Arrival of the first Indian cargo ship at Sittwe Port: Assessing the Kaladan Project

With much fanfare, the first Indian cargo ship, MV-ITT LION (V-273), successfully docks at the well-known Sittwe Port on 9 May 2023. This significant event marks a milestone in the burgeoning partnership between India and Myanmar after two decades ever since the Kaladan Multimodal Transit Transport Project (KMMTTP) was envisaged. Following a fruitful pilot shipment of rice to Bangladesh in March 2023, the first official cargo of 20,000 bags comprising 1,000 metric tonnes of cement, was flagged off ceremoniously by Shantanu Thakur, Minister of State for Ports, Shipping, and Waterways, at Syama Prasad Mookerjee Port in Kolkata on 5 May 2023. The regular commercial operations from the port were completed by the Inland Waterways Authority of India under the supervision of the Shipping Ministry in 2018, and have been granted permission by Naypyidaw. The successful moorage of the freight ship paves the way for enhanced transportation links, resulting in a reduction of over 50 percent in both cost and time for goods shipped from Kolkata to Aizawl and throughout the entire Northeast region. This hopes to revolutionise trade and propel economic growth in the area.

The Union Minister of Ports, Shipping and Waterways, this momentous occasion not only hopes to strengthen the strategic ties but also holds immense promise for the economic development of the Bay of Bengal region.

According to Sarbananda Sonowal, the Union Minister of Ports, Shipping and Waterways, this momentous occasion not only hopes to strengthen the strategic ties but also holds immense promise for the economic development of the Bay of Bengal region. Therefore, it remains important to analyse whether the showcasing of the operational prowess of the $484 million Kaladan Multimodal Transit Transport Project (KMTTP) is effective.

Advantages of Port Operationalisation

Sittwe Port is a deepwater port situated in Sittwe, the capital of Myanmar's Rakhine State. This port, developed and funded by India, is strategically located at the estuary of the Kaladan River, on the Bay of Bengal. It is a crucial component of the KMMTTP which was approved in 2008. The port has been specifically designed to accommodate vessels with a maximum capacity of 20,000 Dead Weight Tonnage (DWT). While the current usage does not involve such large vessels, in a few years, there will be demand for heavier vessels. Prominent items of export to India, for now, include rice, timber, fish and seafood, petroleum products, as well as garments and textiles. On the other hand, the port facilitates the importation of crucial construction materials such as cement, steel, bricks, and other vital commodities from India. The states of Mizoram and Tripura are set to benefit from this project. The government of Tripura has initiated efforts to establish connectivity between the state and Myanmar through the Kaladan River. Construction activities have commenced to facilitate the establishment of these crucial transportation links. The road journey from Kolkata to Agartala typically takes around four days to complete. However, by following the water and land course Sittwe - Chittagong- Sabroom - Agartala route, the transportation time will be reduced to two days, resulting in substantial savings in terms of both cost and time and decreasing carbon emissions. An appropriate DPR is yet to be completed in this regard.

However, by following the water and land course Sittwe - Chittagong- Sabroom - Agartala route, the transportation time will be reduced to two days, resulting in substantial savings in terms of both cost and time and decreasing carbon emissions.

Not only does it benefit the landlocked regions of India, and its neighbours Nepal, and Bhutan, but it is an instrumental in the development of Rakhine State, which, through rich in minerals and resources is often wrecked by ongoing internal strife between ethnic armed groups, particularly the Arakan Army (AA) and the Junta. U Khin Maung Gyi, a respected Rakhine businessman and Vice President of REIC Rakhine Economic Initiative Public Co., Ltd, emphasised that this development will also have positive implications for Myanmar's economy as a whole. Granting Rakhine State more trading freedom would bring multiple benefits to import and export businesses. It also underscores the need for Rakhine State to increase its efforts in agricultural production, as agricultural goods constitute its primary export, destined for India and other countries.

Enduring aspects of KMMTTP

To utilise the multimodal component of the Kaladan project, it will be vital that the road section is completed. First, the road component is of utmost importance as it serves as the vital link connecting Paletwa in Myanmar to Zorinpui in Mizoram. The road element of 110 km faces roadblocks due to several reasons. Lack of coordination among agencies on both sides of the border, difficult terrain, issues regarding land compensation, and most importantly, security concerns as the entire area remains insurgency-prone. In 2019, Indian workers were abducted by AA while working on the Kaladan inland waterway. The pandemic and the 2021 coup have further impeded work.

The AA is actively engaged in a determined struggle against the military junta, striving for autonomy and the restoration of democracy.

The section where construction work is underway is currently embroiled in an armed conflict involving the Arakan and Myanmar armies. The AA is actively engaged in a determined struggle against the military junta, striving for autonomy and the restoration of democracy. The areas where the remaining work needs to be completed have been heavily affected by aerial strikes and the ravages of war. The ongoing conflict between the AA and Tatmadaw (Myanmar Army) has resulted in the displacement of a significant number of individuals in Rakhine State during January-February 2023. Across 11 townships in the state, a total of 73,458 people have been forced to leave their homes. Additionally, in Paletwa township in Chin State, another 4,632 individuals have been displaced. This brings the total number of displaced people to 78,090. To foster goodwill and mitigate the risk of insurgent groups targeting the project, Ircon International, responsible for the road component, has opted to engage local subcontractors in Myanmar. However, no public announcement has been made regarding the selection of a subcontractor. The working contract stipulates a 40-month timeline for the completion of the road component, but it also includes a provision for potential delays arising from unforeseen environmental, political, and security concerns. The contract also states that the progress made by the previous contractor will be reassessed, and even completed portions may be reconstructed if necessary. The ongoing violence, relentless military operations, and continuous attacks by armed groups introduce significant uncertainty, making it difficult to predict a timeline for completion. Despite the Sittwe port holding significant potential for trade with Myanmar through the strategic transportation of goods, gas, or oil to the Northeastern Region (NER), its viability as a cost-effective regular transportation route to the NER is uncertain. This is primarily due to the anticipated high costs associated with frequent bulk breaking and transshipment. In addition, though the Paletwa terminal has been completed, its operationalisation is dependent on the completion of maintenance dredging on the Kaladan River between Sittwe and Paletwa. Until this is accomplished, cargo vessels will transport goods exclusively to the Sittwe port.

The ongoing violence, relentless military operations, and continuous attacks by armed groups introduce significant uncertainty, making it difficult to predict a timeline for completion.

The resolution of the growing conflicts coupled with insurgency issues in Myanmar will remain crucial to attracting more private investors to utilise this route. A coup or increasing conflict intensity creates greater "risk" in "returns" to the capital expenditure. Therefore, any private investor will think twice about putting money in an economy that suffers from such a "governance deficit". While the successful operations of the port open opportunities; conflict resolution will remain imperative for the completion of the road component that completes the proper operationalisation of the entire project and more judiciously showcases the prowess of the KMMTTP.

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Sreeparna Banerjee is a Junior Fellow at ORF’s Strategic Studies Programme.

• Neighbourhood
• International Trade and Investment
• India
• Neighbourhood
• Arakan Army
• conflicts
• economic growth
• Indian cargo ship
• Insurgency
• Myanmar
• Sittwe Port

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