BackAfter years of neglect, India wakes up to coastal, inland water transport potential
Directorate general of shipping grants further exemptions from provisions of the Merchant Shipping Act to Indian ships carrying cargo on local routes
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India is blessed with 7,551km of coastline and about 14,500km of navigable inland waterways. Yet this sector has remained neglected despite universal acceptance that transportation through waterways, both coastal and inland, is fuel efficient, environment friendly and more economical than rail and road.
Of the navigable inland waterways, 4,503km are national waterways, the development and maintenance of which is the responsibility of the Indian government, while the responsibility for the rest lies with the state governments where they are located.
India has six national waterways: the Allahabad-Haldia stretch of the Ganga river (running through Uttar Pradesh and West Bengal); the Dhubri-Sadiya stretch of the Brahmaputra (Assam); the Kottappuram-Kollam stretch of the West Coast canal along with the Udyogamandal and Champakkara canals (Kerala); the Kakinada-Puducherry stretch along with the designated stretches of the Godavari and Krishna rivers (Andhra Pradesh, Puducherry); the designated stretches of the East Coast canal, the Brahmani river and the Mahanadi delta (Odisha); and the Lakhipur-Bhanga stretch of the Barak river (southern Assam).
India transports only 7% of its domestic cargo by coastal shipping, or so-called short-sea shipping, while the European Union transports 42%, China 43% and the US 15%.
Inland water transport, or IWT, accounts for less than a 1% share of goods transported within India through various modes such as rail, road and water, much less than other nations that are similarly endowed.
This may be about to change.
On 31 July, the directorate general of shipping (DGS) granted further exemptions from provisions of the Merchant Shipping Act to Indian ships exclusively carrying cargo on local routes. DGS is the country’s maritime regulator.
Ships that can travel seamlessly through sea and river channels were first freed from a few provisions of the Merchant Shipping Act in 2011.
This relaxation is now being significantly expanded to cover more ships.
The notification on river-sea vessels was aimed at reducing the costs of constructing and operating vessels to encourage coastal shipping, inland water transport and trade. It was also designed to encourage the upgradation of existing inland vessels for coastal operations.
A seamless integration of river-sea trade using coastal ships is expected to provide an alternative means of quick discharge and dispersal of cargo from mother ships docking at big ports and their onward movement by sea to various smaller ports along the coast as well as inland locations.
As ships built under the river-sea vessel regulations require very little depth to dock, they can load and unload cargo at smaller ports, which is not possible for bigger ships.
Passenger ships, gas carriers and offshore support/supply vessels are, however, not part of the exemption.
Earlier, provisions of the Merchant Shipping Act pertaining to construction, equipment, operation, certification and safety applicable to vessels plying in international waters were mandatory in all respects to vessels plying exclusively in the coastal trade.
As a result, coastal ships were subject to the same stringent construction and safety standards as those of ocean-going vessels, making coastal shipping and inland water shipping uneconomical due to the high cost of construction and operation.
The first instance of the change in rules being seen to work came in 2011, when NTPC Ltd, India’s biggest power utility, awarded a seven-year contract after a public tender to Jindal ITF Ltd for transporting 3 million tonnes (mt) of imported coal a year from Sandheads (Bay of Bengal) to the thermal power plant located at Farakka through the Haldia-Farakka waterway.
The Inland Waterways Authority of India (IWAI), the agency tasked with developing the country’s national waterways, is to provide navigational channel and allied facilities between Haldia and Farakka, while Jindal ITF will invest some ₹ 650 crore in various components of the project such as the transhipper, barges, unloading infrastructure and conveyor belt system at Farakka, including transporting coal by waterways up to the coal stockyard at the Farakka power plant in West Bengal at a specified rate. The coal transport system will start functioning from early next year. Farakka plant has been operating since 1986 but has been using a mix of rail and road transport to supply coal.
NTPC has floated a second tender for a 10-year contract to haul 3 mt of imported coal a year through inland waterways to its power project at Barh in Bihar.
It will seek a similar arrangement to transport 1.5 mt of imported coal a year to its thermal power station at Bongaigaon in Assam.
Efforts are also being made by the government to get long-term cargo commitments from fertilizer companies, Food Corp. of India Ltd, Oil and Natural Gas Corp. Ltd, Oil India Ltd and Concor Ltd for transportation through waterways.
A committee headed by Planning Commission secretary Sindhushree Khullar has been set up to identify new areas for private investment—both in infrastructure and in transportation—in inland waterways.
It will also identify multiple business models for which bids can be sought through concessions.
This will be supplemented by drafting so-called model concession agreements and other standardized documents for facilitating a rapid scaling up of investment.
The opening of India’s first container transshipment terminal at Vallarpadam in Kochi is also expected to boost coastal shipping because it is dependent on smaller feeder vessels bringing cargo that is then put on bigger ships to be taken to their final destinations.
The integration of both the sectors could be effectively exploited with the operation of suitable and optimum capacity coastal-cum-inland vessels.
P. Manoj looks at trends in the shipping industry.
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