India digs deep for trade and commerce

Posted in India | 01-Jun-05 | Author: Sudha Ramachandran| Source: Asia Times

BANGALORE - A century and a half after the idea was first conceived, the decks have finally been cleared for the execution of the Sethusamudram shipping canal project. This envisages increasing the navigability of the waters between India and Sri Lanka, and will involve dredging a channel in the seabed between the two countries. The canal will run through Indian territorial waters.

India's cabinet committee on Economic Affairs has given the green light for the US$550 million project, and work is scheduled to begin next month. The canal is expected to be ready by 2008 for medium-sized vessels to navigate.

Currently, the movement of vessels through the Palk Strait is impeded by its shallow waters. Between Pamban island near Rameshwaram in the southern Indian state of Tamil Nadu and Talaimannar in Sri Lanka's Mannar district lies a reef called Adams Bridge, where the depth of the sea is a mere two to three meters. Consequently, ships from the Arabian Sea heading to the eastern ports of India (or vice versa) have to take a circuitous route around Sri Lanka at present.

The Sethusamudram project will change that. It involves dredging a 167 kilometer, 300 meter wide, 14.5 meter deep canal, which will stretch from Tuticorin port on India's southern coast to Adam's Bridge in the Gulf of Mannar, and extend northward to the Bay of Bengal.

Once the canal is ready, ships will be able to avoid sailing the circuitous route around Sri Lanka, reducing travel distance by about 400 nautical miles and travel time by at least 36 hours. The reduction in travel time and distance, fuel costs and docking fees at Colombo will cut maritime transportation costs significantly. This cut in costs will obviously make Indian goods more competitive globally, and domestic consumers, too, would benefit. India would also gain from toll collections from vessels using the channel.

The project is to be funded by government-guaranteed debt and equity from the public that that will be listed on stock exchanges.

Winners and losers
Tuticorin harbor is the biggest beneficiary of the project. The Sethusamudram canal is expected to transform Tuticorin into a transshipment hub that will act as a catalyst for the development of other ports - in Nagapattinam and Rameshwaram for instance - as well as economic activity in the hinterland.

However, while the project might hold out the promise of profits and seem like a South Asian version of the Suez Canal, to some it spells economic ruin and environmental disaster.

Notably, there are worrying economic implications for Sri Lanka. Colombo port currently relies on India for about 60% of its transshipment business. This could fall drastically once the canal is operational.

However, Indian officials are saying that Tuticorin cannot displace Colombo in importance as a port, as bigger Indian vessels would still need to sail around Sri Lanka and dock at Colombo port. Besides, international shipping would continue to take the route around Sri Lanka.

Environmentalists in India have pointed out that the project threatens the rich marine ecology of the area and that the dredging and marine traffic could destroy the Gulf of Mannar Marine Reserve - one of India's most biologically diverse coastal regions. Environmentalists in Sri Lanka have warned that heavy dredging could disturb the water system of the Jaffna peninsula. It is also feared that the dredging and increased maritime traffic would disrupt sea currents, step up sea erosion and threaten the fragile coastline of the Gulf of Mannar.

The livelihood of about 500,000 fisherfolk spread across 138 fishing villages along five coastal districts of Tamil Nadu will be severely hit, as there will be restrictions on the waters they can enter and the number of hours they can fish. Entire fishing villages could be displaced to make way for repair yards and other onshore services.

But not just the environment lobby is opposed to the project. "Comparing the Sethusamudram canal with the Suez or Panama canals is absurd," admits an Indian official in the Ministry of Shipping. "The Suez Canal transports 14% of world trade and reduces navigation time by 24 days. The Sethusamudram Canal cuts navigation time by 36 hours only. The investment might not justify the boost in trade that is expected to accrue," he points out.

So why is the Indian government steaming ahead with the project? "Reports in the media seem to have exaggerated India's expectations from the project," says the Shipping Ministry official. India does not expect the Sethusamudram project to emerge as an important waterway for international shipping. "We see it as a means to boost coast-to-coast shipping within the country," he says.

All political parties in Tamil Nadu have been demanding the implementation of the project. It appears that pressure from the Tamil parties in the ruling United Progressive Alliance coalition has speeded up the cabinet committee's green light for the project.

But there are also defense and security compulsions behind the project. India's Minister of Finance P Chidambaram has drawn attention to the "tremendous externalities" in defense, security and anti-smuggling that the project has. Security analysts have pointed out that the canal would enable the Indian navy and coast guard to deploy larger vessels than they do at present and allow them to deploy faster as well.

The significance of the project to India's security stems from its proximity to Sri Lanka's Northern province, the bastion of the Liberation Tigers of Tamil Eelam (LTTE). The increasing reach and effectiveness of India's navy and coast guard in the Palk Strait and the Gulf of Mannar as a result of the project is expected to improve India's capacity to check smuggling and movement of LTTE cadres across these waters.

Analysts such as Professor V Suryanarayan, former director of the Center for South and Southeast Asian Studies at the University of Madras, have been warning that the emergence of the LTTE's naval wing - the Sea Tigers - "as a credible fighting force in India's immediate neighborhood has serious implications for India's security".

"New Delhi should take up the Sethusamudram project on a top priority basis, so that the navy and the coast guards can freely move around the Palk Bay and the Gulf of Mannar and keep constant vigil on India's maritime borders," he wrote in 2003 in an opinion piece in The Hindu.

The LTTE has been strangely silent on the project. Sri Lankan sources tell Asia Times Online that this could be because Tamil political parties in India are in favor of the project. And the Tamil LTTE might not want to be seen to be opposing their "dream project". It is possible that the LTTE is content to stand back for now while the environmental lobby and other opponents of the project press their protests. Pro-Tiger websites have been carrying analyses by environmentalists critical of the project and articles that portray India's maritime and geostrategic ambitions.

When Prime Minister Manmohan Singh lays the foundation for the Sethusamudram canal project next month, India will be taking its first concrete step toward making a 150-year dream a reality. This reality, though, might not turn out to be as rosy as hoped.

Sudha Ramachandran is an independent journalist/researcher based in Bangalore.