The working group report

6.1 To put the IWT development issues in India in perspective and to prescribe a road map thereof, it is imperative that the sector is analyzed in terms of its Industry Structure. Accordingly, an analysis of the IWT industry structure is as follows:
6.2 Industry Structure. The IWT industry structure comprises (i) National Waterways/Feeder routes/Other Waterways (ii) IWT Infrastructure/inter-modal linkages, (iii) IWT Fleet/Operations and (iv) Legal framework for IWT operations. All the components ought to be sound and should complement each other.

Current scenario: The current scenario with reference to the participating institutions/stakeholders vis-à-vis the market, other modes and other relevant aspects is as under:
6.2.1 National Waterways (NWs): Presently there are three NWs totaling to 2716 km of fairway. Declaration of three more Waterways, viz. Kakinada-Pondicherry canal along with rivers Godavari and Krishna (1095 km), East Coat Canal along with Brahmani and Mahanadi delta rivers (623 km) and Barak(152 km) as NWs is under consideration in the Government. With this, the NW coverage will be approx 4586 Kms.
6.2.2 Feeder Routes/Other Waterways: Development of these waterways is vested in the States. These are not well developed despite liberal assistance under CSS.
6.2.3 Infrastructure Provider: IWAI is the statutory infrastructure provider, facilitator and regulator functioning since 1986. However, IWT infrastructure developed over the years is grossly inadequate. The main reason is – while there has been underinvestment in this sector on the one hand, the capacity of IWAI, the Authority vested with this responsibility, has not grown in proportion to the responsibility. More technical manpower is needed to conceptualize, manage and implement IWT infrastructure projects. Unless this issue is tackled upfront and requisite institutional strengthening takes place, this component will remain weak and IWT infrastructure will not develop at the required pace to support viable IWT operations.
6.2.4 Infrastructure funding: It has several models. At one end of the funding spectrum is 100% State funding and at the other end is 100% private funding. For an infant industry like IWT, 100% state funding will be desirable without looking at the commercial returns in the short run; and as the Sector develops it could be opened to Private Sector investment with the State doing the hand holding; and when the sector has really blossomed the State could withdraw completely except as a regulating authority and let enough private players compete with one another in what could then be a perfectly competitive market.

In an attempt to rope in the private sector, a proactive IWT policy was announced in 2001. The policy permits IWAI to enter into Joint Ventures with IWAI’s equity contribution capped at 40%. The efforts made by IWAI in this direction are outlined in Chapter 1. Reckoning this facilitative policy framework, in fact, extra budgetary resources (EBR) for IWT during 10^th Plan was envisaged at the level of Rs. 228 crore; the break up being Rs. 92 crore through private sector participation and Rs136 crore to be raised through bonds. IWAI did pursue this strategy as given in detail in Chapter 3, however the scenario obtaining towards the end of 10^th Plan is not encouraging. The fact that not a single JV could be formed so far calls for introspection in terms of policy review. At this stage of IWT development, raising of bonds by IWAI, even though it has been empowered, appears to be an improbable proposition.

6.2.5 User Charges: IWAI can levy user charges for the infrastructure created and service provided by it; however, to date, it has not levied any such charges or rather, it(IWAI) is in no position to demand user charges, given the state of IWT infrastructure in the country and almost negligible share of this mode in the freight transport market. Unless commercial IWT operations pick up in the country, cost recovery through levy of user charges appears to be an improbable position. And for commercial operations to pick up, the prerequisite is to have necessary infrastructure and inter-modal linkages on NWs and other navigable inland waterways.
6.2.6 IWT operations – Users perspective: IWT operations are essentially services, best left to the market likely to be dominated by private parties. In a well developed and vibrant sector, market forces determine the number of players/operators with PSU operator, if any, checking monopolistic tendencies thereby moderating the prices(i.e. cost of transportation in transport market), which in turn is dependent on the competitive advantage of the sector itself. IWT sector is still in its infancy in terms of business cycle, requisite infrastructure is not yet in place, private operators are limited and CIWTC, the only central PSU operator(which since its inception in 1967 has been a loss making) with about 100 vessels (most of it obsolete ) is on the verge of disinvestment. In this kind of scenario, at the present juncture, IWT operations in India without Govt. support/incentives do not appear to be a financially viable proposition from users’ perspective. The sector needs liberal State funding and incentives for development of infrastructure and for making IWT operations viable.
6.2.7 IWT operations – Nations’ perspective: The energy efficiency of a transport mode could be measured in terms of tonne-km of cargo moved by 1 litre of fuel. This figure for road haulage is 25 tonne-kms, for rail haulage 80 tonne-kms and for waterways 105 tonne-kms. Hence it is undeniable that IWT is energy efficient. Further, it is estimated that per billion ton-km of cargo shifted to IWT mode would result in annual savings of the order of Rs. 100 crore by way of savings in fuel cost alone.

