A supplementary agreement that was signed by the state of Kerala and Adani Vizhinjam Port Pvt Ltd would aid the hastening pace of revenue sharing from the deep-water international seaport in Vizhinjam, located near Thiruvananthapuram. The agreement modification would mean receiving a far bigger share of revenue from the port much before time, with tremendous growth prospects of state income as well as tax revenues during the coming decades.
Background of the Vizhinjam Port Project
Being built as a Public-Private Partnership between the Government of Kerala state and the Adani Group, the Vizhinjam seaport project promises to be another flagship infrastructure product. With its project cost already at Rs 7,700 crore, the project has every ingredient to make it the central mover in turning the logistics and trade landscape for Southern India inside out.
This would only help in processing large volumes of cargo and also allow the state to have a better economic status since the revenues in the form of state taxes and corporate profits will be higher when the project is scheduled to reach full capacity in the year 2028. The new agreement marks a grand landmark in the development of the port with the condition that the share of profit will begin earlier than the planned period in the state.
Revised Revenue Projections and Impact on Kerala’s Economy
The total revenue projection of the port has now gone up a notch under the new concession agreement. The initial proposals were to generate Rs 54,750 crore in revenue from this port for 36 years. But after planned expansion, this figure is to reach an impressive Rs 215,000 crore.
The estimated revenue has hopped manifold with this increase. The share of the state in the revenue will, therefore, increase. The share of the state in the revenue will climb from Rs 6,300 crore to Rs 35,000 crore by the end of the operational term of the project. The agreed deal revised means Kerala would start getting the revenue share from the year 2034, five years ahead of the schedule, since there was a construction delay.
Expansion and Capacity Enhancements
However, one of the most critical outputs of the new deal is that it has augmented the port capacity. The current construction of the port was 1 million per year. However, this has now risen to 4.5 million per year by 2028. This will make Vizhinjam port the largest freight terminal in the state of Southern India while making Kerala a significant player in the shipping industry at global levels.
This increased capacity is likely to further enhance the region’s trade potential significantly, making transportation of goods easier and faster for industries such as pharmaceuticals, textiles, and electronics. The port will become more competitive with enhanced infrastructure, attracting larger volumes of international cargo traffic, thus increasing Kerala’s contribution to the national and international economy.
Broadening the Scope of Revenue Sharing
The new deal also extends revenue sharing further so that Kerala is to benefit from all the four phases of this project, instead of the first one in the previous offer. The state had, in the original contract, been limited to gaining only from the first phase, which might have caused delays of the revenue until as late as 2039, because of mishaps in construction. This new date will advance this line, and thus the state will get earlier.
With this new arrangement of the contract, all the four phases provide continuous revenue stream; hence Kerala will receive share revenue progressively through the operational period.
Indirect Growth in Revenues for Kerala
The port operations would provide only a portion of the income directly. There would also be a tremendous growth in indirect income. GST income from the port operations up to Rs 29,000 crore would be given to Kerala for the next contract period of 36 years. Corporate income tax revenues would grow through the expansion of business and employment opportunities triggered through the activities that the port would generate in the region.
The indirect revenues are also likely to inject Rs 48,000 crores more in the Kerala economy, boosting the state’s financial profile.
Reduction of Financial Liabilities of Kerala
The liability of the state in the amended agreement for the financial commitment during the construction phase of the port has also been reduced. The viability gap funding liability of the state towards Adani Ports has been reduced from Rs 408.90 crore to Rs 365.10 crore. This reduces the financial liability of the state so that the state can divert its resources for other development works and still enjoy the growth of the port.
Future of Vizhinjam Port
It is a model of public-private partnership envisaged for upgrading the sustainability of economic growth in this region. The expanded capacity with the better revenue-sharing arrangement has now made Vizhinjam port as the spearhead for the future economy of Kerala.
The port is going to play a vital role in developing the maritime trade and logistics infrastructure for India, other than bringing much-needed revenues to the state. In its full functional capacity, the port will represent an important linkage in the world supply chain with Kerala acting as a significant gateway for international cargo traffic in this region.
Conclusion: A Game-Changer for Kerala’s Economy
This is a major milestone in the development of Vizhinjam port as Kerala has inked a new agreement with Adani Vizhinjam Port Pvt Ltd. The capacity would increase much more, along with a greatly improved revenue-sharing framework and significantly higher financial gains for Kerala. As the port is completed by 2028, Kerala’s economy will be among the world trading hubs, contributing to its excellent economic profile coupled with prosperity for the nation.
Source:
TOI, Link to article
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