The Sethusamudram Corporation (SCL) is set to be wound up with scrapping of the Sethusamudram Ship Channel Project.

The Corporation has passed a resolution seeking additional grant of Rs 115.72 crore from the government to settle dues of the Dredging Corporation of India (DCI) for the works carried out at the project site along with a proposal to the Ministry of Ports, Shipping and Waterways for winding up SCL.

SCL is a special purpose vehicle (SPV) set up under the Companies Act in 2004, with the Union Cabinet’s approval, to raise funds and implement the Sethusamudram Ship Channel Project (SSCP) -- a shorter shipping route between the east and west coasts of the country.

The SPV was formed with equity participation from state-run firms such as the Shipping Corporation of India (SCI), DCI, the Vizag Port Trust, Kamarajar Port, the Chennai Port Trust, the Paradip Port Trust and the VO Chidambaranar Port Trust. SCI and DCI had invested Rs 50 crore and Rs 30 crore, respectively as equity in the project.

Billed as India's Suez Canal, the Rs 2,427.40 crore project was to reduce  voyage time between India's western and eastern coasts by as much as 36 hours and distance by up to 424 nautical miles, by creating a channel between the Indian mainland and Sri Lanka.

The SPV has so far spent Rs 836.35 crore on the project, which involved boring a new shipping lane connecting the Gulf of Mannar and the Bay of Bengal through Palk Straits and Palk Bay.

Dredging work in Adam’s Bridge area, the controversial part of the project, was stopped from September 2007 in the wake of an interim stay granted by the Supreme Court.