Table 7.1 Commodities Carried through Inland Waterways
Waterway Commodities carried
I
Cement, General Cargo, Jute, Sugar, Pulses, Soya, Peas, Molasses, Logs,
Over Dimensional Cargo, Petroleum Lubes (since 2000-01 lighterage of
POL products between Budge-Budge and Haldia has stopped after
commissioning of the pipeline)
II
Cement, Jute, ODC, Fertilisers, Foodgrains, Forest products, coal, GC,
Plant & Machinery etc, including intra state and inter district cargo
handled at Neamati and Dhubri Terminals
III Sulphur, Rock Phosphate, FO, Zinc, Concentrated Petroleum products,
Liquefied Ammonia Gas, Drinking water
Mandovi/Zuari Iron Ore, Iron Ore Pellets, Other Ores, Coal, Steel Plates
Barak General Cargo, Coal
Chapter 7: Inland Water Transport
7 - 8
The cargo traffic in tonnes on the above waterways in the last six years is given in Table
7.2. This includes the movement of iron ore through Mandovi and Zuari rivers in Goa.
Table 7.2 IWT Cargo Traffic
Waterway 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
(Upto Feb)
NW I 997673 841170 713670 335356 411238 556832
NW II 17477 19036 21837 49768 41453 92808
NW III 751605 1026889 1112183 1085151 1164460 955327
Total 1766719 1887095 1847690 1470275 1617151 1604967
Goa Rivers 18283638 15368867 14867691 18047353 15691958 16941344
Barak River 995 735 8324 550 2760 5043
Grand Total 20051352 17256697 16723705 19518178 17311869 18551354
7.4 ROLE OF PRIVATE SECTOR IN THE DEVELOPMENT OF IWT
7.4.1 Opportunities
Private Sector can actively participate in development of IWT in any of the following
ways:
− Owning and operating vessels for cargo transport
− Developing and maintaining fairway
− Constructing and operating river terminals
− Providing and operating mechanised cargo- handling system
− Constructing and operating warehousing facilities
− Installing and maintaining navigational aids
− Providing pilotage services
− Setting up of IWT training facilities
The participation can be in the form of joint venture or Build- Operate- Transfer (BOT)
Scheme. Joint venture could be with the state or national agencies concerned with IWT.
7.4.2 Incentives for Private Participation in IWT
− Inland Water Transport has been accorded the status of infrastructure under
Section 80 IA of the Income Tax Act so as to enable it to avail itself of
concessions applicable to other infrastructure sector.
− Grant of 100 percent tax exemption for 5 years and further 30 percent tax
exemption permissible under the Income Tax Act to be availed of in the next 5
years within a period of 15 years as in the case of National Highways so as to
enable this sector to develop.
− The rate of depreciation for all vessels ordinarily operating on inland waterways
will be fixed in par with the rate of depreciation applicable to ocean going vessels,
from time to time.
− A subsidy of 30 percent would be given to ship owners for inland vessels built in
Indian shipyards.
Chapter 7: Inland Water Transport
7 - 9
− In principle the approval has been given for levying minimum customs duty on
imported equipment and machinery for the development of inland waterways.
− The Government/ IWAI will carry out a pre-feasibility study of the project
identified for private investment and results of such studies would be provided to
the prospective investors at a nominal cost.
− IWAI will acquire land wherever required for creation of facilities and handover
to the private party on lease.
− IWAI will assist the enterprise in obtaining environmental clearance for the
project.
− Government support for facilitating long term cargo assurance.
− Foreign Direct Investment upto 100 percent equity is permitted through automatic
route
7.5 IMPEDIMENTS TO GROWTH OF IWT
Principal factors that impede growth on this mode despite its numerous advantages are:
− Insufficient depths (LAD) throughout the stretch of navigable waters
− Excessive siltation in major rivers from erosion of uplands and deforestation
− Navigation being relegated to the fourth position due to priorities to drinking
water, irrigation and power (hydel) sectors that results in reduced draft
− Non availability of low draft high technology vessels
− Non availability of adequate navigational aids resulting in restricted sailings over
long periods of time
− Non-availability of permanent terminals with adequate infrastructure for loading /
unloading, storage etc.
− Non availability of bulk commodities along the water front
− Non availability of return cargo on most of the routes
7.6 ADVANTAGES OF IWT
Low capital cost
Cost of development of inland waterway has been estimated to be a mere 5-10 percent of
the cost of developing an equivalent 4-lane highway or railway.
