THOOTHUKUDI: The union government's decision to construct a mega international transhipment port worth Rs 41,000 crore at Galathea Bay in Great Nicobar Island overlooking the establishment of a transhipment hub at VOC Port, pending for over a decade, has disappointed exporters and shipping entrepreneurs.
Prime Minister Narendra Modi announced the development of VOC port into a container transhipment hub along the east coast on February 25. The transhipment hub project at VOC port was introduced as an outer harbour development project in the 2013 union budget. A detailed project report was drafted in 2014 so as to implement the project in four phases at a total cost of Rs 23,432 crore. The then union finance minister Arun Jaitley had also announced the same in 2014 union budget.
In the meantime, the repeated attempts to shift the project to Enayam in Kanniyakumari, were proven futile. VOC Port Authority Chairman TV Ramachandran proposed to implement the outer harbour development project under the Gati Shakti scheme at a cost of Rs 7,500 crore in March 2022. Though six international companies expressed interest in the outer harbour project, it is still pending.
The major concern of exporters and importers is the absence of transhipment ports for container cargoes in India on both the eastern and western coasts. The container cargoes, either originating from or destined for India, are mainly transhipped at foreign ports such as Colombo, Jebel Ali, Singapore and Malaysia. Over 25% of all containers are transshipped through foreign ports with nearly 40% of the containers transshipped at Colombo port, sources said.
Association for Tuticorin Hub Port Development member J David Raja pointed out the main constraint of Indian ports is its lack of deeper drafts, which prevents mother vessels from directly accessing the ports. As against the Indian port drafts, the international ports have a draft of at least 12 to 20 metres. So India has to depend on the foreign transhipment hubs to transport the products, he said, adding that the transhipment hubs at Colombo, Jebel Ali, Singapore and Malaysia target foreign containers as they do not have huge production in their own country.
All India Chamber of Commerce & Industries (AICCI) president TR Thamilarasu told TNIE that the transhipment of the containers to foreign countries increases logistics costs and impedes 'lead time' (time taken for procuring goods).
"The lead time to buy anything from India is later than China and other countries. Even though the production cost is cheaper, the transhipment of the containers at different terminals adds at least $300 to $500 to each TEU. This is in addition to the product cost," he said, adding that Indian products struggle to be competitive in foreign markets due to the higher prices.
Thamilarasu said the drawback of Indian products is that its delayed reach to the foreign market, sometimes after a trend fades out. "When an item is a hit in Europe, it lasts for just three months. Exporters from China deliver such materials within 18 days to any European ports, whereas India takes at least 45 days," he added.
Thamilarasu further explained, "The logistic cost for Indian products comes to about 14% of the total product cost, while the cost of those manufactured in developed countries is only around 8%. Transhipment containers at Great Nicobar may not reduce the logistic cost. Since VOC port has multiple advantages, it should be a transhipment hub for India."
A senior official of a private berth at VOC port said if the port was not upgraded in a timely manner, the cargo volume would slump due to the push given for the nearby Vizhinjam port.