The coastal shipping and inland waterways segments have started making waves over the past few years, primarily due to increased attention from various quarters. From the launch of the Jal Marg Vikas Project (JMVP) for capacity augmentation of navigation on National Waterway (NW)-1, to the declaration of 106 new NWs, the inland waterway segment has been abuzz with activity. Similarly, the coastal shipping segment has witnessed a series of initiatives to promote coastal traffic, such as a relaxation in the cabotage law, the extension of the Coastal Berth Scheme and the provision of financial support.
Trends and developments
Cargo movement on NWs has been witnessing an upward trend for the past few years, increasing from 41.53 million tonnes (mt) in 2015-16 to 73.61 mt in 2019-20. However, NW traffic declined during the first half of 2020-21, primarily due to Covid-19-induced restrictions. Cargo volumes during April-September 2020 stood at 30.38 mt, a 16 per cent reduction over the corresponding period in the previous year.
The government has also been focusing on increasing the share of coastal shipping in the total cargo handled at Indian ports. The Sagarmala programme has coastal shipping as one of its key focus areas. Following its implementation, the share of coastal cargo in the total cargo handled increased from 16.34 per cent in 2015-16 to 22.61 per cent in 2019-20, registering a compound annual growth rate of 6.71 per cent.
Increased government support
The Ministry of Ports, Shipping and Waterways (MoPSW) has been rolling out various initiatives to develop the inland water transport (IWT) segment. Notably, benefits under the Tonnage Tax Scheme have been extended to inland vessels in order to attract private investment. Under Section 33 of the Income Tax Act, a tax benefit has been provided, which allows up to 100 per cent deduction from the profit and loss account and its utilisation for ship acquisition within a period of eight years. Other initiatives include the launch of a new portal, the Least Available Depth Information System, which provides real-time information on the least available depths of the waterways; the deployment of conveyer belts at the Sahibganj and Haldia terminals to facilitate cargo movement; and the implementation of river information systems (RISs). Meanwhile, the Inland Waterways Authority of India (IWAI) is exploring the possibility of creating a riverine development fund to provide longer-tenor funds at a low borrowing cost.
The JMVP, one of the key projects in the IWT segment, has also been progressing well. As of November 30, 2020, the project has achieved physical progress of 39.85 per cent and financial progress of 38.21 per cent. It is expected to be completed by December 2023.
To facilitate 24×7 navigation, digital solutions in the form of state-of-the-art RIS and differential global positioning systems are being implemented on NW-1. Moreover, the development of freight villages and logistics hubs adjacent to the Varanasi and Sahibganj multimodal terminals has been proposed to enable cargo aggregation and transshipment.
The Indo-Bangladesh Protocol route was developed to allow inland vessels of one country to transit through specified routes of the other. So far, 12 ports of call have been created on the route. The second addendum to the Protocol for Inland Water Trade and Transit was signed between India and Bangladesh in May 2020. Through this addendum, five ports of call and two extended ports of call have been added on each side: Dhulian, Maia, Kolaghat, Sonamura and Jogigopha on the Indian side, and Rajshahi, Sultanganj, Chilmari, Daudkandi and Bahadurabad on the Bangladesh side. Meanwhile, international agreements have been signed with Nepal, Bhutan and Myanmar for the use of waterways for the transportation of goods.
The government has also been taking requisite steps to encourage a modal shift from road and rail to coastal shipping. In a notable development, cabotage has been relaxed for coastal transportation of export-import/empty containers; agriculture, horticulture, fishery and animal husbandry commodities; and fertilisers. Moreover, coastal vessels are being given a discount of 40 per cent in port charges over foreign-bound vessels.
The way forward
In spite of the various advantages, the potential of these relatively cheap and environment-friendly modes of transport is yet to be fully tapped. Both the IWT and coastal shipping segments are fraught with several problems such as policy support to traditional modes of transport like railways and roads, last-mile connectivity issues, high initial investments, and a limited number of players.
Going forward, however, both the segments have a positive outlook owing to a plethora of government programmes and initiatives. The IWAI has set an ambitious target to increase traffic movement through waterways to 77 mt by 2022 and 123-125 mt by 2030. As far as coastal shipping is concerned, the MoPSW expects coastal traffic to reach 370 mt by 2025. While the disruptions caused by Covid-19 are likely to have a short-term impact on coastal traffic, the long-term prospects for this segment seem promising.