Ministry of Shipping Sagarmala Building Gateways of Growth

Ministry of Shipping Sagarmala Building Gateways of Growth 1 st Meeting of the National Sagarmala Apex Committee 5 th October, 2015 1

Important pronouncements on Sagarmala “The Government would evolve a model of port-led development…” - Hon’ble President of India “Our coastal area can be a channel for global trade…” - Hon’ble Prime Minister of India “Harnessing India’s long coastline will generate rich economic dividend to the country. ” - Hon’ble Union Minister of Shipping & RTH 2

Port-Led Development : Opportunity for India 3

Opportunity for port-led development in India China: Province-wise GDP per capita ranking Top 10 Top 11 -20 India: State-wise GDP per capita ranking Others Top 10 Top 1120 Other s ▪ China has 30 x of India’s port capacity & 3 x of India’s coastal GDP Key Findings ▪ India’s share of waterways in domestic transport is 2 -3% compared to China’s 25 -26% ▪ India’s logistics cost is 3 x of China’s as a percentage of manufacturing GDP SOURCE: EIU, National Bureau of Statistics, State Information, Analyst Reports, Secondary Research, OECD, IPA, World Bank Report 4

International examples of port-led development China Coastal Power Complex Ulsan & Pohag (South Korea) Automotive, Steel, Marine Cluster Pohang Ulsan Tianjin port 250 MT Shanghai Port 50 MT 330 MT ▪ ▪ Guangdong Port All major non-pit head power plant clusters in China are located in coastal regions ~630 MMTPA of thermal coal travels on coastal routes feeding into these plants SOURCE: Secondary research ▪ World’s largest automotive production complex and ▪ shipyard based in Ulsan Industrial cluster at Pohang has 384 production units, including 17 MMT of steel production capacity 5

Example of port-led development in India - Gujarat (India) Petrochemicals, Power, Automotive, Steel Automotive & Steel Clusters Power Complex Mundra Refinery, Petrochemical Complex Jamnagar Sanand Vadinar Hazira Port-led development accelerated the State growth rate to 8. 15% per annum in 1990’s and subsequently to >10% per annum Steel plant SOURCE: Secondary research 6

Sagarmala Institutional Mechanism National Sagarmala Apex Committee Sagarmala Coordination and Steering Committee State Sagarmala Committee Sagarmala Development Company (SDC) State level SPVs Central Implementing Ministries Central-level SPVs Port SPVs 7

Engagement with Maritime States & Central Ministries 1) Engagement with Chief Ministers of Maritime States and Union Cabinet Ministers Union Minister of Road Transport, Highways & Shipping, vide letter dated 20. 05. 15, requested CMs of Maritime States / UTs and Union Cabinet Ministers for suggestions 2) Meetings with Maritime States Activities One Consultative meeting held in Ministry of Shipping Undertaken Eight Consultative meetings held in states covering all Maritime States MSDC meeting held on 24. 08. 2015; Sagarmala concept presented & discussed 3) Presentation before the Parliamentary Consultative Committee deliberated on implementation of Sagarmala Programme on 11. 08. 2015 8

Sagarmala: Industry-wise opportunities identified 9

Industries with strong linkages to port Cargo % of total port traffic in 2013 -14 Sector Energy Manufacturing Other Sectors India Industry China Thermal Coal (Power) 20% 8% Petroleum, Oil and Lubricants (POL) 37% 14% Steel and allied industries 14% 43% Discrete manufacturing (Containers) 12% 10% Others 1 17% 25% ▪ Four industries contribute about 80% of port traffic Key Findings ▪ China is far ahead in port-led development of “Steel and allied industries” SOURCE: Basic Port Statistics of India, Transport Research Wing, Government of India, 2013 -14 1 Includes Food, Fertilizer, Chemicals, Cement & Other Dry Bulk Cargo Types 10

INDUSTRY PERSPECTIVE - ENERGY Thermal Coal: Coastal shipping opportunity Power Generation Cost Break-up Key Findings Thermal Coal Scenario 2020 ▪ Southern & western states ` per kwh, plant location 1000 km from mine head Capex need coal for power production ~30% of Total Cost -31 +120 Coal cost ▪ Coal mines are located in +150 Odisha and Chhattisgarh -75 Coal Logistics cost -32 O&M 0. 2 moved via coastal shipping to decongest railways -42 ▪ Potential saving of ~Rs. Output (MMTPA) 2020 MCL 250 SECL 250 Total cost xx SOURCE: CIL, Sigma Insights ▪ 100 MMTPA coal can be -50 Net coal supply Commissioned 7, 000 Cr and 15% reduction in power cost Coal field Under construction Port 11

