- Karnataka is keen to accelerate a port-led model of development, hoping to attract a number of private investments. It has one major port and 12 minor ports under different stages of development.
- Since 2014, the state government has been pursuing policies that ease infrastructure and industrial development.
- The port-led model, however, ignores people living in the vicinity of proposed constructions. At least three ports that are currently under development have run into trouble, facing resistance from the communities.
Karnataka is on a port-development spree. The 320-kilometre coastline, spread across three districts – Uttara Kannada, Udupi, and Dakshin Kannada – is dotted with 12 minor ports, and one major port, in different stages of development. A common complaint across this port development activity is that it ignores concerns raised by the coastal communities that live in the vicinity of the action – concerns about the loss of coastal commons, the loss of biodiversity and a loss of livelihood.
While a major port comes under the aegis of the central government, the minor ports are controlled by state governments. A major port has deeper drafts allowing large, capesize vessels, higher investments and higher tariffs. A minor port, in comparison, has lower tariffs.
With the impetus of Sagarmala, a nationwide port-led development initiative of the central government, Karnataka is keen to go all-in to create coastal infrastructure in the form of ports, railways and highways that connect the coast to the hinterland. Kapil Mohan, additional chief secretary of Karnataka Infrastructure Development, Ports and Inland Waterways Department and the Chief Executive Officer (CEO) of Karnataka Maritime Board estimates that “the planned infrastructure development is expected to bring in approximately Rs. 15,000 crore (Rs. 150 billion) of economic value addition.”
This growth is led by both Sagarmala, which is funded largely by the central government, and the state government which is also pumping in and encouraging private investments largely through a public-private partnership model. In a speech at a business and maritime conclave organised by Karnataka Maritime Board, Federation of Karnataka’s Chamber of Commerce, and State Bank of India on May 12, Karnataka’s chief minister Basavaraj Bommai said that their government has proposed projects of over Rs 8,000 crore (Rs. 80 billion) to be developed under Sagarmala. Both the central and state government are led by the Bharatiya Janata Party (BJP). In November this year, the state is organising a global investors’ summit to attract international investments.
Waterways are one of the cheapest modes of freight transport. The rate of freight transport via road is almost double in comparison. At the moment, about 87 percent of Indian freight either uses rail or road for transportation of cargo, and waterborne transport accounts for less than six percent. Industry insiders say that better connectivity between ports through inland and coastal waterways is economically efficient. They also say that port development would connect the hinterland industries with the ports via a better road and railway network, leading to the idea of projected growth; infrastructure creating its own demand.
For example, Karnataka’s new industrial policy of 2020-2025 focuses on the growth of the cement and steel sectors, and increasing the export of sugar, by building better infrastructure and logistics. The investor pitch document prepared by Karnataka Maritime Board says that the state has a “well-developed industrial hinterland including 40 MTPA (Million Tonnes Per Annum) of cement capacity, 25 MTPA of iron & steel capacity, 10 GW (gigawatts) of installed thermal power plant.”
The investor document is seeking investments in captive ports as well. A captive port is constructed and developed by a private sector company for a specific purpose. For instance, the port at Manki, in Honnavar taluk of Uttara Kannada, is to be developed as a captive port by Renuka Sugars. The port at Pavinkurve, another village in Honnavar, is slated to be constructed by the JSW (Jindal South West) Group with an investment of Rs. 2,000 crore (Rs. 20 billion) to carry 15 MTPA cargo to their own steel plant in Vijayanagar which is also being expanded from 12 MT to 18 MT. The port at Kasarkod-Tonka, a third location within the Honnavar taluk of Uttara Kannada, will have a capacity of 5 MTPA once completed.
Port officials also say that amid port expansion efforts, the port at Karwar in Uttara Kannada is projected to have a capacity of 4.5 MTPA from the current 3 MTPA capacity. The port at Old Mangalore is slated to expand from 1 MTPA to 2 MTPA.
What do these ports import and export, and do we really have the need for so many ports? According to data obtained through the Right to Information Act, apart from the port at Karwar, which imports rock phosphate, bitumen, HSD (High Speed Diesel), palm oil, industrial salt and caustic soda solution, and exports molasses and caustic soda, no other minor port has shown an increase in its exports and imports in the last five years.
In fact, the ports at Tadadi, Honnavar, Manki, Pavinkurve, Bhatkal and Padubidri show no history of cargo handling, indicating that they are not commercial ports, yet. The ports at Belekeri, Kundapura and Hangarkatta show no cargo handling data after 2018. And the ports at Malpe and Old Mangalore show a reduction in business in the last five years.
Creating policies that ease ‘big’ growth
Karnataka’s new industrial policy also aims to make land acquisition easier, removing restrictions on land conversion and exempting industries from the Karnataka Land Reforms Act, 1961 through a series of amendments. It is focused on export-oriented, production-driven growth banking on high investments from private vendors, both national and international. Ports and connecting infrastructure will allow it to export and import from within the state, and not depend on ports outside the state.
In August 2013, the government of Karnataka notified new port limits for all minor ports of Karnataka, indicating the extent of jurisdiction of the state ports department.
The Karnataka Minor Ports Development Policy 2014 aspires to develop commercial ports, increase their capacity for handling more cargo, decongest highway traffic by providing facilities for coastal shipping of passengers and cargo traffic, build more captive ports through a public-private partnership (PPP) model, and create facilities to handle at least 5-10 percent of the country’s cargo. It also allows the state government to invest up to 11 percent in all PPP port projects and requires the state government to take up the mantle of acquiring land even for private port projects. In addition, it aims to convert all ports from fair-weather (seasonal) to all-weather ports.
In 2015, the state passed the Karnataka Maritime Board Act, which allowed the formation of the Karnataka Maritime Board. Once established in 2018, the Board became the nodal agency to coordinate and implement the port development policy, a job that initially belonged to the Ports and Inland Water Transport Department. The board, according to the policy, allowed bidding for private investments, a function that is not possible for the state department.
So far, out of the 12 minor ports and one major port, one is being developed under a public-private partnership between the state government and Honnavar Port Private Limited, two are slated to be developed as private captive ports by the JSW Group and Renuka Sugars, and two were coming up under the Sagarmala scheme, at Karwar and Tadadi. Owing to resistance by coastal communities, the port at Karwar has been stalled indefinitely and the port at Tadadi has been denotified. The rest are still in various stages of being finalised or seeking investments.