In one line, Sagarmala is about decongesting Indian roads, saving manufacturers time and money, bringing down cost of goods produced, and increasing India’s competitiveness.
As things stand, delivery to points of manufacture, logistics, consumption is not optimized. Goods have to move through roads, and this makes the whole process inefficient. Vehicles consume gas, emit pollution, and jam up traffic, all of which leads to increased costs, pollution and inefficiencies in general. It also lowers quality of life.
The government feels that if all this is done by the use of waterways (sea) and rail, it would de-clog India and reverse all the negatives stated above. Moreover, the Indian waterways are hardly developed and therefore the opportunity is huge. Check out India-China-port-led development comparison below:
Therefore, the Indian government has launched Sagarmala, a massive infrastructure project which involves INR 8 lakh crore investments. Sagarmala aims to:
Reduce time and cost of transporting cargo by using ocean and rail transport, and keeping the road transportation to the minimum. This will involve upgrading existing ports and building new ones. The figure set as the feature image gives a rough idea of the major and minor ports, pipelines, railway lines leading to different destinations.
Enabling manufacturers and exporters to locate their industrial facilities at the point of shipping (ports). This will involve construction of factories and warehouses at ports.
Building rail lines that connect the ports to the nearest rail junction that can further carry the cargo to destination cities. Rail line construction, new rail wagons, etc., will be required.
Building pipelines that will transport petchem products to the nearest destination (instead of transporting these in trucks). All pipe makers will benefit heavily from this. The idea is to transport petchem products directly to major railway lines or to their destinations.
Creating a road network that will connect the ports to industrial corridor, without the vehicles having to pass through cities. This offshoot project is nicked Bharatmala.
When complete, Sagarmala will generate an investment ranging between 4-8 lakh crore, 40 lakh jobs, save up to 40,000 crore per year on logistic costs, and boost exports by $110 billion. It attempts to achieve all this development latest by 2025.
This is one awesome plan which I wish is implemented the way it is envisaged.
Prominent Companies that will benefit from Sagarmala Project
(Please contribute by giving feedback. I have likely missed out many companies)
Port companies — Adani Ports, L&T, Gujarat Pipavav, Sical, Tata Steel, ITD Cementation
Pipeline companies — Oil India, JSW Infra (unlisted yet), Gammon India, Jai Hind Projects, Maharashtra Seamless, Jindal Saw, Oil Country
EPC Companies — NCC, L&T, Punj Lloyd, GMR, HCC, JP Associates, Gammon India, Shriram EPC, Raunaq EPC
Road Construction Companies — NBCC, HCC, L&T, Punj Lloyd, Gammon India, NCC, IRB Infra, MBL Infra, Patel Engg, Simplex, Ahluwalia, BL Kashyap, GMR, MSK, Mukand, PBA Infra, Petron, Sadbhav, Sunil Hi-Tech, Gayatri, Madhucon, ILFS Transportation, J Kumar, KNR, NBCC, Dilip Buildcon, Simplex Infra
Rail Companies — Pennar Industries, Texrail, Texmaco, BEML, KEC, Amara Raja, CMI, HFCL, BHEL
There will be a flip side too. If manufacturing facilities are concentrated at ports, demand for commercial vehicles should decline because round trips will become faster and given that GST has cut down checkposts, it is likely that the demand for commercial vehicles and also auto ancillaries will reduce.
Even transport companies may face degrowth. The bright side is that many companies will benefit while the polluters, time- and money-wasters will suffer.
That’s all for now. Just don;t be in any rush to buy – consult you advisor, do your research and then make your move.
Please message your feedback on Twitter (@TheBullBull).
Further reading: Sagarmala Document