State Falls Behind in Port-Led Growth as Vizhinjam Sets New Benchmarks

Rapid summary:

• Vizhinjam International Seaport in Kerala achieved over 100% capacity utilization within months of full-fledged commercial operation since last year.
• The State government, which has invested ₹2,160 crore out of ₹5,595 crore in the first phase (with private concessionaire contributing ₹2,454 crore), has received ₹38.3 crore as tax revenue so far.
• The concessionaire generated total revenue of ₹425 crore until August 31.
• The State will receive 9% GST share and a portion of annual port revenue starting from 2035 (gradually increasing up to 40%). Indirect revenues hold transformative potential for Kerala’s economy but remain largely unrealized.
• Despite plans such as the outer Area Growth Corridor (OAGC), progress on industrial and logistic ecosystems around the port remains stalled.
• High land costs near the port (~₹10 lakh per cent) deter investors despite attempts like creating a land bank within a 15-km radius by industry groups. Reports suggest Tamil Nadu is already acquiring land to tap Vizhinjam’s potential.
• A project implementation commitee was recently formed by Kerala’s government to address infrastructure bottlenecks.

Indian Opinion analysis:

The rapid operational success of Vizhinjam International seaport underscores its economic promise as a regional logistics hub, with over-capacity utilization hinting at considerable demand growth. However,challenges such as underwhelming state tax revenues and stalled ecosystem development risk dampening this momentum.While long-term financial arrangements may yield higher shares for Kerala starting in 2035 and beyond, immediate focus must shift towards strategic infrastructure expansion-container facilities, industries-and resolving land cost barriers that currently impede investment.

Kerala’s apparent lack of urgency contrasts sharply with Tamil Nadu’s proactive measures to capitalize on port-related opportunities through aggressive land acquisition plans near Tirunelveli. Failure to act swiftly could result in loss of competitive advantage or diminished investor confidence for Kerala despite Vizhinjam’s favorable positioning. Decisions made now directly influence whether the seaport elevates regional growth or becomes an isolated success story without deeper integration into state-led developmental frameworks.

Read more: The Hindu