Formation of a Special Purpose Vehicle to provide efficient rail evacuation systems to Major Ports and thereby enhance their handling capacity and efficiency

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for formation of a Special Purpose Vehicle (SPV) to provide efficient rail evacuation systems to Major Ports and thereby enhance their handling capacity and efficiency. The SPV would undertake the following Projects:- 1. Last mile connectivity to Major Ports; 2. Modernization of evacuation infrastructure in Ports; 3. To operate and manage internal Port Railway system; 4. To raise financial resources for funding Port related Railway Projects Major Ports have identified a shelf of nearly 40 Projects which includes the last mile connectivity Projects and internal Port Rail Projects which would require an estimated investment of Rs. 2,372 crore. The SPV would be funded by all the 12 Major Ports and the Rail Vikas Nigam Limited (RVNL). Major Ports would contribute 90 percent of the equity with RVNL contributing the rest. The SPV would work in close co-ordination with the Indian Railways and leverage the existing participative model of the Indian Railways for enhancing last mile connectivity to Ports. The work of the SPV is expected to result in substantial reduction in dwell time of cargo at Ports and bring down the overall logistic cost for trade. The SPV focusing on Port connectivity will fit into the ambitious Sagarmala Programme of the Government which aims at promoting port-led direct and indirect development and to provide infrastructure to evacuate goods from ports quickly and efficiently. The SPV would be registered as a Company under the Companies Act with an initial authorized capital of Rs. 500 crore. The initial subscribed share capital would be Rs. 100 crore. It is also proposed to raise resources from multilateral funding agencies and other financial institutions to finance Port Connectivity Projects. The SPV would be manned by professionals with expertise on rail transport and port logistics. The SPV would be headquartered in Mumbai with a registered office in New Delhi. Background: Ports handle nearly 90 percent of the EXIM trade of the country by volume and are critical to enhance competitiveness of the country in the international trade. One of the key determinants for efficiency of Ports is evacuation and hinterland connectivity. An efficient evacuation system and seamless connectivity to the hinterland from the Port can substantially reduce the logistic costs for the trade which will enhance the competitiveness of India. The internal Rail Systems in Major Ports have evolved over the past five decades and are antiquated and need renewal. The 12 Major Ports have nearly 612 km of internal rail network. Though the Major Ports and Indian Railways have taken up many connectivity projects, there is an urgent need for focused attention and substantial allocation of resources. The Government is also keen on increasing the percentage of cargo being evacuated through rail from Major Ports which stands at 28 percent now. Increased movement through rail and coastal/ inland water transport can go a long way in reducing the congestion in the already stressed road network and reduce the adverse externalities associated with it. The Government has taken many initiatives to improve the operational efficiency of the Major Ports to international standards. A massive thrust has been given to increase the capacity of the Major Ports and also to deepen the drafts so that larger vessels can be handled. Realizing that these efforts would not bear fruit unless evacuation and connectivity are improved, the Ministry of Shipping proposed the creation of a SPV.