A conglomerate of the Indian government is building a transshipment port in Vizhinjam built by the Adani Group. The construction costs $240 million.
Another port will be constructed in Enayam. Experts believe that the port here will save Indian companies $200 million in shipping costs.
Prime Minister Narendra Modi wants to expand the potential of India's coastline that extends to major shipping routes around the world. He envisions a port that can carry up to 18,000 units of 20-foot containers.
The government expects that shipping will jump to two-thirds by 2020 as the new port can be a transit port like the ones in Sri Lanka, Dubai and Singapore.
A representative from the Adani Group said, "The port can attract a large share of the container transshipment traffic destined for, or originating from, India which is now being diverted primarily through Colombo, Singapore and Dubai."
In a statement, India's Ministry of Shipping said, "We want Indian ports to compete with the best ports in the world in various parameters like turnaround time, efficiency, last-mile connectivity, infrastructure etc."
A source from India's shipping ministry said that they also want to be cautious with the use of the port for "strategic purposes".
He was referring to a Chinese nuclear submarine surfaced unexpectedly in Sri Lanka in 2014, and the government would like to avoid this.
The Indian government rejected a proposal to build the Vizhinjam port because for the sake of national security.
The government is ready to release $500 million to compete with China. India wants to develop the Iranian port of Chabahar.
Andy Lane, a partner at maritime and port consultant CTI Consultancy, was skeptical if the port will finish soon. It took 25 years for the project to be approved and pass through bureaucratic processing.
Lane also said that shipping lines might not want to divert to India as the Colombo is already "cheap and very effective."