Kerala Chief Minister Pinarayi Vijayan requests Centre to remove repayment condition on Vizhinjam Port funding.

Kerala Chief Minister asks Centre to revoke Vizhinjam Port grant refund clause

Kerala Chief Minister Pinarayi Vijayan has urged Union Finance Minister Nirmala Sitharaman to lift the repayment condition for ₹817.80 crore in Viability Gap Funding (VGF) for the Vizhinjam International Seaport project.

by · India Today

In Short

  • Kerala Chief Minister urges Centre to lift repayment clause on Vizhinjam Port funding
  • Repayment adds a ₹10,000-12,000 crore burden on Kerala’s limited resources, he said
  • Vijayan argues VGF is usually non-repayable, aiding essential infrastructure projects

Kerala Chief Minister Pinarayi Vijayan has written to Union Finance Minister Nirmala Sitharaman to remove a financial condition imposed on the Viability Gap Funding (VGF) for the Vizhinjam International Seaport project.

While the Centre approved Rs 817.80 crore VGF for the project, Kerala has been asked to repay this amount through revenue sharing.

The project is designed as a major transshipment hub under India's "Maritime India Vision 2030" and "Maritime Amrit Kaal Vision 2047."

The Chief Minister highlighted that VGF, intended to be a non-repayable grant, aims to support essential yet financially challenging projects, and Kerala's already heavy investment in the port makes the repayment condition particularly burdensome. Kerala is contributing Rs 5,595 crore toward the Rs 8,867 crore project and would face an additional Rs 10,000-12,000 crore financial strain if required to pay back in Net Present Value (NPV) terms through revenue sharing.

“Given the fact that the ports in India account for a lion share of the Customs duties collected in the Country (now estimated in the Union Budget for the current year of Rs.2.38 lakh crores), Vizhinjam International Seaport, which is to be commissioned in December 2024, will soon contribute very significantly to this,” he wrote. The Chief Minister also highlighted the revenue potential of the Vizhinjam seaport, estimating that it could contribute Rs 10,000 crore annually in Customs duties, generating an additional Rs 6,000 crore for the central government each year.

Vijayan's letter also questioned why similar repayment terms were not imposed on the recent VGF approval for Tuticorin Port's Outer Harbor project, urging the Centre to provide Vizhinjam Port with comparable support to prevent a significant financial impact on Kerala’s resources.