The government is expected to provide cargo owners with three-year subsidies for the transportation of commodities via inland waterways in an attempt to increase the amount of freight movement in India, which is now barely 2%.
According to the Ministry of Ports, Shipping, and Waterways, the proposed change, which would provide a 35% subsidy for river transportation on national waterways 1, 2, and 16, is expected to result in the relocation of about 800 million tonne-kilometers (tkm) of cargo to interior waterways. The metric tonnes of cargo multiplied by the kilometers traveled yields Tkm.
In contrast to ports, the inland water transport industry is still in its infancy and needs assistance to encourage cargo mode shifts in addition to the development of physical infrastructure. The multi-modal character of the transportation makes the overall logistics cost higher than other modes of transportation, even if the cost of shipping cargo on the waterways is lower than that of other modes.
The estimated cost of the project is approximately Rs 100 crore, of which Rs 40 crore would be needed to develop inland vessel services and Rs 45 crore will be needed for subsidies.
Approximately 65% of the sector’s modal share is accounted for by road transport, with rail coming in second at 26%. In contrast, the ministry estimates that Inland Water Transport (IWT) accounts for just 2% of India’s total freight movement.
To encourage the sustainable modal shift of goods from road or rail modes to IWT, financial incentives will be offered up to 35% of the total real operating expenditures incurred on waterways journeys.