Low maintenance cost
Cost of maintenance of inland waterway is placed at 20 percent of that of road.
Low fuel cost
Inland Water Transport is a highly fuel-efficient mode of transport. This fact borne out by
the estimate that one litre of fuel can move 24 tonne-km of freight by road, 85 by rail and
105 by IWT
Chapter 7: Inland Water Transport
7 - 10
Cost-effective transport mode
It has also been estimated that diversion of one billion tonne-km of cargo to the IWT
mode will reduce transport fuel costs by 5 million USD and the overall transport costs by
9 million USD
Need for Infrastructure building
The need for building essential infrastructure like mechanised handling at terminals and
night navigation facilities has already been discussed. Table 7.3 reveals how these can
translate into reduction of cost of transportation per tonne-km (TKM) over short haul as
well as long haul carriage by IWT.
Table 7.3 Cost of Transportation by IWT
Cost in Rs/Tonne
Distance in km Different scenarios
100 500 1000 1500 2000
If Status Quo maintained with
One way cargo
Two way cargo
354.67
270.67
680.00
433.33
1086.67
636.67
1493.33
840.00
1900.00
1043.33
If Night Navigation is available
One way cargo
Two way cargo
341.33
264.00
613.33
400.00
953.33
570.00
1293.33
740.00
1633.33
910.00
If Material handling is mechanized
One way cargo
Two way cargo 261.33
210.67
586.67
373.33
993.33
576.67
1400.00
780.00
1806.67
983.33
If Night Navigation and
mechanization is available
One way cargo
Two way cargo
248.00
144.00
520.00
280.00
860.00
450.00
1200.00
620.00
1540.00
790.00
From the above it would be observed that the TKM cost of movement would come down
from the present Rs. 3.55 to Rs.1.44 for a short haul of 100 km and from Rs.0.95 to 0.39
for a long haul of 2000 km.
7.7 INTEGRATION OF IWT WITH COASTAL SHIPPING
7.7.1 Physical Integration
By nature all rivers are integrated with the sea as the rivers ultimately reach the sea
whether the uplands are as far as the Himalayas or as close as the Vindhyas. They provide
an ideal combination for integrating the sea routes with the inland water routes.
Unfortunately due to our water usage techniques and the construction of several dams on
the rivers not enough water flows in the rivers as they approach the sea. Our land use
techniques demand construction of bridges for road & rail across the rivers, which
contribute to the restrictions in vertical clearances for vessels to navigate the rivers where
required depths are available.
Chapter 7: Inland Water Transport
7 - 11
Hence despite being endowed with several rivers, only three national waterways exist and
the freight traffic on them is negligible.
7.7.2 Functional Integration
The National Waterway I from Allahabad to Kolkata on the Ganga-Bhagirathi-Hooghly
River system and the National Waterway II from Sadiya to Dhubri on Brahmaputra River
are integrated through the Sunderbans River & Canal system and the Jamuna River
flowing in Bangladesh. Cargo movement across the two national waterways takes place
regularly and Kolkata, Budge-Budge and Haldia on the Hooghly act as the integration
points between the two waterways. Kolkata is also a major seaport with berths at Kolkata
Dock System (KDS) and Haldia Dock Complex (HDC). Both the KDS and the HDC are
active coastal shipping ports besides being EXIM ports.
The HDC has inland water terminal located in the complex providing an ideal integration
point for coastal shipping with both the national waterways. Besides the cargo generated
along one waterway moving to the regions of the other waterway and vice versa, a variety
of commodities move by road and rail to Assam in the North Eastern region from
locations other than those in West Bengal. Fertiliser from Paradip and soda ash from
Gujarat are some of the divertibles from rail to the water transport modes. Okha located in
the Gulf of Kutch is a minor port under the Gujarat Maritime Board. Soda ash is regularly
shipped from this port to the major port at Cochin and other minor ports of Kerala like
Beypore. Soda ash is one of the commodities of the coastal trade.
A sample calculation was made to assess whether a case exists prima facie for diversion
of this commodity from land transport to water transport. The summary of computation is
presented in Annexure A-5. It was observed that despite the cost of two long sea voyages
and two river navigations with vessels steaming one way laden and the return in ballast
the transportation is financially viable and compares favourably with rail transport
between the same O-D pair as can be seen below in the Table 7.4.
