Enayam Port

Tamil Research Institute
RAPID TECHNO-ECONOMIC FEASIBILITY REPORT FOR
DEVELOPMENT OF COLACHEL PORT AT TAMILNADU
FINAL REPORT
exports; these businesses further add back to the economy in form of taxes, employment and investments.
Colachel is a large scale port project; it is expected to drive economic growth in the country especially in the
hinterland area. The following section discusses the nature of economic impact of Colachel and quantifies it.
13.4.1. Economic impact of the port
Colachel port will capture a substantial share of India's trans-shipment cargo which today gets trans-shipped in
the foreign ports. It will also capture traffic from other countries in the region specially traffic from the Indian subcontinent
countries. The cargo handling revenue generated by the port in 2030 is ~Rs 4,500 crore (it excludes
revenue from traffic shifted from other Indian ports to Colachel); this is accounted as the direct economic impact
of the port.
Additionally, the port operations will benefit the ancillary port based businesses including inland transportation
businesses in the region. The port will also employ a large pool of employees for port operations. Impact on
economy due to growth of ancillary industries and increased spending by port employees is accounted for in
indirect impact of the port. This is estimated through an economic multiplier of 2.1. The economic multiplier is
calculated based on economic impact studies for different port projects (E.g. Economic Impacts study of ports of
Hamburg and Le Havre, Port of Auckland, South Carolina State Port etc.) and corrections made for the Indian
context through BCG-TYPSA benchmarks. The indirect economic impact of the port is estimated to be ~ Rs 4900
crore in 2030.
13.4.2. Economic impact through businesses that would benefit from the port
The Colachel port will shift hinterland cargo which is currently getting trans-shipped in Colombo to direct
gateway cargo through Colachel. This is primarily due to elimination of one leg of cargo handling in Colombo.
This will reduce the logistics cost of the importers and exporters in the hinterland area (the chapter on traffic study
discusses this in details). The logistics cost reduction accounts for Rs ~ 1,400 cr of savings for the related
businesses in 2030. This will make them more competitive in the export markets and hence help grow their
businesses further. It is estimated that the related industries will receive a profit boost of ~ Rs 1,500 cr (inclusive
of wages, assuming a cost elasticity of trade of 0.8) in 2030. This further will have an indirect impact on the
economy of ~ Rs 2,600 cr in 2030 (assuming an economic multiplier of 2.9 based on economic impact studies
in India including Quantifying the Income and Employment Multipliers for Mumbai Region by National Council
of Applied Economic Research)
The total economic impact of the project is estimated at ~Rs 13,500 cr in 2030. The following figure
summarises the economic impact for the Colachel port project. Please note, this is an estimate arrived at on the
basis of secondary studies; a further social-economic impact assessment study can be done for refining the
economic impact estimates.
194
www.tamilri.com