INDUSTRY PERSPECTIVE - ENERGY POL: Coastal shipping and bunkering opportunity POL Scenario 2020 MMTPA Key Findings ▪ Southern states will be supplied from +53 To Fujeirah -2. 2 +7 0 -3 -0. 4 Colombo surplus states (Odisha & Gujarat) via coastal shipping Singapore +5 For Bunkering -2 ▪ Bunkering fuel sent from India to Fujeirah, Colombo, Singapore; Indian ships go there for cheaper bunkering ▪ Current bunkering volumes in India: ~1. 8 MMTPA ▪ Total bunkering potential in India: ~12 -14 Refinery locations SOURCE: OD Study xx Net POL products supply MMTPA 12

INDUSTRY PERSPECTIVE – MFG. Steel: Coastal shipping opportunity Steel Scenario 2015 Steel Scenario 2020 +14 -2 +9 +1. 5 Mundra +3. 5 +16 -7 +11 +4 +5. 7 Paradip -7 Mumbai 0 Haldia Vizag +6 -1 +3 -2 ▪ Potential annual saving Chennai -5 -3 -3. 6 Cochin Port SOURCE: OD Study Key Findings ▪ Southern and western states can be supplied from surplus states (Odisha, Jharkhand) via coastal shipping of Rs. 1, 500 Cr by 2020 and Rs. 5, 000 Cr by 2025 -8 xx Net supply of steel 13

INDUSTRY PERSPECTIVE – MFG. Container: Exim container movement opportunity EXIM Container Volume Split FY 2014 Key Findings ▪ Indian containers take 1. 5 x more time than Million TEUs, FY 14 Chinese containers over the same distance Port Container source/ destination centres Haryana Delhi Uttar Pradesh Rajasthan Kutch Ahmedabad Chhattisgarh West Bengal Aurangabad Haldia Pipavav Orissa Dhamra Mumbai Hyderabad Vizag South Maharasthra Mundra Bangalore Chennai Cochin East West trade route is the trade conveyor belt for China Europe trade SOURCE: APMT; IPA statistics; Stakeholder interviews Tuticorin South Tamilnadu Joining trade route at Singapore or Colombo ▪ High inventory cost due to uncertainty ▪ Incremental port capacity required in Maharashtra to handle increasing volumes of containers ▪ Reduce dependence of East Coast cargo on Colombo by building a Container port near international shipping route ▪ Developing deep draft container port in WB can facilitate East & NE India & Nepal trade 14

Sagarmala: Key Enablers 15

Key Elements of Sagarmala and Opportunities A Port Modernization B C D Port Connectivity Improvement Port-led Industrial Development Coastal Community Development ▪ Improve operations efficiency and augment capacity of major ports ▪ Develop 4 -5 new ports to cater to cargo traffic growth and reduce logistics cost ▪ Develop a Transshipment Hub Port near international shipping route ▪ Increase coastal shipping volumes of key cargo – E. g. Coal, Steel, Cement, to reduce logistics cost and decongest rail and road network ▪ Eliminate process bottlenecks to reduce container logistics time and cost ▪ Port led development of heavy industries – E. g. cement and steel clusters to leverage coastal shipping for moving raw materials and finished products ▪ Port led discrete manufacturing to reduce end to end container logistics cost ▪ Create human capital for port-led industrial development through coastal community skill development and livelihood generation programs ▪ Create community development fund to ensure sustainable development 16

Port Modernization 1) Port Capacity Augmentation (FY 2015 -16) Target: 30 projects; Investment of Rs. 14, 226 Cr, 162. 20 MMTPA additional capacity 14 projects awarded; Investment of Rs. 8, 714 Cr, capacity addition of 33. 15 MMTPA Activities 2) Major Ports Operational Efficiency Improvement Undertaken 104 initiatives identified for implementation; ~115 MMT incremental volume to be unlocked in existing port capacity; Revenue generation of Rs. 972 Cr 3) Development of New Ports New sites identified: Sagar island (West Bengal), Vadhavan (Maharashtra), Colachel (Tamil Nadu), Tadadi/Belekeri (Karnataka), one site to be identified in central AP 17

Port Connectivity Improvement 1) Establishment of Indian Port Rail Corporation Limited (IPRCL) IPRCL incorporated with equity participation of Major Ports & RVNL 7 projects already tendered for implementation (Total Cost: Rs. 468. 43 Cr); DPR preparation initiated for 15 projects (Total Cost: Rs. 2600 Cr approx. ) 2) Origin-Destination (OD) Study for Key Cargo Types Activities Key cargo types covered: Coal (Thermal & Coking), Iron Ore & Steel, Container, POL & LNG, Cement, Fertilizer, Chemicals and Food Grains (85% of Undertaken total cargo) Traffic scenarios for 5, 10 and 20 years being developed Inter-ministerial working group (thermal coal) formed; Inter-ministerial working groups for other cargo types currently being set up Emerging opportunity: Rs. 40, 000 Cr of Annual savings from logistic cost and time reduction for key cargo movement (Coal, Steel, Cement & Containers) 18

