The decision by Prime Minister Narendra Modi’s administration is significant as Andaman and Nicobar Islands are of maritime importance to India with its potential for trade and surveillance. It is also a vital military base housing the country’s only tri-service command.
One of the key projects planned is a transshipment terminal at Campbell Bay at Great Nicobar, the largest of the Nicobar islands. Campbell Bay is 90km away from Malacca Strait, the principal sea route between the South China Sea and the Indian Ocean.
China, which is dependent on Malacca Strait to ship oil from West Asia, is pursuing an alternative route under its controversial China-Pakistan Economic Corridor project that India is opposed to as it passes through parts of Pakistan-occupied Kashmir.
“A large port facility at Campbell Bay could offer a better opportunity for India to trade with the Association of Southeast Asian Nations (Asean) region, which is in the vicinity," said Biswajit Dhar, professor at Jawaharlal Nehru University. “The project may also have a strategic dimension considering the way China is influencing the dynamics around the region."
The transshipment terminal is among 10 projects identified by the government as part of its island development plan prepared by federal policy think tank NITI Aayog. The projects are in the areas of road, sea and air connectivity, clean energy, development of resorts, digital connectivity, healthcare and education, for which expressions of interest will be invited.
The plan also proposes to extend benefits available to businesses in the north-eastern region under a scheme notified in April this year. These include subsidy on capital investment and interest on working capital loans, reimbursement of insurance premium for plant and machinery, and reimbursement of the central government’s share of the goods and services tax. The fiscal benefits plan, however, needs to be approved by the government.
Experts welcomed the island development plan. Admiral Arun Prakash, former naval chief and the first commander-in-chief of the tri-service command, said the Andaman and Nicobar Islands have huge natural resources but have not been developed because of opposition from environmentalists.
“We should be developing them for their tourist and other potential. This is something we have long neglected," Admiral Prakash said. “Malaysia and Indonesia have been developing their islands and so have the Chinese. We should also be doing this," he said.
The Andaman chain comprises some 576 islands, of which only a few are inhabited.
The former naval chief said Campbell Bay has a port that can be developed for transshipment facility “given that it lies on an international trade route".
He said large international container ships avoid Indian ports because of the long time taken to load and unload cargo.
“So, developing Campbell Bay is a good idea. It can also be used for refuelling by ships," Admiral Prakash said. He, however, does not expect Campbell Bay to become a rival to Colombo, the region’s major transshipment hub.
NITI Aayog is also working on a revenue model to build sea connectivity projects in the public-private partnership mode, especially for ships carrying automobiles, the person said.
Proposals for resorts at the islands of Minicoy, Suheli and Kadmat of Lakshadweep are also part of the plan, said the person quoted above, adding that investors who are already present in the islands as well as non-resident Indians (NRIs) will be encouraged to participate in the projects.
Development of water de-salination plants and waste management are also part of the development scheme.“Constructive suggestions emerging from the pre-bid meeting will be incorporated in the terms of the projects," the person quoted above said.
Island development is a key priority for the government as building infrastructure will improve connectivity and spur economic activity, including tourism. Plans are already afoot to boost air connectivity in the islands and promote helicopter tourism. The Island Development Agency, set up last June to develop the maritime economy, is working with NITI Aayog on this plan.