Pratnashree Basu and Sohini Bose

Great Nicobar in the Andaman and Nicobar Islands is set to be developed into a transhipment port as part of making the islands a hub for the government’s Port Led development plans. The announcement came during the launch of the submarine Optical Fibre Cable (OFC) connecting Andaman & Nicobar Islands to the mainland on August 10th, 2020. Transhipment involves off-loading cargo from one ship and loading it onto another to carry it to its destination. The proposal for establishing a transhipment port at Great Nicobar has been in the works for a while with opinion being divided on the advantages of such a port, its practical implications and the general gulf between estimations which favour development of the ANI and views which are against the same. An assessment of the implications of a transhipment port at Great Nicobar must be understood keeping these fundamental aspects in consideration.

Locational benefits

In terms of location, developing a port at Great Nicobar would prove valuable for two reasons. First, the island lies just 8 nautical miles from the East-West Shipping which is the busiest shipping route connecting Europe and Africa with Asia and second, it is very close to the entry point of the strategic chokepoint – the Strait of Malacca.  This puts a transhipment port at the island at a significant advantage in terms of distance required by ships to make a stop as well provides the country with a strategic leverage at the mouth of a vital maritime chokepoint.

While India's peninsular shape accords it a unique locational advantage of maintaining maritime trade links with the western and the eastern Indian ocean, ports on either coast are lacking in one very crucial element - a deep draft. This makes it difficult to service large vessels which in turn calls for transhipment of cargo onto smaller vessels which can then reach the country's eastern and western seaports. In 2013-2014 the Indian port industry had incurred a revenue loss of almost 1,500 crore INR due to transhipment of containers destined for India at nearby foreign ports like Colombo (Sri Lanka), Singapore or Klang (Malaysia), adding to the cost of trade. This is because mainline vessels-used for carrying containers, can only be accommodated in ports which have a draft of at least 18 meters. Great Nicobar however has a draft of 20 meters- enough to accommodate container vessels of over 15,000 Twenty-Foot Equivalent Units.

As a shorter voyage translates into lesser cost, a transhipment port at Great Nicobar would be advantageous for countries like Bangladesh and Myanmar compared to the existing options. The island hence not only offers a suitable draft for the docking of large vessels and for transhipment of cargo bound for the mainland but also for facilitating trade with other eastern neighbours. This proximity to one of the busiest shipping routes and important transhipment ports, bestow on the Island a strategic leverage to emerge as an alternative transhipment facility for shippers in the region. Tapping into even five percent of the total shipping traffic in this area would prove lucrative for India. Globally, as vessels increase in size, having a transhipment port would prove beneficial with regard to draft as well as trade costs and revenue.

Striking the right balance

While the development of a transhipment port in the Campbell Bay or South Bay area of the Great Nicobar has been proposed on several occasions since the 1980s, little progress could be made due to lack of a viable business model, less exposure and objections from the Ministry of Environment and Forest against large scale developments in these areas. Indeed the ANI has been governed with a protectionist approach since independence in order to preserve its natural and anthropological rarities against exploitative enticements.

With respect to the decades long question over the extent and nature of development that may be permitted for the island chain, it is useful to note that Great Nicobar does not come under the purview of the Tribal Act unlike the rest of the Nicobar islands which precludes it from restrictions that are otherwise applicable to much of the ANI. There has been a delicate balance between the requirements for environmental preservation and tribal safety on the one hand; and the need for economic development of the islands on the other which more often than not tilted in favour of the islands continuing to remain isolated and poorly connected.

However, it would be unwise to continue to constrict advancement in the islands in terms of internal development as well as augmenting the strategic potential offered by their location. It must also be understood that such development is not in contravention with the preservation of the unique ecological and indigenous character of the islands. The growing aspirations of its residents and the national interest to improve linkages with Southeast Asia with a focus on maritime connectivity made it necessary to rationalise development with environmental protection.

In recent years, the government has undertaken steps that are geared towards this objective starting with a 10,000 crore INR plan to transform the Andaman and Nicobar Islands into the country’s first maritime hub being drawn up in 2015. Feasibility studies for the development of a transhipment port at Great Nicobar were undertaken in 2018 by NITI Ayog. A year later the Andaman and Nicobar Islands Administration proposed plans to develop a container transhipment terminal with a Free Trade Warehousing Zone in Great Nicobar to provide Indian shippers an alternative to foreign transhipment ports. Such consecutive initiatives vouchsafe the government’s steady interest in ANI’s logistical growth.

Prudence and Persistence

Even though a transhipment port at the Great Nicobar island would enhance not only the growth opportunities for the archipelago but also be poised to serve tactical purposes, there are essential aspects which would need ironing out. These include uncertainties regarding efficiency of operations which is vital to compete with ports like Colombo and Singapore and devising regulations and best practices that would boost the business viability of the port. There may be additional issues as well in the aftermath of the ongoing global pandemic as supply chains across the world reshuffle and readjust to shifts in demand and a break from established modes of shipping operations and navigation. Nonetheless it is too soon to tell how this will play out in future. For the time being, it would be important to follow through on the plans and work towards the projected prospects of Great Nicobar.

*Pratnashree is an Associate Fellow and Sohini is a Junior Fellow with Observer Research Foundation, Kolkata. The authors can be reached at: This email address is being protected from spambots. You need JavaScript enabled to view it. and This email address is being protected from spambots. You need JavaScript enabled to view it.