#Debriefed: What you need to know about the Sagarmala Project

The Union Cabinet, last week, approved the formation of the Sagarmala Development Company (SDC), which will be the central authority for providing assistance for the implementation of the Sagarmala Project (Project)..The SDC, a company incorporated under the Companies Act of 2013, will have an initial paid-up capital of Rs. 1,000 crore and a subscribed capital or Rs. 90 crore..Given India’s strategic geographical location and scope for expansion of maritime sector, India has sought to replicate the model adopted by nations like United States, Japan, Korea and China who have successfully leveraged their coastline and waterways to drive industrial development..What is it?.Originally mooted in 2003 under the Vajpayee government as the waterways equivalent of the Golden Quadrilateral of India, the Project is an amalgamation of over 150 different projects aiming to leverage the country’s coastline and inland waterways for industrial development. The Project seeks to increase efficiency in cargo transport and tap into the under-utilised routes, to boost exports and employment..India has historically under-performed in this sector owing to capacity constraints, poor infrastructure, lack of modern facilities and of course, procedural and policy related challenges..While maritime states contribute 60% of the Gross Domestic Product (GDP) of India, the contribution made by ports is a meagre 1%. This figure is particularly noteworthy when compared to the 9% share of railways and 6% of roads..Therefore, the Project also seeks to attract investment and locate manufacturing units closer to ports, for greater efficiency in transportation ..Here are some numbers to put things in perspective:.The Project will tap into 7,500 km of coastline & 14,500 km of potentially navigable waterways India has been bestowed with;Generate an estimated 10 million jobs;Save close to Rs. 35,000- Rs. 40,000 crore in annual logistics;Mobilise investment of Rs. 4 lakh crore over the next 5 years;Boost India’s merchandise exports to $110 billion by 2020..Needless to add, a robust institutional framework is imperative for the implementation of the Project..To give effect to the Project, following authorities will be established:.National Sagarmala Apex Committee (NSAC): which will provide overall policy guidance and high level planning and co-ordination for the Project. This Committee is to be chaired by the Union Minister of Shipping and Road Transport & Highways.State Sagarmala Committee (SSC): For coordination and facilitation of the Project at the State level, the state governments will set up the SCC, headed by the Chief Minister/Minister – in – charge of Ports of the States and constituted of members from relevant departments and agencies. Matters to be discussed and deliberated by the SSC shall be decided on priority basis by the NSAC. The Maritime Boards / Departments of Port of the State shall, inter alia, be responsible for the implementation of the individual projects through Special Purpose Vehicles (SPVs)..Sagarmala Coordination and Steering Committee (SCSC): will consider issues relating to funding and other financing options for project implementation of individual projects. The SCSC 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.SDC: is set up with a view to assist the State level SPVs as well as the SPVs to be set up by ports..How will this function?.The SDC will raise funds, equity or debt, depending on the project requirements or by leveraging resources provided by the government and from multi-lateral and bilateral funding agencies..It would also aim to increase the scope of private sector participation in project development. At the central level, the SDC will assist the State level/zone level SPVs, as well as SPVs to be set up by the ports, with equity support for implementation of projections to be undertaken by them..All efforts would be made to implement those projects through the private sector and through Public Private Participation (PPP) wherever feasible. Out of the 13 states which will be a part of the Project, Orissa has emerged as the first state which will form an SPV to give effect to the Project..Timeline of events.August, 2003: Sagarmala initiative announced by then Prime Minister..June 2014: Decision to make Ministry of Shipping the nodal authority for Sagarmala initiative..March 2015: The Programme was launched by the Union Cabinet with a view to promote ‘port-lead direct and indirect development and to provide infrastructure to transport goods to and from ports quickly, efficiently and cost-effectively’..May 2015: The National Sagarmala Apex Committee (NSAC) was set up..July 2015: Ministry of Shipping forms the ‘Indian Port Rail Corporation Limited‘(IPRC), an SPV incorporated under the Companies Act, 2013 to provide ‘efficient last mile rail connectivity to Major Ports‘. IPRC was incorporated with an initial authorized capital of Rs. 500 crore, with equity from 11 major ports and Rail Vikas Nigam Ltd. In the year of 2015, IPRC undertook 23 projects which are critical for last mile rail connectivity to the Indian Ports..July 2015: The SCSC was set up..October 2015: First meeting of NSAC was held which discussed the establishment of a platform allowing central and state governments to work in tandem under the established principles of ‘cooperative federalism’. It also focussed on tapping opportunities available for transport of coal, saving nearly Rs. 7,000 crore in coal logistics and improving port efficiency to cut unnecessary capital expenditure..April 2016: Government releases National Perspective Plan, which has identified over 150 projects, at an estimated cost of Rs. 4 lakh crore..July 2016: Union Cabinet approves incorporation of SDC, which will be under the administrative control of the Ministry of Shipping..(Image: Source)