Govt likely to offer 35% subsidy for goods transport on inland waterways

This incentive will be provided only for long-haul movements on waterways - distances greater than 300 km - and will exclude any expenditure incurred on the first and last mile journeys

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In an effort to boost transportation of goods by rivers, which accounts for only 2 per cent of India’s total freight movement, the government is likely to offer subsidies to cargo owners for goods transportation via inland waterways for three years.

 

The proposed move, where there will be a 35 per cent subsidy for river transportation on national waterways 1, 2 and 16, will likely lead to the shifting of around 800 million tonne-kilometre (tkm) of cargo to inland waterways, according to the Ministry of Ports, Shipping and Waterways. Tkm is calculated by multiplying the metric tonnes of cargo by the kilometres travelled.

 

“The inland water transport sector, unlike ports, is in its nascent stage and requires support to promote modal shift of cargo, in addition to creation of physical infrastructure. While the cost of transporting cargo on the waterways itself is less compared to other modes of transport, the multi-modal nature of the transport makes the total logistics cost higher than other modes of transport,” the ministry said in a policy document.

 

According to officials in the know of the developments, the scheme is likely to cost around Rs 100 crore, with around Rs 45 crore required for subsidies, and around Rs 40 crore for establishment of inland vessel services.

 

Road transport dominates the sector, accounting for approximately 65 per cent modal share, followed by rail at 26 per cent modal share. In contrast, Inland Water Transport (IWT) has only a 2 per cent share in India's overall freight movement, according to the ministry’s assessment.

 

“Accordingly, while we work on providing hard infrastructure on our waterways, it is essential to provide financial support to nudge cargo owners for modal shift to waterways, which has to compete with much better funded and developed road and railways sector (the budget of IWT sector is less than 1 per cent of road/railways),” it said.

 

Financial incentives will be provided to the extent of 35 per cent of the total actual operating expenditure incurred on waterways journey for the sustainable modal shift of cargo to IWT from road or rail modes, the policy document said.

 

This incentive will be provided only for the long-haul movements on waterways — distances greater than 300 km — and will exclude any expenditure incurred on the first and last mile journey.

 

Additionally, there will be scheduled services for transit by Inland & Coastal Shipping (ICSL), with funding by the Inland Waterways Authority of India (IWAI) to ICSL to demonstrate the reliability of waterways.

 

The scheme will be limited only to three waterways for now. “However, based on the success of the scheme, it may also be extended to other waterways,” the ministry said.