances.

‚óŹThe development of supporting logistics infrastructure stimulates economic activities in related sectors, creating a multiplier effect on the economy.

Competitive Advantage

‚óŹVizhinjam's strategic location makes it an attractive choice for shipping companies. Its proximity to international shipping routes enhances its appeal.

‚óŹThe port's capability to handle Megamax container ships, some of the largest vessels in the world, gives it a competitive edge. This ability makes it a preferred choice for international shipping lines, ensuring a steady flow of maritime traffic.

Job Creation

‚óŹThe project is expected to create 5,000 direct job opportunities, providing employment to the local population and boosting the region's economic stability.

‚óŹImproved logistics infrastructure leads to the growth of industrial corridors around the port, creating additional jobs in manufacturing, transportation, and related sectors.

‚óŹEnhanced port facilities benefit cruise tourism, creating employment opportunities in the tourism sector, including hospitality, entertainment, and travel services.

Project Progress and Challenges

  • As of the latest assessment, 65.46% of the project is complete. Construction of essential components like the breakwater (68.03% progress), dredging and reclamation (68.51% progress), and berth construction (82.53% progress) are underway.
  • The project has faced delays due to various factors, including the 2017 Ockhi cyclone, the COVID-19 pandemic, the shortage of granite boulders for breakwater construction, and protests by fishermen. The first phase, initially promised to be operational by 2020, is now scheduled for completion in December 2024

Conclusion

  • The Vizhinjam International Seaport Project not only addresses critical gaps in India's maritime infrastructure but also has far-reaching economic impacts. It attracts investments, generates revenue, enhances competitiveness, and creates significant employment opportunities, making it a pivotal project for the economic development of the region and the country.

PRACTICE QUESTION

Q. What are the key challenges faced by India in its maritime trade operations, and what strategies can the country implement to enhance its competitiveness and self-sufficiency in the global maritime industry?