New Initiatives

Recent government programmes to provide impetus to dredging industry

In the past year or so, the government has proposed a number of programmes and projects for the development and maintenance of ports, inland waterways and rivers. One of the ambitious programmes announced by the government, the Sagarmala programme, is expected to increase port capacity and significantly improve operational efficiencies. For the inland water transport segment, the government launched two key initiatives – Jal Marg Vikas and the development of 106 national waterways (NWs) – with the objective of increasing the modal share of inland water transport in total freight transport. Besides, the government has also announced a number of projects to clean the highly polluted Ganga river.

Recent government programmes Sagarmala

Sagarmala is a strategic, customer-oriented initiative of the central government to modernise Indian ports so that port-led development can take place and coastlines developed. The programme aims at utilising the country’s 7,500 km long coastline, 14,500 km of potentially navigable waterways and its strategic location on key international maritime trade routes.  It is expected to result in a number of benefits including optimising multimodal transport, reducing the cost of transporting domestic and foreign (export-import) cargo, and lowering transport costs for bulk industries by locating them closer to the coast. As per industry estimates, the programme is likely to save about Rs 350 billion in logistics costs.

Projects at inland waterways

A major ongoing project in the inland waterway segment is the Jal Marg Vikas project aimed at the development of the 1,620 km NW-1. Involving an investment of Rs 42 billion, the project is being undertaken with financial and technical assistance from the World Bank. The project is aimed at maintaining a navigational depth of 3 metres on NW-1, from Allahabad to Haldia, to allow the commercial navigation of at least 1,500 tonne vessels.

Besides, the central government has also passed the National Waterways Bill, 2015, to develop 106 additional NWs.

NMCG

The National Mission for Clean Ganga (NMCG) is the operational wing of the National Ganga River Basin Authority and has been set up for the abatement of pollution and the maintenance of a minimum ecological flow in the river. The mission aims at addressing challenges being faced in four different segments – wastewater management, solid waste management, industrial pollution management and riverfront development. The Rs 200 billion Namami Gange project is the biggest initiative launched under the NMCG for the conservation and improvement of the Ganga river.

Key issues and challenges

For the timely execution of these projects, the government needs to provide an enabling environment to address issues affecting the sector. The existence of a dual institutional structure is the biggest issue that has led to the development of major and non-major ports as separate, unconnected entities. Another major issue is the lack of requisite infrastructure for cargo evacuation from major and non-major ports leading to a suboptimal transport modal mix. Further, inadequate hinterland linkages not only increase the cost of transportation but also restrict cargo movement.

Other issues impeding sector growth include low penetration of coastal and inland shipping, untrained or semi-trained manpower, limited mechanisation, procedural bottlenecks, lack of public awareness, environmental issues, land acquisition issues and the involvement of multiple agencies.

Opportunities and the way forward

The Indian dredging industry is all set to grow, driven by the government’s plans to develop new waterways and ports as well as modernise and expand existing ports. The upcoming projects will provide significant business opportunities for various stakeholders such as dredging contractors, dredger builders, component manufacturers and the electronics industry and will also generate employment.

At present, there are very few contractors who can take up dredging works in waterways and rivers, as barring large private players like Dharti Dredging and Infrastructure Limited and Adani Ports and Special Economic Zone Limited, none of the major contractors have small dredgers. The Dredging Corporation of India, the biggest player in the industry, will focus primarily on maintenance dredging works. Capital dredging works, on the other hand, will be largely carried out by big multinational companies.

That said, there is an urgent need to evolve a sustainable revenue model for the industry. An efficient contracting system with clearly defined risks and responsibilities for all stakeholders also needs to be developed. Port authorities should prepare comprehensive and technically sustainable feasibility reports for dredging projects. There is also a need to ensure effective coordination between the various authorities and stakeholders involved in the project.

Based on a presentation by Captain Rajesh Malhotra, Consultant, Dredging Solutions

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