Vizinjam and Colachal to make India Asia’s major shipping hub

With two transshipment ports planned on either side of the Cape and smaller and bigger ports lined all along the western and eastern coasts, India could emerge a major shipping hub rivaling other Asian shipping hubs like Colombo, Dubai, Singapore and Hong Kong, say reports.

Billionaire Gautam Adani-led infrastructure conglomerate, Adani Group, has started building the country's first transshipment port in Vizinjam on the Kerala coast with government providing viability gap funding of Rs1,600 crore.

Vizinjam, a natural port has a deep draft of more than 20 metres and the port under development will be capable of accommodating huge vessels that can carry up to 18,000 containers (tfc).

The centre has given in-principle approval for the Colachel (Enayam) port in Kanniyakumari district, re-kindling hopes of industrialisation of the region.

Once operational, the two transshipment terminals can serve shipping lines on either side, helping to circumvent the port of Colombo, also avoiding the need to dredge the Palk Straits for deepening the sea lane.

The government will be providing Adani a Rs1,600 crore ($240 million) in "viability gap" funding to help the new port at Vizhinjam in Kerala.

Reports say another Adani outfit has the mandate for building the Colachel port and common management for the two ports will help both prosper.

Once Vizhinjam is operational the central government will start building the port at Colachal, reports quoting a senior shipping ministry official said. Colachal alone will save more than $200 million in costs for Indian companies every year, he said.

By bringing onshore cargo handling now done at entrepots in Sri Lanka, Dubai and Singapore, Modi's government expects cargo traffic at its ports to jump by two-thirds by 2021 as India ramps up exports of goods including cars and other machinery.

The lack of an Indian domestic transshipment port forces inbound and outbound containers to take a detour to one of those regional hubs before heading to their final destination.

The government expects the new ports to save Indian companies hundreds of millions of dollars in transport costs, as well as ease concerns over China's strategic investments in Sri Lankan ports at Colombo and Hambantota.