OD Study, Total Cost Saving Opportunity Theme Initiatives Estimated Savings 2025, Rs. Cr Coastal shipping 1 initiative Higher coastal shipment of coal by 100 MMTPA Higher coastal shipment of other commodities (cement, steel, fertilizer, food grains, POL) by 50 MMTPA 11, 500 Coastal capacities 2 for steel and cement New cement coastal capacity in Southern Gujarat, Central AP (80 MMTPA) New steel coastal capacity in Northern Karnataka, Odisha, Northern AP (40 MMTPA) 8, 500 Reduce time to 3 export container by 5 days Customs efficiency Last mile connectivity (dedicated road corridors) Reduce cost to 4 export by Rs. 3000 per container Increase share of Railways in modal mix from current 18% to 25% Transshipment hub at Southern tip Three new container ports (Vadhavan, Central AP, Sagar) Total 12, 500 7, 500 40, 000 19

Port-led Development 1) Port-based Smart Cities Land identified in Kandla and Paradip for development of port-based smart cities Tenders issued for conducting techno-economic feasibility study 2) Port-led Industrial Development Activities Industrial development plan for existing & new port locations under preparation Undertaken Marine cluster potential being evaluated (Katupalli and Ennore) Coordination Committee constituted between DIPP & M/Shipping 3) Coastal Economic Zones (CEZ) 14 CEZs identified and perspective plans under development; SEZ in JNPT, Free Trade Warehousing Zone at Cochin & Ennore being implemented 20

Coastal Community Development 1) Skill development NSDC to conduct coastal district skill gap analysis Sector Skill Council to be set up to promote Maritime sector skill development 2) Community Development Fund Guidelines for Community Development Fund under preparation Activities 3) Lighthouse tourism development Undertaken Eo. I issued for 70 lighthouses; Investors Meet in Mumbai and 3 roadshows planned RFQ for 8 lighthouses for development in PPP mode, Eo. I for 4 being invited 4) Fisheries development projects considered New fishing harbour at Kulai; modernization of fishing harbour at Sasoon Dock, Mumbai Fishermen capacity building, hygienic fish handling & high end products development 21

NPP Development Timelines 2015 Activities under NPP Development ▪ 2▪ May 2016 Jun OD study of key cargo types National Multimodal Grid (including coastal shipping / IWT) 3 ▪ 2035 Port Master Plan for major ports Jul Aug Sep Oct Nov Dec Jan Feb Mar 1 Phase #1 (4 ports) & debottlenecking existing capacity Phase #2 (4 ports) Phase #3 (4 ports) ▪ 4 New port master planning TS Port Sagar Port Master Planning Vadhavan Port Master Planning 2 new sites ▪ 5 Port led industrial development plan & perspective plan for CEZs ▪ 6 Master Planning for Port #3 & #4 Phase 1 Phase 2 Marine Cluster development NSAC is requested to approve actions taken as part of NPP under port modernization, port connectivity improvement, port-led development & coastal community development and the timelines of NPP as above 22

Expectation from Stakeholders 23

Expectation from the State Governments are requested to: • Set up State Maritime Boards in AP, Goa, WB, Puducherry & Lakshdweep • Set up SSC to coordinate and monitor Sagarmala activities (Gujarat, Maharashtra, Goa, Karnataka, TN, Kerala, Puducherry, AP) • Provide necessary inputs for NPP and CEZ Master Plan preparation by providing data and nominate suitable officers for working groups Action Requested • Actively participate in SCSC, NSAC and sector-specific working groups • State Industrial Development Agency to factor the land available with major / non-major ports in its plans for industrial development • Land allocation for identified projects; Financial partnership through SPVs • Provide statutory clearances such as land use change, environment etc. • Fast track project appraisal & approval and implement projects under the State’s ownership in a timely manner 24

Expectation from the Central Line Ministries of Railways, Road Transport & Highways, Coal, Power, Steel, Petroleum & Natural Gas, DIPP, other Departments & Central Line Ministries requested to: • Provide necessary inputs for NPP and CEZ Master Plan preparation by providing data and nominate suitable officers for working groups Action Requested • Actively participate in SCSC, NSAC and Sagarmala related working groups • Make necessary budgetary provision and land allocation for projects • Provide statutory clearances such as land use change, environment etc. • Fast track project appraisal & approval process and implement projects under the Central Line Ministry’s ownership in a timely manner M/o Home Affairs to expedite action on pending bills for creation of SMBs in Odisha, Kerala, Karnataka, A&N islands after getting comments from states. 25

Thank You 26