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Amit Mitra

Coastal shipping is anchored almost where it was decades ago, despite the chant about its potential and the need to develop this mode of transportation.

CONSIDER this: As many as 12 committees were set up by the Centre in the last few decades to review the challenges and prospects facing the coastal shipping sector in India. And all the 12 reports, one after the other, are gathering dust in some government cupboard. Now, the 13th in the series is on the way — Tata Consultancy Services (TCS) is studying afresh the potential and prospects for coastal shipping, with the report likely to be ready within a couple of months. It is anybody's guess as to what fate awaits this report.

What has been the result? Coastal shipping in India is anchored almost where it was decades ago, despite the oft-repeated chant about its potential and the need to develop this mode of transportation.

There is no gainsaying the fact that coastal shipping constitutes an important arm of the transportation system of any country, given its cost and environmental advantages. And this is more so in a country such as India which has a coastline of 7,500 km long, dotted with 13 major and 184 minor and intermediate ports. "This can generate tremendous scope for development of coastal shipping. But, unfortunately, this has remained a much talked about issue which has not been backed by any substantive action," says a shipping analyst.

According to a review by the Indian National Shipowners Association (INSA), though more than 30 per cent of the total traffic handled by the Indian ports is routed through the coastal mode, this sector continues to get the short shrift from the Government and the planners. What is more, as against the Plan allocation of 51 per cent for the Railways and 32 per cent for roads, the share of shipping sector is less than 5 per cent, with, interestingly, no mention of coastal shipping at all.

The Indian coastal fleet has declined to 424 vessels totalling 9.64 million DWT, comprising 98 tugs, 16 dredgers, 73 offshore supply vessels, 31 specialised vessels for offshore services and 77 vessels owned by port trusts and State maritime boards.

In the coastal fleet, 53.9 per cent is over 20 years and 27.5 per cent between 15 and 19 years. This means the bulk of the fleet will have to be replaced in the next few years.

The reasons for this sector languishing all these years include regulatory, fiscal, operational and administrative problems. A senior official of Shipping Corporation of India (SCI), who is an expert on coastal shipping, points out: "Today 90 per cent of the coastal ships operate at the major ports and the remaining at minor ports. As the tariff structure of the major ports is the same for both coastal and other merchant vessels, naturally coastal shipping is at a disadvantage. For coastal shipping to develop through private participation, it is necessary to have a string of minor ports with adequate road and rail linkages."

Several experts on coastal shipping are unanimous on the need for the Government to grant special status to coastal shipping so as to exempt it from Customs and other procedures that apply to the bigger cargo-carrying vessels. "Coastal shipping is generally meant for smaller players with relatively smaller investment capacities. Hence, to attract them into this sector, some kind of fiscal benefits should be given. I feel there should be a separate Act for coastal shipping," an analyst said.

INSA, in its annual review released recently, feels that coastal shipping should be given a string of incentives including a five-year tax holiday to attract investments, the abolition of 5 per cent Customs duty and 4.2 per cent special additional duty on certain categories of assets, the abolition of Customs duty on import of spares and bunkers used during coastal trade, transhipment at ports without bank guarantee and increase in the depreciation rate on coastal ships to 40 per cent from the existing 25 per cent. "Coastal shipping should be redefined as coastal trade," an INSA official said.

Above all, to give a boost to coastal shipping, it is essential that a string of minor ports are developed, backed by strong port road and rail linkages. In this context, experts say that there should be at least two ports located at suitable points on each coast that should be designed exclusively for coastal movement of different cargoes.

The ambitious Sagar Mala project, announced by the Prime Minister, envisaging development of a string of ports at fixed distances wherever a natural draft of 8 metres is available, will give a real boost to coastal shipping. But till then coastal shipping will have to move on at its lethargic pace.

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