The economic loss due to the congestion and accidents on roads in India is estimated to be Rs. 40,000 core per annum as per Tata Consultancy Services(TCS) study Report(2003) and Rs. 1,50,000 crore per annum as per Prakash Narain Committee Report. With the status quo in modal share continuing, the congestion on road and rail will further increase.

Hence, to the extent modal share of IWT improves preferably by way of modal shifts from congested surface transport modes, Indian economy stands to gain in terms of fuel savings, reduced pollution, reduced economic loss due to congestion and accidents etc.
6.2.8 Incentives/Subsidy: As explained above, there is a strong argument in favor of public funding for infrastructure. As far as IWT operations are concerned, it should be best left to the private sector. In long run, private sector would come forward provided requisite infrastructure and inter-modal linkages are put in place by the State. However, till the time that happens, IWT operations must be catalyzed by liberal Govt support in the form of subsidy, modal shift incentives etc.
6.2.9 Modal Share: The current modal share is dismal 0.28%. The ‘Thrust Area’ envisages gradual enhancement of modal share upto 2% by 2025. Enhancement of modal share is dependent on length of NW fairway, development of feeder routes and other waterways, infrastructure, inter-modal linkages, adequate fleet and modal shift incentives, subsidy etc.

Viability of operations apart, IWT operations are severely constrained by lack of fleet both in terms of quality and quantity. For example, we do not today have more than 50 ( nos) quality IWT vessels for operations on NWs and protocol route. Taking modal share to 2% will necessitate induction of 2500 new vessels in IWT fleet.

6.2.10 Integration of IWT and Coastal Shipping: In some stretches, IWT and coastal shipping operations could be integrated to accommodate hinterland, coastal and international traffic. The two waterborne modes, viz. Coastal Shipping and IWT are similar in many ways, in terms of energy efficiency, inter-modalism, infrastructure requirements etc. Both modes are by nature inter-modal. At many places, these two modes provide seamless connectivity to the hinterland, for example, eastern region adjoining Kolkata and Paradip port; Goa region, Cochin Port-West Coast Canal region, proposed NW4 and NW5 linking East Coast Canal and Eluru, Buckingham Canal etc to some minor/major ports on the east coast.

By combining inland terminals with automated Roll on - Roll off (Ro-Ro) system, the cost of transshipment can be minimized to a great extent. Ro-Ro vessels offer an excellent alternative to road haulage on certain corridors/stretches. Such vessels will be able to reach certain inland locations via inland waterways, This could take some of the traffic load off the road network and bring about a better balance among various modes.

Similarly DVC Canal could provide coal linkage from Raniganj to Durgapur coal mines in West Bengal and Brahmani and East Coast canal could be utilized for the movement of coal from the Talcher mines in Orissa to various destinations.

6.2.11 Legal Framework: Inland Vessels Act (a Central Act) provides the legislative framework for IWT operations of mechanized vessels. This Act deals with entire gamut of operational issues such as safety, registration, certification, manning, pollution/environmental/emission norms, etc. However, since administration of the Act vests in the State Governments, the regime varies from State to State. Since navigable inland waterways invariably run through more than one State, it is important to have uniformity in the realm of various operational aspects of IWT throughout the country. Model Inland Vessel Rules prepared by IWAI could provide the answer to this problem.

3. 
   In view of the foregoing, there is a felt need to take a holistic picture of the sector and aim at its development in an integrated manner touching upon all relevant aspects simultaneously. This would call for Paradigm shift in approach to development of IWT during 11^th Plan, different components of which are detailed below:-
   

1. 
   Throughput oriented strategy: At the end of the 9^th Plan period the IWT share was 1.0 billion ton-km. The present throughput of IWT is 2.8 billion ton-km. An increase of 1.8 billon ton-km has been achieved during the 10^th Plan period. During 11^th Plan the targeted throughput envisaged is 5 billion ton-km ( ie by 2012)
   
2. 
   Quantum jump in public funding: There has been under investment in IWT infrastructure vis-à-vis road and rail. While considerable emphasis has been laid on development of rail and road infrastructure in successive five year plans, IWT sector has been neglected. Consequently, public investment in IWT mode has been far below the levels attained in other modes. To illustrate the case in point, while development/maintenance cost of road is about Rs. 5 crore per km; the money spent so far on development of the fairway of 2716 kms of the existing three National Waterways is only about Rs. 400 crore, i.e. Rs 0.15 crore per km only. IWT can not become viable at this rate of investment. Hence there ought to be quantum jump in funding of IWT sector in 11^th Plan. The Programme/Schemes, fund requirement thereof etc are given in chapter-7. Entire projected outlay should be provided.
   
