Vadhavan Port: India's first mega port set to boost sea-based trade

The Vadhavan port, which the Cabinet cleared this week, will be India's first to begin life as a mega port. What does that mean for the country's share of sea-based trade?

The Indian shoreline, thanks to a geographical quirk, has a long continental shelf. This allows for sprawling and safe beaches, where the water recedes for miles and advances picturesquely.

But there is another side to beauty.

The sprawling beaches make it impossible for vessels like large oil tankers and container ships to come near India’s coasts, compelling most of them to offload their cargo at Colombo. In rare cases, they do a mid-sea transfer of goods nearer an Indian port.

The Rs 76,220 crore Vadhavan project, cleared by the Union Cabinet on Wednesday, could change this — at least to an extent. Located in Dahanu, in Maharashtra, it will be India’s first major port since JNPA was commissioned in 1989.

All other government-run ports are even older, none of them younger than 50 years. In the private sector, Mundra was commissioned 25 years ago, but as a single-terminal port. It expanded later.

But in spite of the expansion, neither Mundra nor JNPA qualifies as a mega port, which is an epithet bestowed on only those that have a cargo handling capacity of at least 300 million metric tonnes per annum (MMTPA). JNPA and Mundra have 100 MMPTA each.

The Deendayal port (erstwhile Kandla) on the west coast and Paradip on the east have been identified for transformation into mega ports. But they face limitations of depth in their waters to allow anchorage for large vessels. Deendayal offers 14 meters and Paradip about 14.5. Capesize ships (industry term for ultra-large ships), which usually carry a tonnage of 170,000 DWT (deadweight tonnage), need at least 18 metres or more of depth to come to the harbour.

Vadhavan, slated to start with a capacity to handle 298 MMTPA, will thus be the first port in India to begin life as a true mega port.

The total transshipment cargo of India is about 4.6 million TEUs (twenty-foot equivalent units), out of which about 4.2 million TEUs are handled outside India. The country needs mega ports with the commensurate terminal infrastructure to handle capesize ships to handle the projected volumes of sea-based EXIM trade of about $1.6 trillion to $2 trillion by 2030. 

“Vadhavan will serve as a crucial node for the IMEEC and INSTC corridors, elevating India's maritime infrastructure and enhancing global trade connectivity. It will support economic growth and promote regional integration”, Rizwan Soomar, Chairman, CEO & MD, North Africa & India Subcontinent, DP World and head of the logistics committee at the Federation of Indian Chambers of Commerce and Industry, told Business Standard.

DP World is a multinational logistics company based in Dubai. IMEEC is the India-Middle East-Europe Economic Corridor, which seeks to link India, the United Arab Emirates, Jordan, Saudi Arabia, and Israel with Europe and the United States. INSTC is the International North-South Transport Corridor.

Why a mega port

The port at Dahanu was proposed as early as 1998, when India was making its first foray into building a deep-sea port. But it was shot down by the Dahanu Taluka Environment Protection Authority. When the project was listed in the Sagarmala programme in 2017, its cost was projected at Rs 65,545.55 crore. Wednesday’s Cabinet approval has raised it by Rs 10,765 crore.

In “The India Transport Report: Moving India to 2032”, Rakesh Mohan, part-time member of the Prime Minister’s Economic Advisory Council, had noted: “A key government priority should be to invest in four to six mega ports over the next 20 years… As opposed to other large economies each of which have a few mega port, India has none”.

Speaking with Business Standard, Mohan explained why a mega port was so necessary. “These included a) economies of scale, since average costs of freight per unit gets reduced with larger volumes, b) economies of scope since larger ports are able to handle a larger variety of goods than smaller ports; Indian ports are mostly dry or bulk cargo specific including even JNPA and Mundra, c) mega ports can host a large variety of suppliers, industrial complexes and logistic companies, offering agglomeration economics d) offer competition among all range of operators lowering handling charges and e) feed the smaller ports in a hub-and-spoke model, where the mega port captures the global maritime flow to divide the cargo among the smaller ones.”

Lots going for Vadhavan

Standing at the cusp of the IMEEC, Vadhavan is expected to attract volumes. There has been a rapid rise of business at its nearest rivals, Deendayal and Mundra ports, both located off the Gujarat coast.

It is being planned with nine container terminals of 1,000 metres each, four multipurpose berths, including the coastal berth, four liquid cargo berths, a Ro-Ro berth, and a Coast Guard berth.

Ro-Ro stands for roll-on/roll-off ships, which carry wheeled cargo, such as vehicles.

There is a lot more going for Vadhavan. It has a natural draft of 18 to 20 metres, it is only 150 km upstream of the Mumbai Port and JNPA, and is close to the upcoming Delhi-Mumbai Freight corridor. The cabinet approval has built-in road connectivity between the port and national highways, and linkage to the existing rail network as well as the upcoming Dedicated Rail Freight Corridor.

Infra gambit

A mega port is a massive infrastructure gambit. Once the first set of conditions is satisfied, the next stage is to build an extensive set of gantries which in turn will require sophisticated yard management capabilities, extensive storage facilities, and then backing those up with a huge network of inland connectivity and finally the capacity of the labour and capita to build it all up.

For the current project, both JNPA and Maharashtra Maritime Board, the 74-26 per cent shareholders of the project, took care to address the ecological concerns. For instance, the Union Ministry of Environment, Forests and Climate Change asked for 18 studies on environmental impact assessment and they were done.

Vadhavan rivals another mega port at Galathea Bay, planned at the farthest end of the Nicobar Islands on the east coast. It was approved in 2021. The execution challenge is massive for both, since India has not developed a new port of a comparable scale for a long time.

As Dhruv Kotak, Managing Director, JM Baxi said Vadhavan would score, since it aimed to use sustainable technology. “The all-weather deep draft port is a transformative initiative to bolster India’s dominance in global maritime trade,” he said.