Kerala government revamps incentive scheme for coastal shipping

P Manoj Mumbai | Updated on October 10, 2021

The container vessel SCI, Chennai anchored at ICTT Vallarpadam, in Kochi (FILE PHOTO - REPRESENTATIVE IMAGE)   -  The Hindu

Incentive to be disbursed as a fixed amount based on a rate chart

The Kerala government has approved a revised coastal shipping incentive scheme on loaded containers moving between Kochi and non-major ports in the State. The incentive on freight will now be disbursed according to a rate chart fixed for various routes.

It was originally fixed at 10 per cent above the road transportation costs. The scheme will be applicable to loaded containers shipped between the International Container Transhipment Terminal (ICTT) at Vallarpadam in Cochin Port Trust and non-major ports in the State such as Kollam, Beypore and Azhikkal.


The incentive has been set at ₹12,790 for a 20-foot loaded container and ₹16,627 for a 40-foot loaded container for a Kochi to Beypore run. For shipments from Kochi to Azhikkal port, the incentive will be ₹20,774 for a 20-foot loaded container and ₹27,007 for a 40-foot loaded container.

The incentive for the Kochi to Kollam route will be ₹10,200 for a 20-foot loaded container and ₹13,259 for a 40-foot loaded container, according to an October 8 government order issued by the Fisheries and Ports Department.

The incentives will be valid till January 23 next year. The Kerala government has also directed ship operators to share at least 20 per cent of the incentive amount with the traders/exporters/importers to promote coastal shipping in the State.

The rate chart on coastal shipping removes the ambiguity emanating from an order issued by the Kerala government in January this year, whereby an incentive of 10 per cent above the road transportation costs worked out by the National Transportation Planning and Research Centre (NATPAC), was disbursed to coastal ship operators.

The NATPAC study focussed on container trailers plying from and to ICTT at Vallarpadam. The incentive scheme was modified “to avoid misinterpretation and miscalculation”, the Fisheries and Ports Department said in the October 8 order.

Free-market regime

The container trailer operating industry works in a free-market regime where the rates are set by the individual owners. The government felt that the incentive amount should be a fixed rate. “Otherwise, when trailer owners increase the rates, the incentive pay-out will also go up, upsetting the budget,” a government official said.

The coastal shipping industry reckons that the decision to fix a rate chart for disbursing the incentive will bring much needed clarity to the scheme and remove scope for disagreements. “This will incentivise more operators to start short sea services linking ICTT, Vallarpadam with the minor ports in the State and benefit the export-import trade,” said an industry source.

Kerala is the only State that is currently offering an incentive to boost coastal shipping, a transportation mode that seeks to tap India’s long coastline for moving cargo to cut logistic costs and reduce pollution. “The Kerala government is holding inter-ministerial discussions to extend the incentive scheme for a further period of three years when its current tenure ends in January 2022,” officials said.

Published on October 10, 2021

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