JNPT Current Affairs
The Union Government has given go-ahead for setting up India’s first mega coastal economic zone (CEZ) at Jawaharlal Nehru Port (JNPT) in Maharashtra.
The first of its kind mega CEZ will stretch along north Konkan region spread across Mumbai, Thane, Pune, Nashik and Raigarh. About 45 companies across auto, telecom and IT sectors will soon bid for 200 hectares of land to set up manufacturing units in zone.
Coastal Economic Zone (CEZ)
CEZs are spatial economic regions comprising group of coastal districts or districts with strong linkage to ports in region to tap into synergies with planned industrial corridor projects. These zones are expected to provide business-friendly ecosystem including ease of doing business, ease of exporting and importing, swift decisions on applications for environmental clearances and speedy water and electricity connections.
CEZ will be developed as part of plan for developing 14 such industrial clusters to spur manufacturing and generate jobs. The plan envisages total investment of Rs 15,000 crore in first phase and creation of more than 1.5 lakh jobs.
The idea is to attract large firms interested in serving export markets as they will bring with them capital, technology, good management practices and links to world markets. This in turn will help create ecosystem around them in which productive small and medium firms will emerge and flourish.
The Union Cabinet in 2016 had approved setting up of 14 mega CEZs under National Perspective Plan of Sagarmala Programme. Its aim was to promote development of industrial clusters around ports, encourage portled development, reduce logistics cost and time for movement of cargo, enhance global competitiveness of country’s manufacturing sector and create hubs of job creation.
India’s premier container port, Jawaharlal Nehru Port Trust (JNPT) in Navi Mumbai has signed 400 Million US Dollar agreement with State Bank of India (SBI) and Development Bank of Singapore (DBS) for External Commercial Borrowing (ECB).
The agreement was signed by JNPT officials in the presence of the Union Minister for Shipping, Road Transport & Highways Nitin Gadkari in Mumbai, Maharashtra.
- With this ECB Agreement, JNPT becomes the first major port in the country to take loans in dollars to improve the infrastructure.
- The ECB of 400 Million dollars will be primarily utilised for expansion of JNPT’s existing road network connecting to its port project. It will help JNPT to double its existing capacity.
- JNPT was able to take loans in dollars as it has US dollar denominated foreign currency earnings which can be leveraged for a low cost foreign currency borrowing.
Why Ports are opting for low cost foreign currency borrowing?
- Port projects, including connectivity infrastructure projects are critical to developing cargo handling capacity of the country.
- With Central Government’s thrust on port led development under the Sagarmala programme, improving viability of port projects is critical.
- One of the primary factors that impacts viability of port projects is the interest rate on borrowings to fund projects.
- While Ports have surplus funds, they also need to borrow to achieve a quantum jump in the investment.
- Thus, ECBs is an innovative means of raising low-cost particularly when the port had revenues in foreign exchange, which provided a natural hedge to the ports.
- This would substantially help to eliminate the requirement of hedging the forex risk and would reduce the cost of borrowing.
- The step is also considered as another milestone in infusing dynamism into the functioning of the ports, both in their operations and financing.
For more information: External Commercial Borrowings