Government to offer 35% subsidy for goods transport on inland waterways

The government is expected to provide cargo owners with three-year subsidies for the transportation of commodities via inland waterways in an attempt to increase the amount of freight movement in India, which is now barely 2%. According to the Ministry of Ports, Shipping, and Waterways, the proposed change, which would provide a 35% subsidy for river transportation on national waterways 1, 2, and 16, is expected to result in the relocation of about 800 million tonne-kilometers (tkm) of cargo to interior waterways. The metric tonnes of cargo multiplied by the kilometers traveled yields Tkm.

In contrast to ports, the inland water transport industry is still in its infancy and needs assistance to encourage cargo mode shifts in addition to the development of physical infrastructure. According to a policy statement released by the ministry, “the multimodal nature of the transport makes the total logistics cost higher than other modes of transport, even though the cost of transporting cargo on the waterways itself is lower than other modes of transport.”

Officials aware of the events estimate that the scheme will cost approximately Rs 100 crore, of which about Rs 40 crore will be needed for the construction of inland vessel services and about Rs 45 crore will be needed for subsidies. Approximately 65% of the sector’s modal share is accounted for by road transport, with rail coming in second at 26%. In contrast, the ministry estimates that Inland Water Transport (IWT) accounts for just 2% of India’s total freight movement.

In light of this, it is crucial to offer financial assistance to encourage cargo owners to switch to waterways while we work on building hard infrastructure for them. This is because the IWT sector has a budget that is less than 1% of that of the road and railways sector, which is far more developed and well-funded. According to the policy paper, financial incentives would be offered up to 35% of the total actual operating costs incurred on waterways journeys in order to encourage the sustainable modal transfer of cargo from road or rail modes to IWT. This incentive will only be offered for long-distance canal transportation (distances above 300 km), and it will not cover the cost of the first or last mile of travel. In order to show the dependability of the waterways, Inland & Coastal Shipping (ICSL) will also have scheduled transit services. ICSL will get money from the Inland Waterways Authority of India (IWAI). For the time being, the plan will only cover three waterways. “But, depending on how well the plan works, it might also be expanded to other waterways,” the ministry stated.