Coastal Economic Zone (CEZ)

Coastal location allows companies to operate in the world markets unhindered by the poor infrastructure in the hinterland. This was successfully done in China.

The NITI Ayog, thus, suggests that India should also work on building a Coastal Economic Zone (CEZ) .

This becomes further attractive in the light of Sagarmala initiative.

India has planned to build its first Eastern Coast Economic Corridor (ECEC) from West Bengal to Tuticorin in Tamil Nadu.

• As part of the project, recently, the Asian Development Bank approved a $631 million loan for the construction of industrial corridor between Vishakhapatnam and Chennai (VCIC).
• The fund will help develop the first key 800-km section of the planned 2,500-km East Coast Economic Corridor. The remaining $215 million will be funded by the Andhra Pradesh government.
• The idea is to not just build new ports or upgrade old ones but raise entire industrial ecosystems that encompass several such ports.
• The ADB loan will help the government build state-of-the art industrial clusters, roads, efficient transport, and reliable water and power supplies with a skilled workforce and good business policies.

Significance:-

• The new industrial corridor is expected to spur growth by augmenting existing investment in world-class transport networks, infrastructure, and industrial and urban clusters.
• VCIC will also be an important component of the government’s Make in India campaign to attract foreign investors and encourage the creation of manufacturing hubs in the country. 
• According to ADB's projections, automobile and electronic manufacturing will grow 24% a year over the next two decades along the coastal corridor districts.
• By linking areas that are lagging in development with dynamic industrial and urban clusters, VCIC will create employment opportunities that alleviate poverty and reduce inequality. 
• This is particularly significant for the Eastern region as it lags behind other regions of the country.
• It can help unify the large domestic market.
  • The Visakhapatnam-Chennai corridor, for example, will link four economic hubs and nine industrial clusters.
• It will integrate the Indian economy with the dynamic global value chains of Asia and drive India’s Act East policy. 
• Greater connectivity and economic integration between South Asia and the rest of Asia is likely to contribute significantly to development and foster regional cooperation as well.
• As a coastal corridor, VCIC can provide multiple access points to international gateways. It is in line with the trade reforms needed in the evolving global trade landscape.

Maritime Clusters and CEZ

• Maritime clusters are to be one of focal points for economic development along India’s coastline, according to a draft report prepared under Sagarmala Programme of the Ministry of Shipping.
• The report on port-led-industrial development of the coastal economic clusters identifies two major maritime clusters in Tamil Nadu and Gujarat as areas with potential

Need

• Globally, the shipbuilding market is dominated by China, Korea and Japan, which cumulatively account for 90 per cent of the world’s shipbuilding capacity.
• According to the report, India currently accounts for only 0.45 per cent of the global shipbuilding market and could target 3–4 mn DWT of the global shipbuilding capacity by 2025.
• The report also states that India can target to achieve a 0.2 per cent share of maritime services in overall GDP by 2025.
• INR 5,000 crore worth ancillaries market for maritime cluster can prove to be a huge opportunity for the Indian economy with engineering, fabrication and machining offering the greatest potential by 2025.

The report further captures overall opportunity of port-led industrial development for the country through 14 CEZs proposed along the maritime states and industrial clusters under Sagarmala.

• •  The competitive location of these CEZs will help reduce logistics costs, thus, enabling Indian trade to be more competitive globally.
  • These proposed CEZs have been envisioned to tap synergies from the industrial corridors to provide a thrust to manufacturing and industrialization under the ‘Make in India’ initiative of the Government of India