India is intensifying its efforts to compete with other well-established hub ports in South Asia, such as Colombo in Sri Lanka, Port Klang in Malaysia, and Singapore, which dominate transshipment activity on the subcontinent.
New Delhi has approved a long-considered plan to construct a dedicated container transshipment terminal on Galathea Bay of Great Nicobar Island in the Andaman and Nicobar Islands, along the Bay of Bengal coastline, in a strategic move.
India’s Ministry of Shipping made the following statement in an announcement: “Experts have long maintained that a strong economic case exists for enabling a transshipment hub in India that can attract Indian and regional transshipment traffic from the current hubs, save significant revenue loss, reduce logistics inefficiencies for Indian trade, reduce risks to the country’s export competitiveness, and create an opportunity for India to become a large hub for Asia-Africa, Asia-US/Europe container traffic trade.”
“Currently, nearly 75% of India’s transhipped cargo is handled at ports outside of India,” the ministry added. More than 85% of this cargo is handled in Colombo, Singapore, and Port Klang, with Colombo Port handling 45% of this cargo. Transshipment cargo can save Indian ports $200-$220 million annually.
“Also, developing Galathea Bay Transhipment Port will accrue significant benefits such as forex savings, foreign direct investment, increased economic activity at other Indian Ports, enhanced logistics infrastructure and thus, efficiencies, employment generation, and increased revenue share,” it went on to explain.
The public-private partnership (PPP) model will be used to develop the approximately $5 billion project.
The first phase, which is expected to be finished in 2028, has a capacity of 4 million TEUs per year and will eventually be ready for 16 million TEUs.
The locational advantages of the site, such as its close proximity to the bustling east-west international shipping route and deep natural water depths, have led to its selection.
According to the ministry, “the project focuses on three key drivers that can result in making it a leading container transshipment port,” including “the availability of natural water depth of over 20m and carrying capacity of transshipment cargo from all the ports in the vicinity, including Indian ports,” and “the strategic location in terms of proximity in terms of proximity (40 nautical miles) with the international shipping trade route.”
In order to begin the bidding process, the government has authorized policymakers to solicit “expressions of interests” (EoI) from potential private investors.
The announcement stated, “Subject to the minimum guaranteed traffic, the PPP concessionaire shall have the flexibility to develop storage area, container handling equipment, and other infrastructure based on concessionaire’s own market and business assessment.”
It went on to say that “The concessionaire would be awarded a long-term PPP concession of 30 to 50 years (based on requirement), shall be responsible for the provision(s) of port services and shall have the rights to levy, collect, and retain charges from port users,” and that the concessionaire would be given the right to do so.
For Indian exporters and importers, foreign transshipment means higher logistics costs and longer transit times, which hurts their competitiveness on the global market.
As a result, India’s trade expansion relies heavily on a more effective ecosystem for the supply chain.