Development of East Coast Economic Corridor and Vizag–Chennai Industrial Corridor: Critical Issues of Connectivity and Logistics

Abstract

The East Coast Economic Corridor (ECEC)—India’s first coastal corridor—is an example of an integrated economic development initiative. The key idea behind the corridor is port-based industrial development along the eastern coastal belt of India, in alignment with the goals of the Sagarmala initiative, and integration of India’s industrial clusters with value chains extending to Southeast Asia and East Asia. The development of the ECEC will start with Vizag–Chennai Industrial Corridor (VCIC) which covers about 800 kilometers and includes several port clusters as well as major industrial clusters. Given the importance of the ECEC and VCIC, there is a need for careful assessment of important issues. This paper provides a detailed discussion of the policies and strategies that should be considered to attain the overall objective of improving shipping and air connectivity in ECEC and VCIC while developing an enabling environment for efficient logistics support businesses that play a critical role in the management ofglobal supply chains. It discusses the issues that inhibit the growth of connectivity and investment in logistics services rather than on physical infrastructure gap analysis for individual ports and airports. It analyzes the legal and regulatory context, focusing on a corridor management perspective that investigates the existing framework of multijurisdictional coordination and rules that govern logistics operations, and advocates for regulatory reform. Specific proposals include policy reforms to support development of a major hub port on the eastern coast of India and a major air cargo hub at Chennai; (ii) the streamlining of customs procedures and removal of protective measures in road freight markets; and (iii) the establishment of Free Trade and Warehousing Zones.