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Coastal Economic Zones

Last updated : December 9th, 2022 11:55 am

Coastal Economic Zones

The Ministry of Shipping has introduced the Coastal Economic Zone (CEZ). The CEZs are categorized to develop the country’s economic status by initiating port-led industrialization. The zones are set up to create a business-friendly environment by making the import and export easy and fast on the environmental clearances.

Objectives of the CEZ

The objectives of the CEZ are to:

• Reduce the export and import costs and time
• Reduce the cost of transporting the cargo by waterways
• Lower the expenditure of the bulk goods

Components of the Projects in CEZ under Sagarmala

• Post-modernization and New Port development
• Port Connectivity Enhancement
• Port-linked Industrialisation
• Coastal Community Development
• Coastal Shipping and Inland Waterways Transport

Implementing the Projects

• The State Maritime or State Governments and Central line Ministries execute the projects under the Sagarmala.
• The Special Purpose Vehicle (SPV) and Sagarmala Development Company Limited (SDCL) will fund only the projects that other sources cannot fund.
• The SDCL will provide equity support to the state and port-level SPV.
• The equity support will be granted only for 5-6 years.
• The expenditure for the development of the projects is considered as the support of SDCL.
• The Central line ministries and the State Governments prepare a Detailed Project Report (DPR) for specific projects.
• For the rest of the projects, the SDCL prepares the DPRs.
• The ministries or departments will fund the leftover projects.
• The operation and maintenance costs will come under the Sagarmala.

Eligibility Criteria for Selection of Projects

• Projects which come under the components of the Sagarmala.
• The project proponent should provide the DPR and the financial analysis, which the administrative authorities should approve.
• The residual projects which are innovative following the objectives are given preference.
• The residual project will be considered if the project’s proponent contributes to the land.
• The project’s inbuilt Business Model.
• Revenue Generation of the project.
• Market Scenario for project viability.
• A cost estimate and the budget for the project should be provided.
• The details of the organization structure should be provided along with the requirements of human resources.

Approval and Appraisal of the Project

• The road and rail connectivity projects, which have already been approved by the Ministry of Road Transport and Highways and the Ministry of Railways, will be an appraised projects.
• The projects selected for equity support and the projects to be financed under SDCL will be appraised independently by the SDCL.
• The projects to be funded by the Sagarmala program will be appraised as per the guidelines of the Ministry of Finance.

Format for the Appraisal of the Projects

• Outline of the project.
• The estimated outcome of the project.
• The estimated cost for the project.
• The source of finance for the project.
• The viability of the project.
• The requirement of human resources.
• Clearance and approval for the land.

Annexure-II can be referred for the detailed account of the format of the appraisal of the projects which can be accessed below:

Guidelines-for-funding

Funding Mechanism for the Projects under the Sagarmala

• The project funded under Sagarmala will be provided from SDCL, the equity support or by the Ministry of Shipping.
• The fund for the project would be after all the clearance and approval are in place.
• There will be no other guarantees given to the projects.

Funding from the Ministry of Shipping

• The funds provided for the project will be limited to 50% of the project cost as given in the DPR or the tender cost, whichever lesser will be taken.
• The 50% will be given in 3 splits.
• The project under the Central Sector Scheme (CSS) will not be funded higher than the scheme.
• The project with little profit, but a huge impact on the society will be provided with funds along with the schemes of the Central Ministries.

Equity Support

• The equity support will be given based upon the project equity given in the DPR.
• The equity will not be more than 49% of the project equity.
• The projects which are ready to be implemented under the SPVs will take equity.

Token equity will be taken for projects that are in the development stage to initiate the project.

Monitoring of the Projects

• The will be constantly monitored and evaluated by the SPVs, SDCL and Ministry of Shipping (projects with equity support).
• A monthly report about the progress of the project should be submitted by the project proponent or the fund recipient. SDCL will monitor and evaluate it (projects without equity support).
• The utilisation certificate of the funds of the previous tranche should be submitted. This is to receive the next instalments of the funds.
• A completion certificate should be submitted to receive the final tranche of the fund.
• The completion certificate can be issued by a third party agency, appointed by the Ministry of Shipping.
• The financial records, statistical records, supporting documents and other documents should be maintained by the project proponent or the fund recipient.

 CEZs Employment Potential for the Public

• The bulk manufacturing (steel, cement, power and petrochemical) industries in the CEZ have the possibility of having 40 lakh direct jobs and 60 lakh indirect jobs by the year 2025.
• Discrete manufacturing industries (Footwear, leather, food processing) have a higher potential for direct employment.
• Job opportunities in the construction sectors will be opened for the development of the infrastructure projects.

Schemes Implemented for CEZ

• Central Plan scheme on ‘Assistance for Deep Sea Fishing’.
• CSS for providing financial support to the Non-Major or Major ports handling oil for the oil spill response facility.
• CSS gives financial support for the movement of cargo or passengers by waterways in the Major or Non-Major ports.

Contact Details

Sagarmala Development Company Limited,
1st Floor, Right side, Press Trust of India Building,
Parliament Street, New Delhi – 110 001
Phone: 011-23714715, Fax: 011-23714716,
Email: [email protected], [email protected]

The guidelines can be accessed below:

Guidelines-for-funding