Freight subsidy boost for inland waterways under study

In a bid to promote inland waterways transport (IWT) in the country, the government is considering introduction of freight subsidy to encourage private sector participation in the sector.

A section in the ministry is of the opinion that huge facilities have to be built on important riverways like National Waterways 1, 2 and 3, and lack of infrastructure was choking growth of IWT.

A freight subsidy should be provided till such time quality infrastructure led to sustainable volumes in the IWT sector.

The subsidy would be provided to shipping companies on tonne-per-kilometer basis. Private investors, for instance, have sought subsidy of 30p per tonne/km.

A subsidy of 10p/tonne per km was paid before 1996-97 but was discontinued thereafter.

At present, Inland Waterways Authorities of India (IWAI), the nodal department for development of IWT, is offering a single subsidy.

Investors buying a barge under 1,000 tonnne was eligible for 30 per cent of the cost as subsidy.

At present, the inland national waterways carry about one million tonne cargo every year.

The total volume handled by the sector is about 30 million tonne with Goa and Mumbai accounting for 24mn.t. and 5mn.t. respectively.

National waterways-1 is the 1,620km stretch between Haldia in West Bengal to Allahabad in Uttar Pradesh on Ganga.

NW-2 is 891km channel between Dhubri and Sadiya on Brahmaputra in Assam. NW-3 is the 205km West Coast Canal between Kottapuram to Kollam in Kerala. Out of these, NW-3 accounts for bulk of the cargo handling.

"Operations are not viable at present due to poor infrastructure. Neither there are enough handling facilities nor enough terminals on the waterways. The subsidy would at least make the operations viable," M V Nath, chairman of Vivada Inland Waterways Ltd, a private sector company, said.

Vivada carryies bitumen from Indian Oil Corporation's refinery at Haldia to Guwahati through Bangladesh using barges.

The journey and cargo handling should have taken 45 days but it now takes more than 100 days.

IWT's share in total cargo movement in the country is negligible but it is 14 per cent in China, 25 per cent in Germany and over 40 per cent in the Netherlands.

According to one estimate, one per cent shift from road and railways to IWT could save fuel worth Rs 550 crore.