Govt plans big push for coastal shipping

A subsidy of Rs 0.5 per tonne per km on bulk cargo, a rebate of Rs 2,000 per container for container cargo and an additional 20% rebate on vessel/cargo-related charges would be offered

For a country with a coastline of 7,500 kilometres (kms), shoreline shipping plays a surprisingly small role, transporting over 160 million tonnes (mt) of cargo in 2012-13. To change this, the Central government is mulling a scheme to promote this shipping.

According to the proposed plan, a subsidy of Rs 0.5 per tonne a km on bulk cargo, a rebate of Rs 2,000 a container for container cargo and an additional 20 per cent rebate on vessel/cargo-related charges would be offered. The subsidy would be provided directly to shippers of general cargo items like salt, sugar, automobiles, fertilisers, tiles, steel, cement, marble and foodgrains.

A similar subsidy scheme, offering a subsidy of Rs 1 a tonne a km, was previously announced by the Kerala government, which is yet to take off.

Though an environment-friendly mode of transport, coastal shipping in India is beset by problems. Twelve major ports are governed by the Centre and more than 60 active non-major ports come under states.

Additionally, state maritime boards, which can direct policy, aren’t a ubiquitous presence. Currently, only Gujarat, Maharashtra and Tamil Nadu have a maritime board. This lack of coherence inhibits focus on the development of coastal shipping across the nine coastal states.

According to the plan, an online portal is likely to be developed by National Informatics Centre, which will automate the process of subsidisation. “The shipper’s consignments, from the port of origin to arrival, will be tracked online. Once the cargo reaches the destination, the tonnage will be determined and the subsidy amount will be directly transferred by the government within a stipulated time frame,” said a ministry official, requesting his name be withheld.

India has almost 70 per cent of 835 vessels engaged in coastal shipping, as of December last year, under the Indian flag. However, India’s movement of domestic cargo through water transport is paltry in comparison to other countries. While it’s 20 per cent in China, 24 per cent in Brazil and over 42 per cent in Japan, it’s a lowly seven per cent in India.

Another major factor that places a prohibitively high premium on coastal shipping is the lack of connectivity of non-major ports to the road and rail networks. The lack of consensus between state and centre about appropriation of funds for connectivity to non-major ports adversely affects the prospects of coastal shipping.

While the promise of reduced carbon footprint, greater fuel efficiency and de-congestion sound great, there are a lot of other issues that need to be addressed.

“What is the incentive for smaller exporters or businesses to ship cargo through coastal shipping if there’s a lack of regularity and dependability in the form of dedicated berths and terminals,” asked Hemant Bhattbhatt, chief executive of HMSA Consultancy Services.

Also, since the subsidy amount is also dependent on cargo tonnage measured at the points of arrival and departure, the scheme might be prone to leakages.

“There’s no mechanism as such to determine consignment fraud in terms of when the cargo is pilfered or actually lost. So that area needs to be looked into,” added the ministry official.

With 15,000 km of navigable waterways and a 7,500-km coastline, coastal shipping needs to be looked at as a thing of the future. With improved infrastructural capacities through reforms, the incentivisation scheme could prove to be a useful addendum to India’s domestic cargo navigation story.