The Government can incentivise road/rail connectivity to ports by granting ‘viability-gap’ funding for such projects.

The Shipping Secretary’s recent statement that the Government will formulate policy measures to encourage movement of domestic cargo through coastal shipping and inland waterways is most timely. Today, about 60 per cent of goods traffic within India happens on road and another 31 per cent by rail. Waterways contribute a mere 8 per cent, much of it being along the coast. In contrast, 46 per cent of China’s domestic cargo transport volumes are by water – twice that by rail and significantly more than the 30 per cent by road. That constitutes one more reason, among others, why Chinese firms score in manufacturing competitiveness: The fuel consumption for shipping one tonne of freight over a given distance is not even a fifth of that by road and roughly half of that by rail. Waterways development, moreover, requires no major land acquisition or capital costs compared to what building highways and rail networks entail.

Also, it’s not that India does not possess the natural endowments to promote water as a mode of domestic cargo transport, as the Chinese, Europeans or Japanese have done. The country, after all, has a string of ports, large and small, dotting virtually its entire 5,700-km mainland coastline: From Mundra, Kandla and Pipavav in Gujarat, JNPT/Mumbai, Mormugao, New Mangalore and Cochin on the West to Tuticorin, Chennai/Ennore, Visakhapatnam, Paradip, Dhamra and Kolkata/Haldia along the East coast. These can certainly move much larger volumes of farm commodities, iron ore, coal, cement, LPG or even cars and white goods between and within States than what they are currently receiving and forwarding. Coastal shipping can become still more viable with enough spur lines from the ports to connect the hinterland, enabling seamless movement of cargo. Kerala — which does not have much of a hinterland — has drawn up ambitious plans of developing seven ports, including Azhikal in the North and Vizhinjam in the South, to help divert 40 per cent of cargo now moved by road within the State by 2020.

What can the Government do to give a real fillip to the above process? One policy action could be to incentivise ports to develop exclusive berths for handling domestic cargo, apart from grant of ‘viability-gap’ funding for rail or road projects providing vital branch connectivity to ports. Secondly, many of its own agencies — the Food Corporation of India, for instance — could be mandated to increasingly exercise the coastal shipping/inland waterways option for transporting their material. Last, but not the least, regulations restricting co-loading of domestic and international cargo or not allowing foreign flag vessels to engage in coastal shipping need to go. In today’s context, there is no need to view cargo movement from Jebel Ali in Dubai to Mundra very differently from Mundra to Cochin port. Ultimately, both these routes cover around the same 1,025-odd nautical miles distance.

(This article was published on February 18, 2013)
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