Sagarmala Development Company (SDC)

 The Union government cleared a plan to set up Sagarmala Development Company (SDC) to provide equity support to port-led economic development projects, with an initial authorised share capital of Rs 1,000 crore and a subscribed share capital of Rs.90 crore.
About SDC:

• The SDC’s role will be to identify port-led development projects and assist special purpose vehicles (SPVs) in project development, bid out projects for private sector participation and put in place suitable risk management measures for strategic projects.
• Under the administrative control of the Shipping Ministry, it will also be responsible for obtaining the required approvals and clearances for the port projects.
• SDC will be raising funds as debt or equity (as long term capital), as per the project requirements/ by leveraging resources provided by the government of India and from multi-lateral and bilateral funding agencies
• SDC will undertake the preparation of the detailed master plans for the Coastal Economic Zones (CEZs) identified as part of the NPP and provide a framework for ensuring the integrated development of Indian maritime sector.
• Other important role assigned to SDC is to manage the coastal community development scheme and fund coastal community development projects identified under the Sagarmala Programme. The projects considered would be specific time-bound local interventions and innovative in nature.

About Sagarmala initiative:

• Sagar Mala project is a strategic and customer-oriented initiative to modernize India's Ports so that port-led development can be augmented and coastlines can be developed to contribute in India's growth
• It aims to develop access to new development regions with intermodal solutions and promotion of the optimum modal split, enhanced connectivity with main economic centres and beyond through expansion of rail, inland water, coastal and road services.
• The Union Ministry of Shipping has been appointed as the nodal ministry for this initiative.
• The Sagarmala initiative will address challenges by focusing on three pillars of development, namely: a) Supporting and enabling Port-led Development through appropriate policy and institutional interventions and providing for an institutional framework for ensuring inter-agency and ministries/departments/states’ collaboration for integrated development; b) Port Infrastructure Enhancement, including modernization and setting up of new ports. c) Efficient Evacuation to and from hinterland.
• In addition to strengthening port and evacuation infrastructure, it also aims at simplifying procedures used at ports for cargo movement and promotes usage of electronic channels for information exchange leading to quick, efficient, hassle-free and seamless cargo movement.
• It also strives to ensure sustainable development of the population living in the Coastal Economic Zone (CEZ). This would be done by synergising and coordinating with State Governments and line Ministries of Central Government through their existing schemes and programmes such as those related to community and rural development, tribal development and employment generation, fisheries, skill development, tourism promotion etc.

Analysis:

• Indian ports handle more than 90 percent of India’s total EXIM(export - import) trade volume. However, the current proportion of merchandize trade in Gross Domestic Product (GDP) of India is only 42 percent, whereas for some developed countries and regions in the world such as Germany and European Union, it is 75 percent and 70 percent respectively. Therefore, there is a great scope to increase the share of merchandising trade in India’s GDP.
• India lags far behind in ports and logistics infrastructure. Against a share of 9 percent of railways and 6 percent of roads in the GDP the share of ports is only 1 percent. In addition high logistics costs make Indian exports uncompetitive. Therefore Sagarmala project has been envisioned to provide ports and the shipping the rightful place in the Indian economy and to enable port-led development.
• Coastal Economic Zones would be created with modern support and planned infrastructure and would carry along adequate fiscal incentives that attract more and more investment to these townships and islands. For instance, Kandla port in Gujarat is one port that has more than two lakh acres of free land within its possession and would be developed as a CEZ.
• The Sagarmala Yojana would undertake redevelopment of new and existing ports through upgrading them to be developed enough to handle extensive use of equipments and IT and thus bring in an improved monitoring and hi-tech infrastructure for day to day business activity. The Jawaharlal Nehru Port Trust itself, which is one of the biggest ports in India, would alone get a big amount of Rs 4,000 Crore for development as an SEZ.
• These model ports would build infrastructure in a way that allows bigger ships to be docked in more numbers thereby facilitating smoother port activity. These ports would focus on chemicals, energy, coal and other commodities. Along with this, inter waterways would also be developed so that the entire countries and all these ports are connected well with the mainland throughout the nation.
• India has a huge coastline and this brings in a lot of opportunity to develop these ports as a profit center for creating sources of renewable energy and this is yet another segment that government is focusing on. This would call for a lot of foreign investment. The power generated from these centers would in turn feed these coastal areas and their infrastructure so that optimum power supply is maintained.

By: Vishal