Port Connectivity Enhancement

Connectivity is one of the critical enablers for ports and the end-to-end effectiveness of the logistics system drives competitiveness for the maritime industry as well. With infusion of new technology and capacity building, the cumulative/ total capacity available at ports can match demand but will not be able to handle additional traffic if the evacuation to and from the port is restricted. It is, therefore, important that connectivity of major ports with the hinterland is augmented not only to ensure smooth flow of traffic at the present level but also to meet the requirements of projected increase in traffic.

India's hinterland connectivity is mainly based on surface transport i.e. road and rail, wherein, domestic waterways (coastal shipping and inland waterways) playing a very limited role. Pipelines are predominantly used only for transporting crude oil, refined petroleum products and natural gas.
In India, smooth connectivity to ports is even more important as the cargo generating centers are mainly in the hinterland instead of in the coastal region. The long lead distance increases the logistics cost and time variability within which the cargo can be delivered.

Under Sagarmala Programme, endeavor is to provide enhanced connectivity between the ports and the domestic production/consumption centres. More than 235 connectivity projects at an estimated investment of more than Rs. 2.35 Lac Crore have been identified. Some of the types of connectivity projects considered are listed below:

  • National waterways prioritized for development in the first phase
  • Connectivity to Dedicated freight corridors
  • Last mile rail and road connectivity projects
  • Major rail connectivity projects
  • Freight friendly Expressway projects connecting the major ports
  • Development of Multi-Modal Logistics Parks
  • POL Pipelines

Coastal Shipping &Inland Waterways

Despite having an extensive network of inland waterways in the form of rivers, canals, backwaters and creeks freight transportation by waterways is highly under-utilized. Waterways currently contribute around 6% to India's transportation modal mix, which is significantly less than that in developed economies and some of the developing economies as well.

It is estimated that coastal shipping traffic of about 250 MMTPA can be achieved from current and planned capacities across coal, cement, iron and steel, food grains, fertilizers, POL by 2025. Additionally about 125 MMTPA of cargo is expected to be moved via inland waterways by 2025.
Availability of dedicated infrastructure will go a long way in promoting coastal shipping as a mode of freight transportation. Hence infrastructure at ports and supporting infrastructure using rail/road and waterways to facilitate coastal movement are being created. These include development of dedicated coastal berths, bunkering and storage at ports and creation of supporting hinterland transport infrastructure with last mile connectivity

To realize the potential, Ministry of Shipping has been focusing on improving the coastal Shipping and Inland Waterways Transport which is an environment friendly mode of transport.
Government of India has undertaken various initiatives to promote coastal shipping such as

  • Relaxation in licensing for foreign flag vessels to transport fertilizers, agricultural products and EXIM containers for trans-shipment in India on coastal routes under section 406 and 407 of the Merchant Shipping Act
  • Licensing Relaxation for special vessel such as RO-RO, RO-pax, ODC etc has been extended till 2020.
  • Priority berthing policy for coastal vessels has been notified to reduce turnaround time for coastal vessels and improve their utilization
  • A discount of minimum 40% is offered by major ports on vessel and cargo related charges to vessels carrying coastal cargo. For the case of Ro-Ro car carriers, this discount is extended to the tune of 80%.
  • GST Reduced on Bunker Fuel from 18% to 5%
  • Grant-in-aid assistance to develop berths and associated infrastructure including dredging, Break-water creation, mechanization under the coastal berth scheme has been extended till 2020

Pursuant to the above, India has witnessed a steady growth of 11.3% of cargo movement on coastal routes from 2015-16 to 2018-19.

In 2018-19, it had handled 120 MTPA of coastal cargo in comparison to 94.5 MTPA in 2016-17 and is expected to reach 250 MTPA by 2025

In order to unleash the optimal potential of the sector, MoS has undertaken a perspective plan on coastal shipping in association with Asian Development Bank in July 2019 that will form the basis of infrastructure development over the next decade.