Coastal shipping: Languishing in shallow waters

Amit Mitra

In the last 20 years, almost as many reports were submitted by various Government committees and independent consultants on Indian coastal shipping. All of these studies and reports elaborated on the potential that the 7,500 km-long coastline of India had for this mode of transportation, which can signicantly bring down cost of moving goods and decongest the cluttered road and rail sectors. But, these voluminous reports continue to gather dust in the multitude of Government cupboards in New Delhi or get the occasional visit by researchers on the Internet. None of these reports have been translated into a comprehensive coastal shipping policy. At best, a few recommendations from these were incorporated in the shipping policies that did precious little to boost coastal trade. The bottom-line twenty years of studies and debate have not done much to give the desired llip to coastal Winds of change? The Shipping Ministry is in the process of coming out with a policy that will provide incentives to shipping. manufacturers and transporters of good to shift from rail and road movement to coastal shipping. K.K. Mustafah
POOR GROWTH

million tonnes of traffic can be diverted to coastal shipping from rail and road without any increase in transport costs. Furthermore, if concessions are extended, the coastal traffic diversion may grow up to 10 million tonnes by 2012. The report had recommended an institutional mechanism with a special cell to be set up under the Director General of Shipping to give guidance to coastal shipping, apart from an autonomous body at the state level. However, the sector did not get the push it deserved and this mode of transportation continues to languish. Hopes of this sector getting a significant boost ared when the ambitious Sagarmala project was proposed in 2003, which sought to link the minor ports and pave a seamless way for coastal shipping to take off. But, even this did not move beyond the proposal stage.
CASH STRAPPED

Almost all these reports identied the major problems bedevilling the sector import duty on bunkers (fuel) and spares, customs procedures, tax-related issues, differential manning scales, high port charges, inadequate port infrastructure, tight access to funding, absence of right incentives for transporters to shift cargo movement to coastal mode and lack of a

sound institutional mechanism to drive growth. Today, coastal shipping hardly has a share of eight per cent of the total exportimport cargoes criss-crossing the country every year, registering a measly one per cent increase in the last twenty years. Also, the coastal shipping eet has declined to 118 cargo vessels of 6.71 lakh dwt (deadweight tonnes) and 33 passenger

Industry players feel that one of the biggest problems facing coastal operator is getting a berth at major ports on time. Ocean going vessels get priority and vessels. Exactly ten years ago, the total will be higher, but the comparative range coastal vessels have to wait, often for eet strength stood at 424 vessels, in- will be more or less similar. Ten years ago, days, for a berth. This makes the service cluding 98 tugs, 16 dredgers and 73 off- a comprehensive study undertaken by the uneconomical. Also, coastal ships are govshore supply vessels. Tata Consultancy Services for the Ship- erned by the same norms on age, manning It has been estimated by several com- ping Ministry had estimated that coastal and statutory clearances as applicable to mittees that the unit cost of transporta- traffic would increase from 115 million ocean-going vessels, says Sarvesh Shahi, tion is Rs 5 by road, Rs 2 by rail and Rs 15 tonnes in 2003 to 220 million tonnes by a Mumbai-based coastal shipping player. Tighter access to funds has also been by air, while the same through coastal 2012. shipping would be about Re 1. The report had concluded that even if stunting the growth of this sector. While Given the current prices, the unit costs things stand as at present, annually four banks provide only ve to eight years

funding, operators feel that the repayment should be stretched to 20-25 years, given the current economic contours of this business. It had earlier also been suggested that a corpus fund for coastal shipping be created, but, like other suggestions, this did not see the light of the day. The cabotage policy, which restricts foreign ag vessels from getting into coastal trade in India, has been another issue that had engaged policy makers and industry in endless hours of debate. One signicant development has been the relaxation in the cabotage rules for containerised cargo for the Vallarpadam terminal in Kochi. Now, the Shipping Ministry is in the process of coming out with a policy that will provide incentives to manufacturers and transporters of good to shift from rail and road movement to coastal shipping. The incentive will be on a sliding scale and differ from cargo to cargo. We are expecting the nal report from KPMG on this. Hopefully, this will materialise in the next few months. The incentive scheme will not be part of any new coastal shipping policy, but will be a standalone scheme, P.V.K. Mohan, Chairman of National Shipping Board, said. Clearly, the industry needs to lobby harder with the Government to put in place a sound coastal shipping policy, which should be seen as a long-term solution to Indias transportation problems.
amimitra@thehindu.co.in