Table 7.4 Comparison of Rail and Coastal Shipping + IWT Transport
15000 T Soda Ash from Okha to Guwahati (Pandu)
Transportation cost
In Rs. Per
Coastal Shipping + IWT Rail
Tonne 1793 1828
TKM 0.30 0.65
However, the time involved is in the region of 45 days. The time factor can be
considerably reduced as already seen in the previous section if night navigation facilities
& infrastructural facilities are created at the IWT terminals. Providing these facilities
would also bring down the cost further making it even more financially attractive.
Other than the KDS and HDC, Kerala, the location of the NW III, also offers several
integration options, the major being Cochin Port. The geographical location of Cochin is
unique. It is located where the West Coast canal (from Kottapuram to Kollam) and the
two canals (Champakara and Udyogamandal) meet, thus offering an inland channel to all
parts of the National Waterway III. Cochin, a major seaport, has exclusive berths to
handle coastal cargo as well as inland water cargo. Of the 3.41 million tonnes of coastal
Chapter 7: Inland Water Transport
7 - 12
cargo handled at Kerala ports in 2002-03, 3.31 million tonnes was handled at Cochin and
the minor ports accounted for just 0.1 million tonnes. Likewise the entire 0.96 million
tonnes of inland water cargo on NW III was handled at this port.
The Cochin Port Trust is actively involved in the development of traffic on the NW III
and has even carried out studies for transportation of containers on the waterway between
Kochi Port and CSEZ, Alappuzha & Kollam. Currently 14163 containers are moved
between these locations (in 2002) by road. The projected traffic for the year 2007 is
23277 of which 50 percent is likely to be moved by the inland waterway (IWT mode).
The commodities moved by containers on this route are coir products and cashew kernels
(export) and cashew nuts (import).
Other locations of possible integration of IWT & CS are at Alappuzha, Kollam,
Kayamkulam, which are declared minor ports of Kerala. When the proposed extension of
the NW III materialises, other ports such as Vizhinjam, Ponnani, Azhikkal and Beypore
also become potential locations for integration of the two modes of water transport.
Mormugao port handles mainly export of iron ore mined from the region. The
transportation from the mines to the port takes place through barges on the inland waters
comprising of Mandovi & Zuari rivers and Cumberjua canal. Ore brought from the barges
is loaded on the transhippers (Coastal Vessels as per Directorate General of Shipping’s
List) wherefrom the ore is transferred to the ocean going carriers. A quantity of about
30000 tonnes is landed and 10000 tonnes is shipped to other ports of India. This coastal
cargo is general cargo that excludes POL products landed which moves inland entirely by
road. The general cargo has the potential to be moved by inland water barges to inland
locations with landing facility.
7.7.3 Infrastructure Requirements for Integration
For the smooth transfer of goods from one mode of water transport to the other, the
integration points should necessarily have facilities for:
− Permanent berths
− Handling gears like shore cranes and gantries (for containers)
− Mobile cranes, forklift trucks and trailers
− Storage sheds, warehouses and open stacking yards
− Sufficient lighting and power (for shore connection to vessels etc)
− Water supply
− Bunker supply
7.8 SUMMARY
The present chapter reviews the status of IWT and integration aspects of IWT with
coastal shipping. The locations identified for integration are:
− Integration of NW I and NW II through Sunderbans river and canal system
with Integration points Kolkata, Budge-Budge, Haldia
Chapter 7: Inland Water Transport
7 - 13
− NW III with coastal shipping at Cochin port with integration points
Allappuzha, Kollam, Kayamkulam
− Mandovi and Zuari rivers with Mormugao port
8 - 1
CHAPTER 8
RECOMMENDATIONS
To make these recommendations purposeful, it would be appropriate perhaps to underline
the objective of this study. The Consultants are required to recommend measures
designed to give a fillip to the development of coastal shipping in the country with minor
ports largely providing the infrastructure and equipments to facilitate the achievement of
this given objective and promoting multi-modalism in the transport of goods. The
achievement of the objective is contingent on the ability to harness the potential that
exists for the speedy and balanced growth of this industry with India’s long coastline
encompassing all nine maritime states.
The achievement of the objective is underpinned by the following recommendations:
1. An important prerequisite is the setting up of an institutional mechanism to guide
and monitor the progress of this industry and effectively coordinate its activities
with external agencies. In the interest of integrated development of coastal
shipping along with other modes particularly national shipping, it is important to
keep these two segments under one umbrella. The Directorate General of Shipping
is the obvious choice in our view; the proposed special cell may be constituted
under this Directorate.
