Sagarmala to cut down logistics cost, saves Rs.35k -40k crore a year

The Dollar Business Bureau 

Sagarmala, the ambitious project of the government for ‘Port-led development’, will help in cutting down the logistics cost for domestic as well as EXIM cargo, with an estimated overall cost savings of Rs.35,000-40,000 crore per year by 2025.

“Sagarmala, the ambitious programme for ‘Port-led development’ in the country, is all set to change the logistics sector performance by optimizing India’s logistics modal mix. The flagship programme by the Ministry of Shipping will help in reducing the logistics cost for both domestic and EXIM cargo with optimised infrastructure investment. An overall cost savings of Rs.35,000 to 40,000 crore per annum by 2025 is estimated from the same,” said an official release.

There is considerable potential to move finished products and raw materials using inland waterways and coastal shipping, which is about 60-80% cheaper compared to road or rail transport, said a study carried out under the Sagarmala programme.

While the share of inland waterways and coastal shipping in India’s modal mix continues to be low, emphasising on coastal shipping to support road and rail transport can result in overall cost savings in logistics, the study said.

The Sagarmala programme is aimed at increasing the movement of coal via coastal routes from 27 MTPA in the fiscal of 2016 to 129 MTPA by 2025 and to enhance the share of coastal shipping and inland waterways in modal mix from 6% to 12%, the release said.

“The programme envisions cutting down the cost of generating the power by Rs.0.50 per unit, it added.

It is expected that for power plants which are situated 800 to 1,000 km around the coal mines, the coal logistics cost can contribute up to 35% of the power production cost.  

The idea of ‘port led development’ is core to the vision of Sagarmala and focuses on logistics-intensive industries. 

In India, the logistics cost is 19% of GDP, which is one of the highest in the world. Under the Sagarmala Programme, it will go through a complete transformation by unlocking the whole potential of the country’s coastline and waterways.