Ministry plan to fund IWT

The ministry of surface transport has drawn up a plan to pump in Rs 1,000 crore for the Inland Water Transport (IWT) and coastal shipping programme, partly through contributions from banks and financial institutions, and partly through budgetary support.

"While we expect the Centre to chip in Rs 500 crore, the other half could be contributed by financial institutions. The aim is to boost the IWT and coastal shipping sector by extending loans from these funds at softer rates in the range of 6-8 per cent for acquiring vessels," a ministry official said.

This is a departure from the earlier stance, when the funds for these sectors were to be created out of a portion of resources accumulated from the maritime development cess on the amount of cargo carried by the Indian ports.

The Roads & Highways and Shipping minister, TR Baalu's objection to maritime development cess as the means of raising resources, seems to have forced the ministry to look at alternative modes of financing.

The minister was of the opinion that it was unfair to tax consumers as eventually, the costs would be passed on to them.

The ministry officials are of the view that to realise the potential of the IWT and coastal shipping, the government support was necessary in the initial stages to create infrastructure for attracting private players.

The ministry also proposes to set up around 15 new terminals, complete with modern features like full-fledged container handling facilities, mainly on National Waterway I & II, an official said.

He added that at present, container handling facility was available only at the IWT terminal at Haldia, where the containers were transported through waterways to Narayanganj in Nepal.

The ministry, in the proposed shipping policy, has spelt out setting up of Rs 500 crore fund each for IWT and coastal shipping sector for acquiring vessels on easier terms than the loans available in the market.

The policy has said that the joint ventures and BOT projects would be encouraged in the IWT sector, with 100 per cent FDI proposed to be allowed in the sector. The ministry at present is in process of finalising projects for the sector, an official said.