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THE PULSE | ECONOMY | SOUTH ASIA | SOUTHEAST ASIA
India to Build New Transshipment Terminal in Andaman and Nicobar Islands
The facility is expected to help India boost its maritime trade.
By Sudha Ramachandran
September 08, 2020
Credit: Flickr/eutrophication&hypoxiaADVERTISEMENT
On August 10, India’s Prime Minister Narendra Modi unveiled plans for the development of a transshipment terminal at Great Nicobar island, one of the Andaman and Nicobar Islands (ANI). Part of a slew of projects that India is implementing in the archipelago to boost economic development there, the transshipment port project, estimated to cost 100 billion Indian rupees, could also help India address some of the problems dogging its maritime trade.
The ANI is a chain of 572 islands, of which 325 belong to the Andaman group and 247 to the Nicobar group. The archipelago lies east of the Indian mainland in the Bay of Bengal. In terms of distance, the island chain is closer to several Southeast Asian countries than to mainland India. While Port Blair, the ANI’s capital, is 750 nautical miles from the Indian mainland, the archipelago’s northernmost island is just 22 nautical miles from Myanmar and the southernmost tip only 90 nautical miles from Indonesia. Thailand lies 270 nautical miles to the east of the ANI.
A port at Great Nicobar will therefore provide a shot in the arm to India’s trade with Southeast Asia and a much-needed boost to its “Act East” policy.
The ANI lies close to important sea lanes of communication. The Great Channel, where three major Indian Ocean shipping routes converge and which leads into the Strait of Malacca — a strategic waterway through which 90 percent of crude oil shipped through the South China Sea transits — lies to the south of Great Nicobar Island.
The proposed transshipment terminal is being built at Campbell Bay at Great Nicobar, the largest of the Nicobar group of islands. Incidentally, Campbell Bay also hosts the Indian Naval Station (INS) Baaz, which falls under the tri-services Andaman and Nicobar Command of the Indian military.
It is only over the last couple of decades that the Indian government has begun infrastructure development in the ANI. Efforts to improve air, sea, and overland connectivity between the islands and with the Indian mainland have gathered momentum only in recent years. In August, a submarine optical fiber connectivity project was inaugurated. Alongside, an array of projects to boost the ANI’s tourism and trade are also being implemented. The transshipment terminal at Great Nicobar is part of this effort to boost the islands’ economic development.
The Great Nicobar port project will provide employment opportunities to locals. But more important is its value to India as a transshipment terminal.
The shipping business in India has suffered on account of India’s poor port infrastructure. Most Indian ports have shallow drafts, which means that ships with higher tonnage — which is increasingly the norm in international maritime trade today — cannot dock at these ports. Consequently, large container ships with cargo headed for India must offload at nearby transshipment ports where their freight is then loaded on to smaller feeder vessels that can dock at Indian ports. Shippers must pay port handling charges at transshipment ports, which add to their costs.
Almost a quarter of India’s maritime trade is shipped through ports in other countries and over 80 percent of its transshipment cargo uses facilities at ports in Singapore, Colombo in Sri Lanka, and Klang in Malaysia.
Transshipment costs are leading to Indian port industry losses of Rs 15 billion annually. This translates into an “estimated loss of Rs 3,000-4,500 crore [Rs 30-45 billion] to the economy based on the economic multiplier effect of 2-3 times for ports on country’s economy.”
The need to improve overall cost of shipping has prompted India to improve its port infrastructure, including the development of container transshipment terminals. Such terminals have been constructed at Vallarpadam in Kochi and Vizhinjam near Tiruvananthapuram, both on Kerala’s coast. There are plans to build another transshipment port at Enayam in Kanyakumari, the southern tip of India.
The proposed Great Nicobar transshipment terminal will add to this capacity.
India to Build New Transshipment Terminal in Andaman and Nicobar Islands
The facility is expected to help India boost its maritime trade.
By Sudha Ramachandran
September 08, 2020
Credit: Flickr/eutrophication&hypoxiaADVERTISEMENT
On August 10, India’s Prime Minister Narendra Modi unveiled plans for the development of a transshipment terminal at Great Nicobar island, one of the Andaman and Nicobar Islands (ANI). Part of a slew of projects that India is implementing in the archipelago to boost economic development there, the transshipment port project, estimated to cost 100 billion Indian rupees, could also help India address some of the problems dogging its maritime trade.
The ANI is a chain of 572 islands, of which 325 belong to the Andaman group and 247 to the Nicobar group. The archipelago lies east of the Indian mainland in the Bay of Bengal. In terms of distance, the island chain is closer to several Southeast Asian countries than to mainland India. While Port Blair, the ANI’s capital, is 750 nautical miles from the Indian mainland, the archipelago’s northernmost island is just 22 nautical miles from Myanmar and the southernmost tip only 90 nautical miles from Indonesia. Thailand lies 270 nautical miles to the east of the ANI.
A port at Great Nicobar will therefore provide a shot in the arm to India’s trade with Southeast Asia and a much-needed boost to its “Act East” policy.
The ANI lies close to important sea lanes of communication. The Great Channel, where three major Indian Ocean shipping routes converge and which leads into the Strait of Malacca — a strategic waterway through which 90 percent of crude oil shipped through the South China Sea transits — lies to the south of Great Nicobar Island.
The proposed transshipment terminal is being built at Campbell Bay at Great Nicobar, the largest of the Nicobar group of islands. Incidentally, Campbell Bay also hosts the Indian Naval Station (INS) Baaz, which falls under the tri-services Andaman and Nicobar Command of the Indian military.
It is only over the last couple of decades that the Indian government has begun infrastructure development in the ANI. Efforts to improve air, sea, and overland connectivity between the islands and with the Indian mainland have gathered momentum only in recent years. In August, a submarine optical fiber connectivity project was inaugurated. Alongside, an array of projects to boost the ANI’s tourism and trade are also being implemented. The transshipment terminal at Great Nicobar is part of this effort to boost the islands’ economic development.
The Great Nicobar port project will provide employment opportunities to locals. But more important is its value to India as a transshipment terminal.
The shipping business in India has suffered on account of India’s poor port infrastructure. Most Indian ports have shallow drafts, which means that ships with higher tonnage — which is increasingly the norm in international maritime trade today — cannot dock at these ports. Consequently, large container ships with cargo headed for India must offload at nearby transshipment ports where their freight is then loaded on to smaller feeder vessels that can dock at Indian ports. Shippers must pay port handling charges at transshipment ports, which add to their costs.
Almost a quarter of India’s maritime trade is shipped through ports in other countries and over 80 percent of its transshipment cargo uses facilities at ports in Singapore, Colombo in Sri Lanka, and Klang in Malaysia.
Transshipment costs are leading to Indian port industry losses of Rs 15 billion annually. This translates into an “estimated loss of Rs 3,000-4,500 crore [Rs 30-45 billion] to the economy based on the economic multiplier effect of 2-3 times for ports on country’s economy.”
The need to improve overall cost of shipping has prompted India to improve its port infrastructure, including the development of container transshipment terminals. Such terminals have been constructed at Vallarpadam in Kochi and Vizhinjam near Tiruvananthapuram, both on Kerala’s coast. There are plans to build another transshipment port at Enayam in Kanyakumari, the southern tip of India.
The proposed Great Nicobar transshipment terminal will add to this capacity.
