India approves deep sea port construction in Tamil Nadu

7 July 2016 (Last Updated July 7th, 2016 18:30)

The Government of India has approved the construction of a green-field deep sea port at Enayam near Colachel in the state of Tamil Nadu.

The Government of India has approved the construction of a green-field deep sea port at Enayam near Colachel in the state of Tamil Nadu.

A special purpose vehicle (SPV) will be formed to develop the port, and an initial equity investment will be provided by VO Chidambaranar Port Trust, Chennai Port Trust, and Kamarajar Port.

The port infrastructure includes dredging and reclamation, as well as the construction of breakwater, ensuring connectivity links will be developed by the SPV.

"The port will also serve as a trans-shipment hub for the global East-West trade route."

The project is part of the mammoth ‘Sagar Mala’ port-led development programme from the government. Its establishment will act as a major gateway container port for Indian cargo.

Enayam is also expected to minimise the logistics cost for exporters and importers in South India, who depend on trans-shipment in Colombo or other ports at present for mainline shipping connections.

The port will also serve as a trans-shipment hub for the global East-West trade route.

Sagar Mala aims to reduce logistics costs as a percentage of gross domestic product (GDP) to around 10% from 18%.

The primary focus of the programme is on the modernisation of the country’s ports and development of infrastructure that can move goods to and from ports quickly.

At present, India’s transshipment cargo is handled at South Asia hubs, such as Colombo or Singapore because of poor port infrastructure and productivity, and will cost ports around $230m in revenue annually.

India further plans to spend $3bn or more various last-mile port-rail links.