Ministry moots infrastructure status for coastal shipping

Written by Sunny Verma | New Delhi | Updated: Sep 12 2012, 06:58am hrs
In order to promote coastal shipping, the shipping ministry has moved a note for the Cabinet Committee on Infrastructure (CCI) to secure infrastructure status for the sector.

The status would help the sector make good use of various benefits such as easier credit at cheaper rates and faster regulatory clearances. The move would also help in promoting trade along India's coastline of 5,560 kilometer, having access to the sea on three sides with 11 major and 168 minor and intermediate ports.

It would also increase private investment in the sector and encourage infra-focussed funds to pump in money.

Coastal shipping satisfies all the parameters listed by the Cabinet Committee on Infrastructure. The ministry has made the proposal for infra status. We expect it to come through, government sources said. The Cabinet recently harmonised the definition for infrastructure sector but coastal shipping does not figure in the new list.

The Cabinet Committee on Infrastructure has outlined six characteristics for a sector to qualify for infra status. These include sector involving natural monopoly, high-sunk costs and asset specificity, non-tradability of output, non-rivalness in consumption, possibility of price exclusion, and presence of externalities.

Besides, three other factors are kept in mind while granting infra status. These are the sector's importance to the scheme of economic development, its ability to contribute to human capital and the specific circumstances under which it has developed in India.

The ministry has pointed out that coastal shipping satisfies these parameters. The government's view is that coastal shipping is a crucial link in the integrated transport infrastructure system, which is vital for the country's economic growth. Coastal shipping does not figure in the Cabinet's infrastructure list. The list includes transport sub-sectors, which include roads and bridges, ports, inland waterways, airport, railway track, tunnels, viaducts, bridges and urban public transport.