The economic benefits of inland waterways

Written by Vijay Kurup | Updated: Jun 22 2012, 08:20am hrs
hese are less capital-intensive, more eco-friendly and require minimum land acquisition, but the infrastructure required to make them viable is still lacking

A senior executive from a container train operator was recently scouting for warehousing space in eastern India for the setting up of a container terminal for the movement of bulk cargo by rail. Setting up a container terminal with a railway siding can be prohibitively expensive. He was rueing the fact that he was standing just 5 kilometres away from the Ganges, but could not exploit inland waterways transport (IWT) due to the absence of a riverine terminal capable of handling bulk cargo.

At a recent maritime conference held in the capital, an official from the Inland Waterways Authority of India, too regretted the lack of progress made, particularly along the east coast, despite the immense potential. The ship-building and repair facilities along the east coast are woefully inadequate; even Bangladesh has better repair facilities than Kolkata. The time taken to build a small-sized ship in Kolkata is about 9 months, compared to just 4 months along the west coast of India.

The lack of development was also reflected in the absence of specialised boats needed for sailing in the Ganges and Brahmaputra. A boat designed to sail in the Ganges would not be suitable in the Brahmaputra and vice versa, owing to different parameter requirements for the two rivers. The speed, curvature of the banks and the depth of the rivers need to be taken into account while building the boats. It was essential, the official said, for design standardisation of boats for faster deployment.

Legal and technical barriers, funds and the reluctance of the private sector have kept IWT in the background in the east coast. The overall expenditure till date stands at less than R1,000 crorean insignificant sum considering the potential involved. For the Twelfth Five Year Plan (2012-2017), IWT has been allocated R10,500 crore, substantially more than the previous Plan periods. A World Bank study on IWT has shown that in many instances, these advantages can be gained with little or no improvement to existing waterways. In others, a modest level of complementary investment can significantly increase usability.

The IWT advantages are several. Among all the transport modes, it is the least capital-intensive, is environment-friendly, can supplement rail and road transport, help in the decongestion of roads, is best suited to carry over-dimensional cargo (ODC), requires minimum land acquisition and has low infrastructure costs. Yet, despite the runaway benefits, IWT constitutes less than 1% of the total inland cargo movement in the country. The amount of goods transported by IWT in other countries is still fairly modest when compared with other modes of inland transport, such as rail and road, but the percentage is significantly higher.

China is focused on improving inland waterways. Luo Ping, director of the China Research Institute of Comprehensive Transportation National Development and Reform Commission claims that inner water ports would be the next big business opportunity in Chinas port infrastructure sector. He believes that there are good opportunities in the inner port infrastructure. Inner port projects wont be as large as sea ports. However, the increase of inner water ports will be rapid, he said.

Where does India stand The Maritime Agenda 2020 identifies inland waterways as a means to enhance connectivity to ports, develop IWT infrastructure and a host of other issues. The finance minister in the current budget had proposed to tax all services except those in the negative listinland waterways are one of the items in the negative list. A 100% grant has been granted to Northeastern states for the further development of waterways.

The involvement of private and public sector enterprises would be a catalyst for growth. In the Twelfth Five Year Plan, the fund requirement of R5,320 crore is expected to come through private investment/IEBR (internal and extra budgetary resources). Jindal ITF bagging the project for the movement of 3 million metric tonnes of imported coal to NTPCs Farakka power plant through the national waterways-I (NW1) could well signify the beginning of the entry of the private sector.

Coal for the power sectors along the river front, food grains to the Northeastern states, fertilisers from the factories to the various nodal points and cumbersome cargo such as machines and wooden logs could well be the principal commodities that will propel inland waterways as a viable alternate mode of transport. Another important commodity that is only just beginning to enter IWT is freight containers, from inland container depotsboth domestic and international. These pockets need to be adequately linked to inland waterways, through rail-linked jetties and last-mile road connectivity.

Cargo commitments by public sector undertakings are forthcoming and this should propel logistics companies to make long-term commitments for all-round development. This could herald a new era in inland waterways transportation. IWT needs to be promoted as a reliable mode of transport. There is enough space for all modes of transport to exist and function. The integration of inland waterways with the various links in the supply chains is required. The inner ports could well be the next big opportunities in India.

author is a freelance maritime writer