India still a long way from utilising its waterways trade potential

Just 2% of country's cargo transported via navigable waterways; Vietnam at 18% & China 14%

India’s trade deficit continues even as its total exports have grown 39.03 per cent in the five years between FY18 and FY22.

However, India maintains a trade surplus with its neighbouring countries – Afghanistan, Pakistan, Nepal, Bhutan, Myanmar, Bangladesh and Sri Lanka – and with the seven countries that make up the Eastern Waterways Connectivity Transport Grid (EWaCTG). This growth is driven by India's exports to these countries, which have increased by 44.4 per cent and 41.8 per cent, respectively, in the same period.
 

It is, therefore, no surprise that India has proposed to extend its waterways connectivity grid to Thailand with the intent of using the regional waterways and certain international routes to increase trade with Bangladesh, Bhutan, Nepal, Myanmar, Singapore, Malaysia and Thailand.

While this international waterway network is also touted as an opportunity for developing an economic corridor connecting Northeastern India with the rest of the country through Bangladesh, a Business Standard analysis shows that the eight states – Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim – account for less than 1 per cent of India’s total exports. Exports from these eight states as a percentage of India's total exports dipped 0.04 percentage points in FY22 from 0.15 per cent in the previous financial year.

India is yet to harness its inland waterways network to its full potential. As many as 106 new national waterways were declared through the National Waterways Act in 2016, taking the total up to 111.

Though 16 of the 26 navigable waterways are operational, just about 2 per cent of India’s cargo is transported through these channels. In comparison, Vietnam transports 18 per cent and China 14 per cent, according to the Maritime India Vision 2030 document.

 

With the intent of plugging the existing gap between potential and current capacity, India is aiming to double the freight transported through its waterways. 

The Maritime India Vision 2030 document had set a transportation target of 200 million metric tonnes (MMT) per annum and the country was transporting 108.7 MMT of cargo through its waterways in FY22. However, even with this increase in traffic, transportation through inland waterways will make up only 5 per cent of the total cargo movement. This will still be lower than the 7.5 per cent transported through the waterways in the US in 2020. 

 

The Union Budgets have maintained a consistent focus on improving the infrastructure and the capacity of the country's waterways network since FY13. The expenditures overshot the Budget targets during the last two years of the United Progressive Alliance (UPA) II government and thrice during the National Democratic Alliance (NDA) rule at the Centre, the last time being in FY19. However, the government is yet to meet its expenditure targets post the pandemic.