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Promoting coastal shipping of just six commodities, including coal, cement and steel, could result in a huge Rs 40,000 crore annual saving, according to government estimates.
Of the total, coastal shipping of thermal coal alone could result in savings of about Rs 20,000 crore while promoting steel and cement would save an annual Rs 5,500 crore and Rs 4,000 crore, an official said.
“By promoting coastal shipping of across six commodities – thermal coal, steel, fertilizers, foodgrains and containers, the annual potential savings is estimated at about Rs 40,000 crore,” the official said.
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Government has already announced a port-led development of coastal areas under its ambitious Sagarmala project that aims at harness India’s 7,500-km long coastline and 14,500-km of potentially navigable waterways.
To encourage shippers to shift cargo to waterways and coastal shipping, the government is planning to provide an incentive of Re 1 per km for a tonne of cargo.
“To encourage modal shift of cargo to coastal shipping and Inland Waterways Transportation, the government is planning to offer financial incentive to shippers who switch to waterways from roads and rails for movement of cargo,” the official said, adding that the incentive is planned at Re 1 per tonne per km.
Initially, the government plans to include 9 commodities that include foodgrain, automobile, cement and marble.
Sources said a note on the incentive scheme would soon be sent to the Cabinet for nod.
“Government is working hard to shift the cargo to waterways as is not only an environment-friendly mode of transportation but economise cost,” Additional Secretary, Shipping Alok Srivastava said when contacted.
He said the government is planning to redefine incentives to boost the share of transportation through waterways and coastal shipping.
Industry players are of the view however that although waterways is an environment-friendly and fuel-efficient mode of transportation, impediments including inadequate infrastructure need to be addressed fully for desired results.
They has been seeking an increase in the share of plan investment towards port and shipping sector which is 6.5 per cent only.
The government has already expressed its commitment to promote coastal shipping and inland waterways transportation and has envisioned increasing of the share of waterways transportation mode from the present level of 7 per cent to 10 per cent by 2020.
“Across all commodities, coastal shipping volumes could grow to 5-6 times of current levels to about 400-480 million tonnes (MT) by 2025,” according to a blueprint on Sagarmala unveiled by the government.
Logistics costs account for a large part of the country’s non-services GDP compared to benchmarks of 8-10 per cent for developed nations, as per the blueprint.
Citing an example, it said up to 100-150 MT of coal can be moved from the east coast to coastal power plants in Andhra Pradesh, Tamil Nadu and Karnataka.
In addition, up to 50 MT could be moved coastally for non-thermal coal users.
“There is potential to move steel, cement, fertilisers and foodgrains coastally to the extent of about 60 MT by 2025. Further, about 50 MT of petroleum products could be moved coastally from refining centres in Gujarat and Odisha to demand centres in Tamil Nadu and Andhra Pradesh,” it said.
Government has identified over 150 projects under Sagarmala. It expects to mobilise more than Rs 4 lakh crore of investment, besides creation of 1 crore new jobs, including 40 lakh direct jobs, in the next 10 years.
These projects have been identified across the areas of port modernisation and new port development, port connectivity enhancement, port-led industrial development and coastal community development.
The Cabinet approved Sagarmala project last year.