By Revendra (@adj_r_squared)
The pre-bifurcation Andhra Pradesh governments focused extensively on the Hyderabad-centric development of IT, pharmacy and manufacturing sectors, and overlooked the potential offered by the vast 940-kilometer coastline. In 2014, the successor state was left with one major port — Visakhapatnam, and though 14 non-major ports were notified — only 4 non-major ports — Kakinada (deep and anchorage), Gangavaram, Krishnapatnam and Ravva are operational. The ports were operating at 65% of their total capacity, and their snail-paced expansion coupled with the failure to add the complementary facilities did not provide distinct advantages to tap this sector, and generate immediate revenues.
In 2013–14, the Vishakhapatnam Port and the non-major ports handled cargo of 59 and 58.94 MT respectively. Based on the cargo handled state-wise, the non-major ports of Andhra Pradesh stood second and the Visakhapatnam port stood fourth in India, together handling 12.25% of (117MT) of the total cargo moved through the sea in India. The total cargo handled by non-major ports from the state was increased to 71.3 and 72.7 MT in FY2014–15 and FY2015–16 respectively. While the current capacity of these non-major ports is 180 MT, over the next few years, the projected 707 MT of total capacity will be added these ports.
Vision to develop economy through the ports
Dr. Arvind Panagariya, Vice Chairman, NITI Aayog proposed a Shenzhen-style Coastal Economic Zone (CEZ) on the eastern coast near deep-draft ports. Fortunately, the state has three deep draft ports — Vishakhapatnam (16.5 m), Krishnapatnam Port (18.5 m) and Gangavaram Port (20.2 m) — which can attract bulk cargo. If the opportunities are exploited, the cargo movement for ports in Andhra Pradesh is estimated to constitute 10% GSDP by 2024 and 12% GSDP by 2030. The Government of Andhra Pradesh (GoAP) is planning to develop 18 ports — 6 currently operational, 6 under development, and 6 identified, to act as a gateway to East and South East Asian regions, and is envisaging to compete with Singapore as a ‘Logistics Hub’. In addition to handling cargo throughput of over 1000 MT a year, GoAP is working towards developing few ports for ship building and repairs.
To realise this vision, the GoAP passed the Andhra Pradesh Maritime Board Bill that was pending since 2005. After drafting policies, and getting the legislative and cabinet approvals, the focus has shifted on short- and long-term activities to boost quantum of cargo conveyed, and encourage associated sectors to invest and grow in the state. Four of the initiatives pursued by GoAP are worth mentioning.
- First, connect and improve existing railways and roadways (four lanes and two lanes) to these ports.
- Second, attract existing domestic manufacturing firms to export from these ports, especially from the neighbouring states of Telangana, and Chhattisgarh, and promote export-oriented domestic industries in the state. Kakinada port, the nearest to Telangana, is poised for growth in petrochemicals sector, and will be benefited from the dry port sanctioned at Bibinagar in Nalgonda district. The Visakhapatnam Port Trust is planning to set up dry ports in Telangana and Chhattisgarh, and the highway between Raipur and Visakhapatnam is being widened to four-lanes.
- Third, the country is dependent on import of petroleum products, coal, iron ore, fertilizers, and other shipments through containers. Development of refineries, Floating Storage Re-gasification Units (FSRU), LNG terminals, etc., along the Andhra coastline, will facilitate the imports from these ports.
- Fourth, develop multi-modal connectivity, supply chain and logistics infrastructure for efficient usage of ports. To achieve the same, the GoAP is planning to attract investments of Rs. 84,000 crores for ports and shipping industry in the state. Further, GoAP has promised to help acquire land — own or lease, provide fresh water, and power supply to these investing companies.
These initiatives are in line with the priorities of Sagarmala identified by the Ministry of Shipping, Government of India.
Seizing the opportunities
The ports in Andhra have the potential to become hubs of transshipment for cargo headed towards Myanmar and Bangladesh. The Government of India is also promoting trade between the states on the East Coast and North-Eastern states through Bangladesh. The ports from Andhra are seizing these opportunities. The Krishnapatnam Port is already facilitating the shipments carrying cotton to Chittagong, whereas the Food Corporation of India has shipped 35,000 tonnes of rice from Visakhapatnam port to Tripura via Bangladesh.
The investments, opportunities, and initiatives will undoubtedly transform the trade and commerce activities on the coastline. It will also create jobs, and contribute significantly to the economy of Andhra Pradesh. However, the economy of ports are tightly coupled with the global economy, and a recession may have debilitating effects on the sector. A small shock was experienced by both ports in Kakinada due to fall in the exports. An optimal composition of imports and exports should be identified, trade activities with stable and growing economies must be promoted, and the government should sponsor research in this sector to keep track of trends, risks, and opportunities. Andhra Pradesh is poised to prosper through the developments of ports.
[Views in this article belong to the author. It is part of a blog series tracking governance in the reorganised Andhra state]
By Revendra (@adj_r_squared)