Big Boost to India?s share in Maritime Trade

Establishment of the transshipment port at Great Nicobar Island would be significant on both commercial and strategic counts not only to India but also to entire Southeast Asia, especially in view of the Chinese forays in the region

On August 10, 2020, the Prime Minister while inaugurating the undersea optical cable project to Andaman and Nicobar Islands (ANI) announced that the government was considering investing Rs 10,000 crore for building a transshipment Port at Great Nicobar Island. Importance of the announcement and historical perspective is interesting.

As per data provided by statista.com, in terms of value, global seaborne container trade is believed to account for approximately 60% of all world seaborne trade. This was valued at around 12 trillion US $ in 2017. While the quantity of goods carried by containers has risen from approximately 102 million metric tons in 1980 to about 1.83 billion metric tons in 2017, the vessels too have likewise increased their capacity. Between 1980 and 2019, the deadweight tonnage of container ships has grown from about 11 million metric tons to around 266 million metric tons. Today, nearly 20 million shipping containers are moving around the globe in about 4,000 hulls. As the volume of shipped goods is increasing so is the size of all types of commercial vessels.

As far as Indian Ocean Region is concerned, as per the Journal of the Indian Ocean Region, more than 80% of the world’s seaborne trade in oil transits through Indian Ocean choke points, with 40%passing through the Strait of Hormuz, 35% through the Strait of Malacca and 8% through the Bab el-Mandab Strait. Almost US$ 70 billion worth goods are shipped annually through the SLOCs of Indian ocean region including that of China, Japan and those of other countries.

Shipping being a highly cost-effective mode of transportation over long distances, the development of ports is an important aspect in the process of enhancing efficiency in international trade. World over, a system of transshipment involving the larger container carriers offloading the containers at a large nodal port for other ships to carry them further to their final destination is being followed.

As India does not have a transshipment port, its containers are presently transshipped through the transshipment ports of Sri Lanka (Colombo), Singapore and Dubai thereby incurring huge revenue losses in terms of facilities and a higher rate of landings. ANI straddling the 10-degree channel not only has the potential to dominate the strategic sea lanes but also capitalise on its geographical location as a major centre for transshipment of goods being shipped through the Indian Ocean Region.

India, therefore, must take advantage of ANI and establish a deep water berth transshipment port at a suitable island in the ANI. The ideal geographical and strategic location of Great Nicobar Island at the southernmost tip of ANI, almost equidistant from east coast of India, Colombo and Singapore and sitting astride the SLOCs of IOR could be exploited by establishing a transshipment port to service the vast volumes of containers in large vessels for the Asia-Pacific region. It would also enable the shipping companies across the world to take advantage by cutting short their travel distance through the process of transshipment at this location.

A free trade zone could also be created along with this port which could act as the engine for economic growth for the islands. Study of literature on the subject indicates that the Government of India has been contemplating on the establishment of such a port at GNI since 1970, however, because of financial constraints, perceived security concerns, environmental issues and bureaucratic delays, the project never took off. The administration of ANI had once again taken up the issue of development of Container Transshipment Port/Free Port in ANI with the Niti Aayog in July 2016. Further, to ascertain the suitability of Great Nicobar Island for the construction and development of Transshipment Port, a detailed geotechnical investigation was carried by Department of Civil Engineering, Karpagam University, Coimbatore, Geo-Technical Engineering GCT Coimbatore and Department of Civil Engineering Aditya Institute of Technology Coimbatore. Based on the extensive laboratory and field investigations, they recommended the construction of transshipment port berthing at Campbell Bay Island in two phases.

Thereafter, an alternate site at South Bay located adjacent to Indira Point in the Great Nicobar Islands was recommended by the ANI administration as an alternative site for the transshipment port. In 2009, the administration had conducted a techno-economic feasibility study through the Water and Power Consultancy Service (WPCOS). However, the project was not progressed further due to lack of basic infrastructure.

Establishment of the transshipment port at Great Nicobar Island would be significant on both commercial and strategic counts not only to India but also to entire Southeast Asia, especially in view of the Chinese forays in the region. Commercially, it would create a hub with spokes extending to the eastern seaboard of India, Bangladesh, and Myanmar and Thai ports for the global shipping companies. More importantly, it would reduce India’s dependence on the transshipment ports of Colombo and Singapore.

Now that the Prime Minister has himself announced the project of establishing the transshipment port at Great Nicobar Island, further studies and construction thereafter must be fast-tracked. Hard decisions as required, in view of environmentalist’s pressures, need to be taken as the strategic requirement should always take precedence.