3. 
   Institutional Capacity Building of IWAI and State level Institutions : Assuming that entire projected outlay is provided to IWAI, it will be able to absorb the outlay and deliver only if its capacity, mainly in terms of its technical expertise to handle and implement infrastructure projects, is enhanced by deliberate intervention preferably in the current year itself. In this context, National Productivity Council (NPC) study is underway. Its report is likely to be available by November, 06. Thereafter, IWAI will be approaching the Govt for its approval. Similarly the State level organization (IWT Directorates) should also be adequately strengthened.
   
4. 
   Organic integration of IWT and Coastal Shipping: A single organization in-charge of both IWT and Coastal Shipping will help development of these two modes in an integrated manner. The organization suggested in this context is IWAI. IWAI Act and Inland Vessels Act could be suitably amended and 30% subsidy available under IVBSS should be extended to the vessels capable of doing both Coastal and IWT legs.
   
5. 
   Composite transportation projects to be the mainstay: The IWT development paradigm pursued so far has been development of various components (terminals, fairway, cargo handling equipments, operations) vide separate projects in standalone manner. This approach has not helped development of IWT sector in an integrated manner. After all, the yardstick of performance of IWT sector is the modal share of IWT, which in turn, is dependent on the quality of infrastructure and productivity of IWT vessels. In other words, only an integrated approach will yield desirable results. Integrated approach to IWT development can be ensured only when composite transportation projects (combining both infrastructure and operation components) are encouraged by supporting such projects with viability gap funding, if required. Each Coastal/ IWT State should be exhorted to take lead for piloting at least one composite project having both infrastructure and operations (vessels) components on identified O-D pairs as in the case of Gujarat Maritime Board’s project of Ro-Ro services in Gulf of Khambat/ Kutch.
   
6. 
   Improving Productivity: The productivity of the Indian IWT vessels is quite low, ie on the average of 5000 ton-km per DWT vis-à-vis 15000 ton-km per DWT in developed countries. Hence there is a need for R&D for designing suitable vessels for pure IWT operation as well as for IWT/ Coastal Shipping combined movements. Besides, attention must be paid to improving qualitative aspects of cargo handling equipments, terminal operation etc.
   
7. 
   Coverage of National Waterways (NWs): By the end of 11^th Plan, three new Waterways are likely to be added to the exisiting 3 NWs, taking the total coverage to 4586 Kms. The focus in 11^th Plan should therefore be to put requisite infrastructure on the existing NWs and make them fully functional, and get on with development of new NWs on fast track as reflected in the Cabinet Note. Accordingly, it is expected that IWAI’s hands will be more than full and it won’t be possible to think of any more declaration during 11^th Plan.
   
8. 
   Setting up of a Committee to study Integrated Transport Planning: Advantages of Integrated Transport Policy/ Planning has not been studied in Indian context. Hence, it is proposed to set up a High Powered Committee on the lines of National Transport Policy Committee (1980) to study the Integrated Transport Planning affairs.
   
9. 
   Connecting remote areas by adopting fish bone model & Development of State Waterways: All riverine States to develop feeder routes to National Waterways or major waterways of that State adopting fish bone modal wherever feasible. More outlay under CSS will be required during 11^th Plan.
   
10. 
    New Scheme for Unorganized Sector: Modernization/ improvement of country boats ( Bhut-Bhutis) in the North East area and other areas of the country should be taken up as a New Scheme. The proposed scheme will improve the productivity of small IWT vessels, offer employment to the people, improve remote area connectivity and most importantly help in poverty alleviation.
    
11. 
    Reaching threshold level of IWT development by Public investment during 11^th Plan: Private sector participation (in IWT sector) in a big way will not happen unless IWT development in the country crosses the threshold level, as has been witnessed in other transport modes, particularly road. Once the sector develops and reaches a threshold level, private funding and extra budgetary resources (EBRs) will start flowing automatically. Hence emphasis during 11^th Plan should be to make enough public investment in IWT sector to cross the threshold level.
    
12. 
    Training on STCW 95 pattern & Network of Training Institutes: To meet the trained manpower requirements of the sector, it is necessary that all riverine and coastal States set up state level Crew Training Centres. These Centres, the existing crew training institutes in Assam, Goa and Orissa and NINI at Patna are to be connected through suitable network for better exchange of training ideas. The training of IWT personnel should be on STCW 95 pattern as per the IMO norms. This will ensure the quality of training as well as its standardization.
    
