Why is Vadhavan Port Project Important to India; Know All Details Including Estimated Cost of Development

After months of discussion, the Union Cabinet finally approved the Rs 76,220 crore Vadhavan Port project in Maharashtra on June 20, 2024. The project was approved at the second Union Cabinet meeting of the Narendra Modi administration's third term.

PM Modi posted a tweet on X saying, “The Cabinet decision on developing a major port at Vadhavan in Maharashtra will boost economic progress and also create employment opportunities on a large scale.”

Vadhawan Port: India’s Biggest Port Development Plan

Vadhavan Port Project Ltd. is a joint venture with 74% ownership held by Jawaharlal Nehru Port Authority Ltd. and the remaining 26% held by Maharashtra Maritime Board that would be developing the port. In accordance with government policy, the port will be developed in two stages, under the Landlord Model. 

As to a government statement, the project's expenses will encompass the public-private partnership (PPP) style of construction for core infrastructure, terminals, and other commercial infrastructure.

Why is it Important?

As one of the biggest port developments in India, it will likely act as a gateway for the future International North-South Transportation Corridor (INSTC) and India-Middle East-Europe Corridor (IMEC).

Vadhavan Port is planned to be developed as a major greenfield deep draft port that is weather-proof.

According to the press release issued after the Union Cabinet Meeting, “The world-class maritime terminal facilities will promote PPP and leverage efficiencies and modern technologies to create state-of-the-art terminals capable of handling mainline mega vessels plying on international shipping lines between the Far East, Europe, the West Asia, Africa, and the Americas. Vadhavan Port, on completion, will be one of the top 10 ports in the world.”

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Cost of Development

According to the port's proposal, the government will invest Rs 38,000 crore in the project. Additionally, an equal amount will be raised from the private sector through bids for the nine terminals.

Since the Union Cabinet first granted in-principle approval for the project in 2020, its cost has risen by Rs 11,000 crore.

The project faced delays in the past due to environmental concerns. The clearance from the Dahanu Taluka Environmental Protection Authority in August 2023 sparked protests from local communities, who argued it would cause significant environmental damage and threaten their livelihoods. In response, the Government of India has now devised plans to address these concerns, aiming to prevent further delays in the future.

Enhancing Connectivity for the New Port

In order to provide connectivity to the future port, the Cabinet also approved the Ministry of Road Transport & Highways' establishment of road connectivity between the port and national highways and the Ministry of Railways' establishment of rail linkage to both the future Dedicated Rail Freight Corridor and the current rail network.

India’s First Offshore Wind Power Project

Additionally, the Cabinet approved a Rs 7,453 crore viability gap finance (VGF) initiative, kicking off the planning for the nation's first batch of offshore wind power generating projects. 

The VGF amount for offshore wind power projects is Rs 6,853 crore, which is allocated for the installation and commissioning of 1 gigawatt (Gw) of offshore wind energy projects—500 Mw each off the coasts of Gujarat and Tamil Nadu—as well as Rs 600 crore for the upgrading of two ports to meet the logistical requirements of offshore wind energy projects.

Power from offshore wind projects will become more affordable with government support for the VGF, enabling power distribution utilities to purchase them.

According to the statement issued by government, private developers will be the one working on the project. 

“While the projects will be established by private developers selected through a transparent bidding process, the power evacuation infrastructure, including the offshore substations, will be constructed by Power Grid Corporation of India Ltd,” stated the government.

As part of the plan, the Ministry of Ports, Shipping & Waterways will assist two ports nationwide in order to meet offshore wind development standards.

Increasing the minimum support price for Kharif crops by 5 to 12.7% is one of the other decisions made during the meeting. 

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