India’s US$9 billion island megaport sharpens China’s ‘Malacca dilemma’

On Great Nicobar, a remote island located closer to Indonesia than mainland India, New Delhi is embarking on one of its biggest developments in decades. The US$9 billion project is intended to transform the country’s southernmost tip into a major transport hub comprising a transhipment port, an international airport and associated logistical facilities. Spread across 166 sq km (64 square miles), the project in India’s Andaman and Nicobar archipelago is slated for completion over three decades, with its first phase due by 2028. When completed, the hub in the Indian Ocean could strengthen India’s ability to monitor a critical maritime corridor and reduce its reliance on other transhipment hubs, giving New Delhi a stronger strategic foothold near the Strait of Malacca, according to analysts. But critics warn that its development could come at a steep ecological cost. According to the Observer Research Foundation, about 60 per cent of India’s sea-based trade and a significant portion of its liquefied natural gas imports pass through the Strait of Malacca. The project is situated near the waterway that is also crucial to China’s crude oil imports and trade flows – a vulnerability often described by analysts as Beijing’s “Malacca dilemma”. “The Great Nicobar project is probably one of the more consequential strategic bets India has made in recent decades,” said Sanjay Iyer, a former brigadier in the Indian army and military diplomat. “It gives India a persistent presence in the eastern Indian Ocean rather than the occasional visit, better awareness of what’s moving through the region, and a degree of leverage that didn’t exist before,” he said. India’s government has described the project as a maritime and economic hub close to the East-West shipping route and is key to the country’s defence and national security objectives. Iyer pointed out that Great Nicobar sits at the edge of the Strait of Malacca, which handles somewhere between a quarter and a third of the world’s seaborne trade, while for China, two-thirds of its maritime commerce and close to 70–80 per cent of its oil imports move through the strait. China has spent over two decades developing alternative trade and pipeline corridors, such as the China-Pakistan Economic Corridor and routes in Myanmar, to bypass the Malacca Strait. “Beijing has openly worried about the ‘Malacca dilemma’, the vulnerability of having so much of its energy supply flowing through a narrow passage it doesn’t control. Great Nicobar sharpens that dilemma considerably,” Iyer said. The importance of Malacca as a potential chokepoint has increased since the US-Iran war, which has disrupted shipping traffic and energy exports across the Strait of Hormuz. “India isn’t going to blockade the strait in peacetime, and nobody seriously expects that. But the infrastructure on Great Nicobar improves India’s ability to monitor [China’s] PLA Navy movements between the western Pacific and the Indian Ocean,” Iyer said. If Chinese vessels want to avoid the Malacca corridor, sailing via alternative routes along the Sunda Strait or Lombok Strait in Indonesia would add significant distance and cost, according to Iyer. Great Nicobar presented a maritime barrier that India could impose on China, Iyer said. “That shifts the calculus in any future stand-off, even if neither side ever fires a shot.” Around 95 per cent of India’s international trade by volume and 70 per cent by value is transported by sea, supported by a network of 12 major ports and 200 minor and intermediate ports across the country’s 7,516km (4,670 miles) coastline. At the project’s core is the International Container Transhipment Port at Galathea Bay, which is expected to handle significant cargo volumes and reduce India’s reliance on other ports. “India wants to reduce its logistical dependence on foreign transshipment hubs such as Colombo, Singapore, and Port Klang,” said Uday Chandra, a professor at Ashoka University in India’s state of Haryana. “It is India’s attempt to convert its inherited colonial geography into maritime leverage in the 21st century. A significant proportion of cargo business on the east-west corridor can be captured by India directly without depending wholly on foreign maritime hubs.” India has been underutilising the potential of the Indian Ocean, which is a vital artery for commerce and energy supplies connecting Europe, Asia and Africa, according to analysts. In contrast, Beijing has been building a network of overseas commercial and military infrastructure, energy pipelines, and naval facilities in Sri Lanka, Pakistan and Djibouti to gain greater access to the Indian Ocean. “Great Nicobar pushes India to think like a maritime power, or specifically an island power too. The Andaman and Nicobar chain is where contemporary India blends into Southeast Asia,” Chandra said. The project could mark “the rise of archipelagic India”, enabling it to form “strategic hinges” between the Indian Ocean and the Pacific Ocean for surveillance, logistics, and deterrence, he added. However, the project has drawn criticisms over its potential environmental impact, with India’s opposition leader Rahul Gandhi saying it could damage huge areas of rainforest. A government-appointed environmental panel has approved the project and rejected petitions citing ecological concerns. Srinivaasan Balakrishnan, director of strategic engagements and partnerships at Delhi-based Indic Researchers Forum, said environmental safeguards would be key to the long-term success of the project. When completed, the Great Nicobar hub would significantly enhance India’s strategic depth and economic security, Balakrishnan said. “In an era of intensifying maritime competition, such projects contribute to a more multipolar and balanced Indo-Pacific, where no single power dominates critical sea lanes.”

India’s US$9 billion island megaport sharpens China’s ‘Malacca dilemma’

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}When completed, the Great Nicobar project would allow India to monitor activities near the Strait of Malacca, a key trade corridor for China

When completed, the Great Nicobar project would allow India to monitor activities near the Strait of Malacca, a key trade corridor for China