Interactive Meeting on Development of Inland Water Transport
June 8, 2001

Address by The Union Minister of Shipping

India is blessed with many rivers, canals, backwaters, lakes and creeks on which inland water transport has flourished in the past. Sadly, however, the potential and the development need of the sector was overlooked as a result of which, and with the advent of rail and road modes of transport, IWT mode declined. In a way there had not been requisite development of infrastructure in the other modes of transport also to the extent heeded to sustain the full development needs of the country. The present Government, under the Prime Ministership of Shri Vajpayee, has however, taken determined decisions to strengthen infrastructure in the transport sector. A series of decisions have been taken regarding the development of roadways from east to west and north to south. I am here, happy to announce to you and to share with you that the Cabinet has approved a package of policies and decisions aimed at resurgence of inland water transport system with a view to make it an efficient and reliable system of transportation and to supplement other modes such as road and rail. Inland Water transport is fuel efficient, economic and environment friendly mode of transport. Development of this mode greatly relieves pressure on other modes which face constraints of their own. One 600 T, IWT cargo vessel can replace 60 trucks from the road. IWT also provide port-hinterland connectivity as most of the rivers connect hinterland to ports. The Government's new policy is to create highways on water and to maintain them. In fact the waterways are gifts of nature whereas other modes of transport like road and rail network have to be created. Here we have god-given fairways, which need only to be properly maintained and kept navigable in safe and efficient manner for most part of the year. Considering this, inland water transport requires considerably lesser investment than other modes of transport.

2. At present three waterways have been notified as National Waterways, namely, the Ganga as national Waterway No. 1(1986), the Brahmaputra the National Waterway No.2 (1988) and the West Coast canal as National waterway No.3 (1993). Apart from development of three National Waterways, IWAI has conducted techno-economic studies on several other waterways, namely, East Coast Canal integrated with Brahmani river, Kakinanda-Mercaunam Canal integrated with Godavari and Krishna rivers, Barak river, DVC canal, extension of NW-3, Sunderbans waterways. All these waterways have the potential of IWT infrastructure development.

3. Several small rivers of the country have the potential of developing small length waterways. Rivers and canals can also provide alternative mode of transport in cities and metros. In addition, various riverine states such as, Assam, Andhra Pradesh, Bihar, Orissa, Tamilnadu, Uttar Pradesh, West Bengal etc., have tremendous potential for IWT development. North-eastern states with several tributaries of Brahmaputra and various other rivers have to be given special emphasis for development of inland water transport infrastructure. States like Jharkhand, which has huge mineral resources, can utilize river Ganga as an outlet for its natural resources. Besides development for cargo transport, waterways can also developed for passenger ferries, river cruises, water sport and tourism related activities.

4. The new Inland Water Transport Policy approved by the Cabinet has several thrust areas. The first one is to invite and facilitate active participation of the private sector. It has been decided to enlarge the role of IWAI to enter into commercial / joint ventures to encourage investment in his sector. In principle approval has been given to the policy guidelines for private sector participation subject to the equity participation by Government/ IWAI being limited to a ceiling of 40% for BOT projects to be worked out on case basis. Such participation will be for areas like fairway development and maintenance, construction and operation of terminals, provision and operation of mechanized cargo handling system, storage facilities, provision of navigational aids, pilotage and setting up and running up of IWT training institutions. Guidelines for private investment in IWT Sector have been developed, a copy of which has been given to all of you.

5. One of the important policy decisions is to grant a tax holiday of ten years to this sector to be availed of during the initial 15 years as in the case of National Highways so as to enable this sector develop. The rate of depreciation for all vessels ordinarily operating on inland waterways is being fixed at par with the rate of depreciation applicable to ocean going vessels (at present 25%) from time to time.

6. In order to make optimum use of our inland waterways we need to have a fleet of vessels to operate on a regular basis. Therefore, with a view to encouraging IWT fleet expansion, a scheme will be operationalised providing for vessel building subsidy for ship owners for inland vessels built in Indian shipyards. This will also enhance the capability of our shipyards to construct modern vessels. Ministry of Shipping is in the process of formulating the vessel building subsidy scheme in consultation with the Ministry of Finance.

7. With a view to provide relief on account of customs duty, in principle approval has bee given in levying minimum customs duty on imported machinery for development of inland waterways to be identified by IWAI. Details of the scheme will be finalized in consultation with the Ministry of Finance.

8. Various countries of the world have made optimum use of their waterway but for this they have invested over decades very substantially, which has paid them rich dividends. Private sector has played a very meaningful role in such development and it is hoped that with the implementation of the package of policies promoting private sector investment inland water transport, the overall investment in this sector will increase. Inland Waterways Authority of India is also being authorized to raise bonds to enable IWAI to borrow from the market and mobilize funds as provided for in other infrastructure sectors.

9. In order to permit Private Foreign Direct Investment into the sector, the Government has decided to permit automatically for direct investment up to 100% equity as applicable in other infrastructure sectors. Apart from funds from outside the country this should also bring modern technology to up-grade our own indigenous capabilities. IWT presents itself as an eminently suitable sector for Foreign Direct Investment with long term benefits and I am optimistic that the sector will attract such investment.

10. Another important initiative is to involve more actively state governments in the development of inland water transport. Centrally Sponsored Schemes will be implemented and projects identified by the State Governments will be extended assistance by way of loan to the extent 50% of the project cost. I am happy at the presence of the representatives of State Governments here. This exercise can be carried out further in the regional meeting, which are to be held shortly. Through this process inland water transport can be developed in small segments and sectors which will be directly beneficial for the states. One area where priority attention can be given is development of IWT for attracting tourists through river cruises etc. We have such places of natural beauty as backwaters of Kerala, the Sunderbans and indeed the entire streches of our rivers.

11. Some of the identified areas where private sector can invest are ownership and operation of vessels for cargo and passengers, fairway development and maintenance, construction and operation of river terminals or river ports, provision and operation of mechanized cargo handling system, putting up and maintenance of navigational aids, provision of pilotage services, setting up and running of IWT training institutions etc.

12. There is substantial scope for technical collaboration and technical assistance with the countries having developed IWT system. We will look forward to such technical collaboration and assistance. This exercise can be carried forward on bilateral basis. Another important avenue, which will be explored as a source of funding for the IWT projects, would be external funding. Development of IWT will promote economic activities in less developed hinterland areas and will help in poverty alleviation. This will promote trade and commerce in such areas. External funding from international funding agencies will boost and accelerate the development of IWT sector.

13. I am extremely happy to note that the Inland Waterways Authority of India under the aegis of Ministry of Shipping and in close and active collaboration with the FICCI has organized the First National Level Meet. I also am heartened to note that FICCI has fully endorsed new policy package. This spirit of cooperation between Government and private sector and the spirit of working together is a very positive development, which I am sure, will bear extremely good results. I assure you that the inputs we would receive during this Interactive Meet as also in other meets to be held in the regions will be very important elements in the formulation of our programmes and projects within the frame work of the new Policy package.

14.I am sure that you have many question to ask and many suggestions to give. Your suggestions are of utmost importance to us. Therefore while thanking you for having spared your valuable time to attend this Meet, I now call upon you to make this Interactive Meet a real success.