3. Definition and Justification
CEZs are coming up as part of the Govt. of India’s ‘Sagarmala’ initiative.
This maritime development programme plans creating capacities in India’s
coastal states that include developing ports, improving back-end port
connectivity and growth of industrial clusters.
Despite being one of the earliest entrants to the SEZ strategy, India’s SEZs
have not performed well compared with those in China, Southeast Asia or
Bangladesh. While Asian and global experience points to significant
benefits from SEZs and export-oriented hubs, India’s SEZs largely failed
due to lack of linkages.
Sagarmala’s vision of developing CEZs that would provide effective
hinterland connectivity to coastal economic hubs increases optimism about
performance of export-oriented industrial clusters, such as an apparel park.
4. Description
Consistent with long-term growth strategy of state of AP.
AP is developing two CEZs – VCIC Central and VCIC North.
The intervention is visualized in VCIC North: this CEZ is linked to the
Vizag port and would have apparels as one of its core industries.
To be developed in sync with efforts for creating CEZs as well as the
APIIC’s efforts to build export-oriented hubs
Industrial cluster of 2,000 acres: the size factor is important for
triggering agglomeration benefits.
Expected to be developed privately in collaboration with state
agencies.
6. Projected Benefits: 20 Year Span
3 scenarios : 1) Lower than baseline
(conservative) – Performance of India’s
current SEZs 2) Baseline – benefits projected
by Sagarmala 3) Higher than baseline (robust)
– performance of SEZs in China and elsewhere
Conservative: Exports and economic activity
50% and 20% of baseline;
Robust: Exports same as baseline: Economic
activity same, but annual increase of 5% (2%
in other two)
Key differences between scenario benefits:
Economic Activity/agglomeration/spillover
8. Definition and Justification
Building new ports/ modernizing existing ports and improving their
connectivity with hinterland is an important aspect of Sagarmala
Competitiveness of exports is a function of port efficiency and
transport costs that include costs of transporting to ports.
Academic literature variously points to the importance of such
initiatives in reducing logistic costs. Indian ports have suffered from
higher logistic costs that have affected their operational performances.
Upgrading port facilities and reducing logistics costs is essential for a
state like AP that has a vision statement of developing into a ‘global
maritime hub’ and also be a core part of Sagarmala vision plan.
9. Description
We visualize port modernization facilities to include dredging, building a new
container terminal and expanding berth size. This is line with similar
modernization effected in Visakhapatnam port.
The port connectivity is planned on the lines of similar linkage programmes taken
up by JNPT port in Maharashtra : expanding road network by increasing highway
lanes.
Intervention visualizes acquisition of 1000 acres of land for ‘expansion’. Risks
include the delays in acquisition of land, resultant time and cost overruns.
Benefits have been confined to revenues generated. Social benefits have not been
estimated as these are difficult to quantify.
11. Projected Benefits – 20 Year Span
Initial revenue – INR 150 crore, based on
traffic generated by 75% of capacity
utilization. Benchmarked to Gangavaram
port revenue performance.
Revenues can increase from flexibility of
non-major ports in increasing tariffs.
But might decrease if capacity utilization
falters
13. Definition and Justification
AP visualizes growing into an ‘aqua hub’ on the basis of its large seafood exports,
particularly Vannamei shrimps. AP is largest producer of these shrimps. Seafood is also the
largest exports from Andhra.
Empirical evidence on quality standards and trade point to adoption of such standards
increasing host country exports
Empirical research points to lack of adequate certification facilities as a constraint for
seafood exports as lack of certification invites NTMs in global markets. But seafood value
chain in India has begun changing in response to demands of conformity assessment.
We expect additional modern testing and certification facilities to encourage substitution
from domestic production to exports. The substitution effect is expected to be strong due to
the high international price premium commanded by shrimp exports.
14. Description
Facility to be located close to Vizag port, which handles largest volume
of outbound seafood exports in the country. It will also cater to seafood
exports bound for Krishnapatnam port.
In line with the earlier policy interventions, the current one dovetails
into the policy vision of Sagarmala and CEZ outputs.
To be developed in line with the norms laid out by Food Safety and
Standards Association of India (FSSAI)
Delays might arise from accreditation received from Export Inspection
Council and other agencies.
15. Projected Costs: 10 Year Span
Fixed Costs: Land & Building, Lab &
Equipment; & Operating costs (INR crore)
Years 1-3: Fixed Costs; 4-10: Operating
Costs;
0
2
4
6
8
10
12
1 2 3 4 5 6 7 8 9 10
Land and building Laboratory and equipment Operating expense
0
2
4
6
8
10
12
1 2 3 4 5 6 7 8 9 10
16. Projected Benefits – 20 Year Span
Initial revenue – INR 65 crore,
expected to rise by 2% each year
Estimates based on expected
substitution of seafood produce
to exports from domestic
consumption and 25% of higher
premium
Might be higher if international
price premiums increase
