The Andaman-Nicobar Islands offer an ocean of opportunities
As India accelerates its commercial and military plans for the Andaman & Nicobar Islands (ANI) in light of recent geopolitical events, opportunities arise for businesses to participate in the sustainable development of this pristine yet strategic region.
India's 572 island-strong Indian Ocean outpost is receiving special attention with a renewed focus on turning it into a tourist, fisheries, transshipment, ocean exploration and military hub. Eyeing deepening trade and security ties with neighbouring nations, the administration is expediting the Island Development Agency's (IDA) execution of NITI Aayog's “Holistic Development of Islands” plan while simultaneously fast-tracking its naval, air force and land-based capacity buildout.
Geo strategic depth
The ANI, located around 1,200 kilometres from the nearest coastal city on the mainland and just a little over a hundred kilometres from Indonesia, has been a part of Indian geo strategic thought for over a thousand years. Emperor Rajendra Chola successfully used the archipelago as a base for engaging with South East Asia in the early part of the last millennium when India's merchant and military navies comprehensively dominated the seas.
The islands' subsequent decline over the centuries into a British penal colony, only to be left on the margins of development since independence, began with invasions in the mainland curtailing all forms of Indian expeditionary ventures, while the centre of gravity of global trade simultaneously shifted westwards. What has not changed, however, is the region's ecological sensitivity and its natural proximity to the Straits of Malacca, the busiest sea lane in the world today. Importantly, it is a chokepoint for 70 per cent of Chinese seaborne trade valued at over $4 trillion. Reimagining the ANI as a commercial hub with an active tri-services military command in the modern context of a rising Asia, involves a carefully calibrated approach to both eco-friendly development as well as regional diplomacy.
The lay of the land
Investing in greenfield projects, especially in far off lands, is typically fraught with uncertainties until, and unless, the state provides adequate infrastructure that can be leveraged commercially. In the case of the ANI, the land is quite literally green, with 80 percent under forest cover. Hosting an abundance of unique flora and fauna across nearly a hundred wildlife sanctuaries, nine national parks and a nature reserve, the islands are vulnerable in the face of industrial scale changes. It also sits on a highly seismic zone (level V), and it is no wonder that the island chain hosts India's only active volcano. The government's infrastructure push is adhering to strict environment laws while concurrently expanding land and coastal sea areas exclusively meant for the local Jarawa tribe by 20 percent, pointing at the scope for inclusive development as the islands open up.
Getting around the ANI
In 2018, Railway Ministry approved construction of a 240 kilometre broad-gauge rail line at a cost of $300 million, connecting Diglipur in the north to Port Blair in the south, which will cut travel time to three hours from the current 300 kilometre, fourteen hour drive. New Delhi's recognition of the strategic and potential military value of this rail line motivated commitment despite an expected negative return on investment in the near term. Main roads are being widened and several bridges and rural roads constructed, connecting peripheral areas to the Andaman Trunk Road, and opening opportunities for tourism in previously inaccessible parts of the main island. Furthermore, thirty small islands have been taken off the Restricted Area Permits list, giving visitors a chance to explore the rich biodiversity of the wider archipelago.
Low-cost UDAN scheme seaplane operations were to begin this year on the islands of Shaheed Dweep, Swaraj Dweep, Long Island and Hut Bay, enabling resort developers to recreate the success seen in the likes of the Maldives and Thailand. Covid-19's deleterious impact on tourism might have stymied SpiceJet and Andaman Airways' water aerodrome ambitions in the short run, but with the current 400,000 tourist footfall expected to double in the next four years, private carriers see a long-term potential. To meet the demand, airport infrastructure is getting a facelift. Resurfacing of the runway at Port Blair's Veer Savarkar International Airport is currently underway while additional greenfield airport sites have been identified for development in Port Blair, Shibpur (near Diglipur), Campbell Bay and Car Nicobar (near Banda Aceh, Indonesia).
Opportunities in Infrastructure
As critical infrastructure is built out across the islands, heavy industries will find an opportunity to participate in an eco-friendly growth story. Tenders are currently open for solar electrification of public facilities like airports, and the demand for off-grid solutions will only increase going forward. Access to clean power and fuel will also be vital. Petronet and NTPC proposed a floating LNG regasification facility and 50 MW power plant respectively, taking the first steps towards helping the ANI realize a clean energy future. Furthermore, the construction of a gas grid spanning the island will enlist steel suppliers, engineers and operators from the private sector. CNG distribution for cars and access to robust commercial batteries that harness solar energy will also be needed as a part of a comprehensive green energy initiative. With regards to drinking water, desalination capacity is set to grow in line with an increase in both permanent residents and tourists.
A proposed $1 billion deepwater port with a container transshipment and logistics facility at Great Nicoar Island's South Bay Free Trade Warehousing Zone, will leverage short transport distances to destinations in the region, making the ANI a commercial gateway to both the Indian Ocean and East Asia. Although it is in its nascent stages, three firms - Adani Ports, Hindustan and Navayuga Engineering - have expressed interest last month.
Sun, Sand and Sea
NITI Aayog laid out a $200 million infrastructure plan which would happen under a Public-Private Partnership model and, in response, top hotel groups including Marriott, ITC, Taj, and Oberoi are exploring opportunities in the islands to set up resorts, water villas, jetties and helipads. Furthermore, the ANI will continue to build on its reputation as an important location for diving by offering international training programmes.
Military and Disaster Relief Cooperation
Until five years ago, projection of Indian power in the Indian Ocean up to the South China Sea through leveraging the ANI was shied away from by the Indian leadership due to concerns over how it would be perceived in the ASEAN region. However, as India's rise in the world order coincides with the growth of threats from authoritarian regimes, the administration has doubled down on its early plans of developing the islands by expanding the scope of its Eastern theatre command.
The civilian airport buildout will complement the islands' existing military airstrips, which themselves are due for imminent runway extensions to accommodate more heavy-duty aircrafts. In response to snooping by Chinese submarines under the pretext of anti-piracy operations, India looks to deploy submarine detection technologies and run regular surveillance sorties. Collaborating closely with South East Asian nations, like Indonesia, to co-develop ports and run disaster-relief operations, strengthens multi-lateral relationships that act as strong diplomatic and military bulwarks against foreign misadventures in the region.
Utilising the Indian-controlled seas around the archipelago for ocean mining, oil and gas exploration and fishing will assert the country's writ over previously unexploited parts of the Indian Ocean. Coupled with a sizeable civilian presence for constructive, transshipment and tourism-related development, India's military plans for growing its tri-services presence in the ANI are likely to be viewed as strong yet defensive within the regional context.
Surya Kanegaonkar is a commodities professional with ten years of experience in research and trading for a hedge fund, utility and miner.