Government to Launch Three-Year Subsidy Scheme to Boost Inland Waterway Freight in India
To transform India’s freight transportation landscape, the government is set to launch a three-year subsidy program to promote the use of inland waterways. The initiative, spearheaded by the Ministry of Ports, Shipping, and Waterways, aims to increase the share of cargo movement through inland waterways, which currently stands at a meager 2%. The program promises to be a game-changer for the sector by offering a 35% subsidy on river transportation across three key national waterways: NW-1 (Ganga-Bhagirathi-Hooghly River System), NW-2 (Brahmaputra River), and NW-16 (Barak River).
The Subsidy Plan
The government’s proposal is designed to incentivize cargo owners to opt for waterway transportation by making it more cost-effective. According to the Ministry, the subsidy would cover up to 35% of the total operating costs for long-distance cargo movement exceeding 300 kilometers. The measure is expected to shift around 800 million tonne-kilometers (tkm) of cargo to inland waterways, significantly easing the burden on road and rail networks.
Tonne-kilometers, a key metric in freight logistics, measure the volume of cargo transported over a specific distance. The initiative underscores the government’s commitment to promoting more sustainable and efficient transport modes, reducing logistical costs, and minimizing environmental impact.
A Nascent Sector in Need of Support
Despite its immense potential, the inland water transport (IWT) sector in India remains underdeveloped, contributing just 2% to the country’s total freight movement. In comparison, road transport dominates with a 65% share, followed by rail at 26%. The Ministry acknowledges the need for robust support to foster a modal shift towards waterways.
“The multimodal nature of transport makes the total logistics cost higher than other modes, even though the cost of transporting cargo on waterways is inherently lower,” the Ministry stated in its policy paper.
To bridge this gap, the scheme allocates approximately ₹100 crore for its implementation. Of this, ₹40 crore will be invested in developing inland vessel services, while ₹45 crore will be directed towards subsidies. The remaining funds will be used for operational and administrative support.
Building a Sustainable Freight Ecosystem
The government’s initiative is part of a broader strategy to create a sustainable and efficient freight ecosystem. Inland waterways are not only cost-effective but also environmentally friendly, offering significant reductions in fuel consumption and greenhouse gas emissions compared to road and rail transport.
However, the sector faces multiple challenges, including limited infrastructure, inadequate vessels, and the high costs associated with multimodal logistics. To address these issues, the plan also emphasizes the development of “hard infrastructure” such as ports, terminals, and navigational aids.
The Ministry has also proposed the introduction of scheduled transit services through Inland & Coastal Shipping Ltd. (ICSL), which will operate under the financial supervision of the Inland Waterways Authority of India (IWAI). This move aims to enhance the reliability and predictability of waterway transportation, further encouraging its adoption.
Focus on Long-Distance Cargo
The subsidy will be applicable only for long-distance canal transportation, covering journeys of over 300 kilometers. The scheme, however, excludes the “first and last mile” costs associated with road or rail transportation to and from waterway terminals. This focus is intended to maximize the use of waterways for bulk and heavy cargo, which benefits most from cost savings over longer distances.
Officials anticipate that the scheme will attract industries involved in commodities such as coal, cement, steel, and fertilizers—sectors that often rely on bulk transport. Additionally, by alleviating congestion on roads and railways, the initiative could lead to broader economic benefits, including reduced wear and tear on infrastructure and lower maintenance costs.
Potential for Expansion
Currently, the scheme is limited to three national waterways. However, the Ministry has hinted at the possibility of expanding the program to other waterways based on its success. “If the scheme demonstrates its intended impact, we may consider extending it to additional waterways in the future,” an official from the Ministry stated.
India boasts over 111 national waterways, but only a handful are operational for cargo transport. By incentivizing the use of these routes, the government aims to unlock the untapped potential of the country’s extensive river systems.
Conclusion
The proposed subsidy scheme marks a significant step towards modernizing India’s freight transport system and promoting a shift towards more sustainable modes of transportation. While the inland waterways sector remains in its infancy, initiatives like this could play a pivotal role in its growth, offering long-term benefits for the economy and the environment.
With the government’s financial backing and a clear policy roadmap, the IWT sector is poised to take on a more prominent role in India’s logistics ecosystem, reducing reliance on traditional transport modes and paving the way for a greener, more efficient future.
