New Delhi: An Indian conglomerate has started building the country’s first transshipment port, conceived 25 years ago, and the government will construct another $4 billion facility nearby to create a shipping hub rivalling Chinese facilities in the region.
New Delhi will grant billionaire Gautam Adani 16bn rupees ($240 million) so-called “viability gap” funding to help the new port at Vizhinjam, on India’s southern tip, win business from established hubs elsewhere in Asia. Once Vizhinjam, in the state of Kerala, is operational the federal government will start building the port of Enayam in neighbouring Tamil Nadu, said a senior shipping ministry official.
Enayam alone will save more than $200m in costs for Indian companies every year, he said.
India’s 7,500km coastline juts into one of the world’s main shipping routes and Prime Minister Narendra Modi wants to capitalise on that proximity by developing ports that can shift freight on to huge vessels capable of carrying up to 18,000 20ft containers.
By bringing onshore cargo handling now done at entrepots in Sri Lanka, Dubai and Singapore, Modi’s government expects cargo traffic at its ports to jump by two-thirds by 2021 as India ramps up exports of goods including cars and other machinery.
The lack of an Indian domestic transshipment port forces inbound and outbound containers to take a detour to one of those regional hubs before heading to their final destination.
New Delhi expects the new ports to save Indian companies hundreds of millions of dollars in transport costs, as well as ease concerns over the growing strategic clout in South Asia of rival China, which has invested hundreds of millions of dollars in Sri Lankan ports at Colombo and Hambantota.
Adani wants the Vizhinjam port, which an arm of his Adani Group is building at a cost of around $1bn, to be operational in 2018.
The port lies by the Gulf-to-Malacca shipping lane that carries almost a third of world sea freight.
India is worried about China’s expanding reach in the region through port investments in Sri Lanka, Bangladesh and the Maldives. China is also developing Pakistan’s Gwadar seaport as part of a $46bn China-Pakistan Economic Corridor.
China had also wanted to partner with an Indian company to build the Vizhinjam port, but its proposal was rejected by the government on grounds of national security.
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