Role of the Special Cell
1. Act as a nodal agency to co-ordinate and monitor the implementation of the
recommendations within the time frame suggested.
2. Coordinate with Centre and States through the Empowered Committee (Refer
recommendation 2) and provide assistance for implementation of the decision of
the Empowered Committee for development of coastal shipping and minor ports.
3. Monitoring of projects and review of financial progress decided by the
Empowered Committee.
4. Maintain up to date database on coastal shipping tonnage, cargo origin and
destination movement and assist the cargo owners in identifying vessels for
movement.
5. Participate in the committee meetings responsible for distribution of various bulk
commodities like coal, POL, steel etc. and promote diversion to coastal shipping,
wherever it is economical.
6. Guide and monitor the progress of the coastal shipping industry.
Existing cell can be dovetailed to meet these requirements providing suitable additional
manpower to perform above roles.
2. An Empowered Committee be constituted under the Ministry of Shipping
consisting of Secretary - Finance for financial decisions and representatives from
Ministry of Railways, Ministry of Road Transport and Highways (MORTH),
Ministry of Coal, Ministry of Petroleum and Natural Gas, Ministry of Agriculture,
Ministry of Commerce and Industry and maritime states to guide and monitor the
development of coastal shipping in India.
Chapter 8:Recommendations
8 - 2
3. Provision be made for providing Central Government funds to the extent of Rs.
185 Crores (Refer Table 6.21 of Chapter 6) as estimated for building up of basic
infrastructure (for rehabilitation/new construction) at minor ports illustrated
below. The basic infrastructure will include capital dredging, breakwater, berths,
back up areas and wharves. The ports eligible for assistances to begin with, have
been identified with the help of a mathematical model (Refer section 6.4 and 6.5
of Chapter 6), which seeks to minimise the subjective elements in the selection.
These ports are:
Ports Under State Government
1. Gopalpur, Orissa
2. Cuddalore, Tamilnadu
3. Vizhinjam, Kerala
4. Azzhikal, Kerala
5. Malpe, Karnataka
6. Karwar, Karnataka
7. Ratnagiri, Maharashtra
8. Dharamtar, Maharashtra
9. Magdalla, Gujarat
Ports Under Private Management
10. Kakinada Deep Water Port (Kakinada Seaports
Limited), Andhra Pradesh
11. Krishnapatnam (Krishnapatnam Port Company
Ltd.), Andhra Pradesh
12. Sikka, Gujarat
13. Pipavav (Gujarat Pipavav Port Ltd.), Gujarat
14. Mundra (Gujarat Adani Port Ltd.), Gujarat
Ports figuring at serial numbers 10-14 presently are under private management. It
is assumed that the parties concerned will finance the developmental needs of
these ports on their own. This leaves for consideration of ports at serial number 1
to 9. Their eligibility may further subject to corporatisation and commercial
operations by the investor operator on his own or in collaboration with the
concerned maritime state government.
4. The respective State Governments shall prepare the Detailed Project Report of the
selected minor ports from their own resources to seek the grant from Centre for
development of basic infrastructure (capital dredging, breakwater, berths, back up
areas and wharves) and submit the proposal within suggested time frame (Refer
Action Plan). The project proposals received from the State Government would be
considered by the Empowered Committee. The recommendations of the
Empowered Committee would be submitted to the Minister of Shipping for
clearance. Thereafter, an MOU between MoS and respective State Ministries
concerned with the development of minor ports may be signed for transferring the
funds to an Escrow Account created in any public sector bank or institution based
bank nominated by an autonomous body created at the State level. This
autonomous body should ensure that the funds are used for the development of
minor ports only. The funds upto 25 percent of the value cleared by the MoS may
be released as first installment and the release of remaining installments would be
Chapter 8:Recommendations
8 - 3
subject to utilization of 60 percent of the total available funds as well as
completion of at least 80 percent of the work.
5. Development of the selected minor ports shall be taken up by the corresponding
State Maritime Boards/Director of Ports. The monitoring of the project
implementation and quality control should be done by Independent Technical
Consultants appointed by State Maritime Boards/Director of Ports and approved
by DGS. The progress of the projects to be monitored by DGS on quarterly basis.
The Consultants believe that this investment would serve to attract private sector
interest in and investment on the development of other facilities and also for
operating the ports on lease or as joint ventures.
