The Pulse | Economy | Environment | South Asia

Is India’s Vizhinjam Port Plan Worth It?

The plan for a deepwater port in Kerala has sparked sharp divisions over its benefits and costs.

By Soumya Bhowmick and Pratnashree Basu for
Is India’s Vizhinjam Port Plan Worth It?
Credit: Flickr/ asgeorge 666

Since its inception over two decades ago, the Vizhinjam International Deepwater Multipurpose Port has witnessed sharp divisions over its viability and utility. On the one hand are questions regarding the socioeconomic and ecological impact of constructing the port together with ambivalence regarding its usefulness. On the other hand are determined justifications in favor of the benefits that would accrue to the state of Kerala and its people in terms of a much-needed developmental boost and the creation of jobs, along with arguments that construction will have limited adverse impacts.

A public-private partnership (PPP) undertaking by the state government of Kerala and the Adani Group, the Vizhinjam port project is scheduled to be completed by December 2019, and has taken on an ambitious target of opening up its first phase of operations by the latter half of next year. Initially the port project, which commenced its construction in 2015, was expected to have been completed by September 2018 — the delay has been attributed to the damage caused by the 2017 Ockhi cyclone and a substantial shortage of stones required for construction.

The Case for Vizhinjam

Realization of the port has been touted as a game changer for the fortunes of Kerala. At current prices, Kerala’s primary sector recorded the highest growth rate of 13.25 percent in 2016-17 compared to its secondary and tertiary sectors, which grew at 9.72 percent and 3.74 percent respectively. Currently, coir, cashew processing, and seafood are the major industries in Kerala. Thus the economic need for Vizhinjam Port cannot be denied.

Container shipping volumes in the Indian Sub Continent (ISC) region have gone up from 4.3 million twenty-foot equivalent units (TEUs) in 1997 to 14.7 million TEUs in 2008. According to the International Finance Corporation Report to the government of Kerala on the Vizhinjam port, more than 50 percent of the container traffic in the region is under the purview of the west coast of India. Hence, theoretically, Vizhinjam has a lot going in its favor by virtue of its location along the East-West shipping route — one of the busiest in the world. Being developed as primarily a transshipment port, it stands to benefit from surging maritime traffic. The port would also have operational advantages thanks to its deep natural draft. Most importantly, it would potentially be able to put India on the global maritime map by stimulating gateway traffic from the hinterland and creating new supply-chain networks.

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With there being an increased focus and emphasis on maritime commercial capability, India’s central government is pushing forward with upgrading port infrastructure through schemes such as the SAGAR and Sagarmala. It is fitting that the country develop its capacities in line with global ports such as Singapore and Colombo. In order to make Vizhinjam port commercially viable, the port project is also set to receive viability gap funding from both the state and central government to the tune of 7.9 billion Indian rupees ($110 million). Additionally, the relaxation of cabotage laws should also encourage traffic.

The Case Against

However, the port project has run into controversy because of concerns related to the environment, which in turn stand to have a considerable impact on the livelihood of the local population. The clearance given for the construction is therefore being called into question for the following reasons.

First, in the initial assessment, it was found that construction of the breakwater would not result in high tides, which could enhance erosion of the coastline as well as an adjacent highway in an area already identified as a high erosion zone. Part of the breakwater has been built and it has resulted in very high waves that have already begun to have an impact the coastline. According to the Coastal Regulation Zone (CRZ) Notification of 2011, construction of ports is not permissible in coastal areas prone to high erosion.

Second, fishermen who live and fish beyond what is deemed by the state government as the project impact area claim that the construction will affect their livelihood nonetheless. They argue that the fish catch would be reduced due to the maritime traffic and the associated risks of coastal pollution. They also assert that they have to travel farther away from their earlier fishing sites due to coastal erosion, making their trade costlier. In fact, a local survey of the area shows that the fishing equipment and storage units occupy a considerably large amount of space adjoining the project site and a complete shifting of the fishing infrastructure might not be an economically viable option for the fishermen. Yet these fishermen did not receive the compensation that was given to those coming under the project impact area.

Green activists also stress that marine life would be threatened with loss of habitat, especially breeding grounds for mussels and lobsters, due to the dredging required for the project. Corals would be also affected by the increase in turbidity of the water.

Additionally, since the inception of the Vizhinjam harbor in the 1980s, the rehabilitation project for the fishermen has been marred by communal violence. Recent interviews with the local fishermen reveal that this small fishing village of Vizhinjam is notorious for communal clashes between the Christians and Muslims, which may have a harmful effect on the functioning of the port in this region. The last violent riots of 1995 over the construction of a church and a mosque ended with four people dead.

The Final Analysis

While the complaints against the project are being led by nongovernmental organizations, a public hearing of the environmental impact assessment report witnessed a greater degree of popular support in favour of the construction. The Kerala state government maintains that adequate cognizance was taken and assessments made of the socioeconomic and ecological impact, with remedial measures planned for both short- and long-term effects.

The government has also refuted a report by the Comptroller and Auditor General (CAG) on the port, which estimated that the Adani Group will reap undue profit from the project. Proponents of Vizhinjam port say that sufficient details have not been provided by the state government, which skewed the findings of the report. The CAG itself has also observed that the costs of the project are subject to inflation and so the technical and financial estimates may not be accurate – with the discrepancies being in Kerala’s favor.

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As far as the economic viability of this project is concerned, Vizhinjam is set to face stiff competition, mainly from Sri Lanka’s Colombo Port, which accounts for 35 percent of the transshipment traffic in the ISC region. Plus, the International Finance Corporation report categorically mentions that the current demand-supply situation in the lower west coast of India had led to underutilization of existing capacities. Hence, Vizhinjam port, which substantially adds to this capacity, may need some time to be optimally utilized by the expected traffic growth in the next decade.

In the light of such considerations, the 75.25 billion rupee investment in the project needs to be objectively assessed so that the ensuing benefits of the project could help to dispel propaganda and instead make way for a clearer understanding of what the port project would actually entail.

Soumya Bhowmick is a Junior Fellow at Observer Research Foundation, Kolkata. Pratnashree Basu is an Associate Fellow, ORF Kolkata.