Taking the water route
The increase in STT may have played the role of an immediate spoiler for the Union budget this time. But as the fine print was examined more minutely a little later, it probably became evident that it brings to the table the much-needed focus on the segments that had to play a critical role in the long term. The provisions made for the maritime sector clearly belonged to this category.
The government has announced an increase of over R2 lakh crore in public expenditure for the next fiscal. And, for the maritime sector, there is a set of fresh capex commitments, which will begin to play out from 2026-27 onwards and will set a new and more vibrant structure for trade-related transportation on water in the years ahead. Of course, the intent is to increase the share of waterways in the overall logistics and supply chain pie (dominated by road transport and railways). It’s no secret that, when it comes to environment friendliness and cost-effectiveness, trade on water has an undeniable edge over the other popular modes.
The Union budget has committed a fresh impetus to inland waterways infrastructure. It has set the target of operationalising 20 new national waterways over the next five years, which would expand the national network. The country today has 111 notified inland waterways (about 25 of them are operational). In 2014, only five stretches existed, and then 106 new routes were notified. As official data underlines, the past decade has seen a little bit of momentum picking up, with cargo movement on inland waterways increasing from 18.1 million tonnes in 2013-14 to 145.5 million tonnes in 2024-25. Meanwhile, while highlighting the intent to operationalise 20 new waterways routes, the Union finance minister also divulged the plans for focused development of National Waterway V on the Mahanadi river system in Odisha. This stretch will connect the mineral-rich areas of Talcher and Angul with major industrial centres, such as Kalinga Nagar and ports at Paradeep and Dhamra. Spots have been identified at Kakudi, Kurunti and Pankapal for the development of major terminals to ferry coal, coking coal and limestone. The government believes the corridor has a cargo potential of about 10 million tonnes by 2032, which could further increase to 20 million tonnes by 2047.
Another major announcement was a dedicated container manufacturing assistance scheme (CMAS) with a total outlay of R10,000 crore over the next five years. The scheme, intended to benefit all modes of cargo transport, aims to pave the way for a robust container manufacturing ecosystem in the country. Under this scheme, the government will target an annual manufacturing capacity of about one million TEUs over the next decade. The budget paper says this scheme will generate a total market value of nearly R1.07 lakh crore (with private-sector involvement, of course) and create a significant volume of new jobs in ancillary industries such as corner castings, wooden frames, specialised steel and water-based paints.
The budget also announced the launch of a coastal cargo promotion scheme, under which incentives will be doled out to stakeholders working in the area of modal shift from rail and road to waterways. The broader target is to increase the share of inland waterways and coastal shipping from 6 per cent to 12 per cent by 2047, which will deliver multiple benefits – lower logistics cost and reduced carbon emission are the main ones.
The focus shown to the maritime infrastructure, particularly for domestic trade, is indeed in the right place. Steps like the promotion of container manufacturing have been in demand for quite some time. The world of supply chain and logistics recognises the invention of containers as the most useful tool in unitising cargo in the modern era, and a command of it (as shown by China) is a must for a growing economy like India. Today, the country has to depend on imported empty containers (about two million units every year), which unnecessarily jacks up the operational cost. Similarly, the decision to operationalise 20 new inland waterways is a step in the right direction. This is a segment which had taken off in the 1980s but moved at a snail’s pace for the next three decades. Even notification of 106 waterways after 2015 has not really made any big difference (in terms of actual performance vis-à-vis potential), even as over 20 of them have become operational. But the action is still low in a majority of them, as supply chain managers in the country are still not sure of making use of them in locations where they exist. The segment is definitely waiting for a decisive, hard push.