These nine ports will be the forerunners of developing likewise another set of
ports (Refer section 6.6.1 of Chapter 6) as and when the demand for port facilities
in these nine ports reaches 50 percent level of capacity utilization.
6. DGS may submit the proposals to the Empowered Committee for diversion of
Government’s own cargo as well as that of its agencies and PSUs such as coal,
POL, food grains etc. (Refer case studies of Annexure A-4) to coastal shipping
wherever it is economically viable. The Empowered Committee to forward the
recommendations to respective Ministries for implementation.
7. Coastal vessels calling at ports may be allowed entry without escort by pilot, if the
master of the vessel has a pilot’s license (Refer Annexure A-1). DGS may coordinate
this matter through Ship Port interface.
8. TAMP may consider reducing tariff for coastal cargo at major ports by 30 percent,
the rate already adopted for levy of vessel related charges (Refer section 5.5.2 of
Chapter 5). DGS may explore the possibilities with TAMP and MoS.
9. To encourage the growth of Indian coastal fleet, incentives to vessel operators
may be provided as given in the following lines
• Import duty on bunkers be waived (Refer section 2.5 of Chapter 2 and section
5.5.2 of Chapter 5)
• No import duty levied on capital equipment and spares required for vessel (Refer
section 2.5 of Chapter 2 and section 5.5.2 of Chapter 5).
The Empowered Committee may deliberate on this proposal and thereafter
transmit the recommendation to the Ministry of Finance.
10. Empowered Committee shall deliberate on the subject of allowing demand side
incentives like IT exemption to cargo owners/shippers for moving cargo through
coastal shipping (Refer section 5.5.2 of Chapter 5). Registered multimodal
operators be allowed a deduction from their taxable income based on traffic
moved by coastal shipping, calculated by multiplying the tonne Km so moved at a
per tonne Km rate to be decided by the Government. Alternatively a surcharge
may be imposed on other modes of transport having negative social and
environmental impacts. (Refer section 1.0 of Chapter 1). These measures may also
Chapter 8:Recommendations
8 - 4
encourage road transporters to become multi-modal operators and to move cargo
through coastal shipping.
11. Integration of coastal shipping and inland waterway transport may be promoted at
Haldia and Kochi (Refer section 7.7 of Chapter 7) where basic infrastructure is
available. Infrastructure to be created at Neendakara and TT Sheds at Kolkata for
such integration (storage of goods, water supply, electricity, lifting equipment and
bunkers). Sufficient draft to be provided in NW3 at Neendakara for berthing of
coastal vessels of upto 3.5 m. DGS may take up the matter with MOS for directing
IWAI for implementation of this recommendation.
12. A study may be initiated promptly by the Central Government to examine the
feasibility of developing the Pamban Canal (Refer section 2.5 of Chapter 2) in the
context of development of coastal shipping after examining the environmental
impact of this project. MOS may initiate the study.
13. Sections 406 & 407 of the Merchant Shipping Act, 1958 provide that a vessel is to
be licensed by the DG shipping if it is to engage in coasting trade of India. In
practice, foreign flag vessels are permitted to carry coastal cargo only if suitable
Indian tonnage is not available. The present policy may be continued until the end
of the 10th five year plan subject to review thereafter. There is no need for separate
Act for coastal shipping. The underlying objectives can be achieved through
suitable amendments in the Merchant Shipping Act itself as and when required.
14. An independent regulator for minor ports on the lines of TAMP, enforcing all
regulatory measures including conservancy of ports, tariff fixation is required
(Refer section 3.2. A of Annexure A1.0). DGS may co-ordinate with MOS on this
matter.
15. Given the present state of this industry which by all accounts is in unenviable state
it is important to come up with policy incentives on several important issues,
integrated approach for transport development for one; in other words all subsystems
of transport including coastal shipping and IWT must work together in
planning and execution of projects and remain guided by the collective will and
vision of the policy making authorities. The task of making a holistic appraisal of
transport requirements may be entrusted to a body of independent transport
economists and experts in the operation of one or more sub-systems. Empowered
Committee to deliberate and decide on this matter.
Not withstanding several advantages of coastal shipping, it has insignificant share in the
overall domestic cargo movement. Consultants have highlighted the issues confronting
this industry and also outlined measures to remove bottleneck impeding its growth. The
Consultants believe that the recommendations will give a fillip to the development of
coastal shipping in the country and promote multi-modal movement of cargo.