13. 
    Fleet Augmentation: Modal Share of 2% by 2025 will require 2500 new vessels. The strategy suggested in this regard is:
    

• 
  Extension of IVBSS upto 2025: IVBSS is currently valid upto March 2007. To build investors faith in IWT sector, the Scheme’s validity on long term basis, co-terminus with draft Maritime Policy (Vision 2025) is important. It is proposed to bring cruise vessels/ luxury boats in the ambit of IVBSS.
  
• 
  Formation of Vessel Leasing Company: At the present level of IWT development, private sector is not encouraged to invest in purchasing of new vessels due to these being capital intensive. On the other hand, the private sector is interested to take vessels on lease since it reduces their capital risk. Hence there should be a vessel leasing company which acquires / builds vessels and leases out to private sector. This could be a win-win situation for both the Leasing company and the private sector.
  

14. 
    Brining about uniformity in legal regime for IWT operations: The relevant aspects should be discussed in Inter-State Council for building consensus on having uniformity in implementation of I.V. Act across the country as also for creating regime conducive to hassle free inter-state IWT operations. Re-writing of IV Act may also have to be considered. The State Govts have to formulate IV Rules for implementation under IV Act keeping in view the operational requirements of the respective States. The Model IV Rules framed by IWAI could serve as a guideline for the States in this regard.
    
15. 
    Promoting passenger transport on Rivers: While IWT development paradigm pursued so far has focused on freight transportation, passenger transport sub-sector has remained neglected. During 11^th Plan, the strategy should be on promoting passenger transport on rivers/ inland waterways by making appropriate policy interventions.
    
16. 
    New emphasis on co-operation with Bangladesh: For achieving higher exports and better connectivity to NER, new emphasis on co-operation with Bangladesh is envisaged during 11^th Plan period. This will be pursued by making efforts for adding more Protocol routes, more Ports of call and improved cargo handling facilities on Protocol routes.
    
17. 
    Encouraging Modal Shift through close ended Incentives: European Union (EU) has launched a modal shift programme titled MARCO POLO, guided mainly by considerations of the need to alleviate congestion of the popular modes, rail and road. This programme essentially has two components – Catalyst Action and Modal Shift Action. There is a need to have such a modal shift programme in Indian context as well to effect targeted modal shift. A package of incentives for IWT operations including a specific incentive scheme of providing @20 paise per ton-km of cargo moved through identified IWT routes would be called for.
    

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Chapter-7

PROGRAMME OF DEVELOPMENT AND FUND REQUIREMENT
In keeping with the road map indicated in the previous chapter, the programme of development and funds requirement thereof are dealt with below, under the following categories:-

i) On-going Schemes

ii) New Schemes

iii) Fund Requirement/ Source of Funding.

7.1 Ongoing Schemes
7.1.1 Grant to IWAI
The programme of development of existing National Waterways will be a two stage process- making them “fully functional” in the first stage and then upgrading them to the level of” financial viability” in the second stage. Waterway-wise break up of the projects made under four major heads namely Fairway improvement, Navigational Aids, Construction of Terminals and Procurement of Vessels are described as under:-
7.1.1 National Waterway-1
i) Maintenance of Fairway

Projects costing Rs 199.68 crores have been identified and are under implementation with a view to provide a navigational channel of 45 m width and 3 m depth in Haldia-Farakka stretch, 45m width and 2 m channel in Farakka- Varanasi and 30 m width and 1.5 m depth channel in Varanasi- Allahabad stretch. This includes annual fairway development measures like bandalling and channel marking, dredging, river training measures, hydrographic surveys, procurement of vessels like dredging units (consisting of dredgers, workboats and accommodation boats), Tug-cum- buoy lying vessel, survey vessels, repair of vessels and construction of regional offices at Haldia, Kolkata and Patna. Of this, an expenditure of Rs 85.33 crores is expected in the year 2006-07 and therefore the balance amount of Rs 114.35 crores will spill over to 11^th Plan.

In the remaining years of 11^th Plan, it is proposed to maintain a navigational channel of 45 m bottom width and 3 m depth for Haldia- Patna stretch and 45 m bottom width and 2 m depth for Patna- Allahabad stretch during 11^th Plan period by undertaking river conservancy works like bandalling, dredging, channel marking etc. Besides, study and provision for semi-permanent river training works is proposed at 37 shoal locations and construction of permanent river training works at 12 locations where study is proposed during 2006-07. It is proposed to set up permanent gauge stations at 20 locations all along the waterway. It is also proposed to set up DGPS stations with HF/ MF link @ one station per 100 km river stretch which would give better accuracy in position fixing for survey and navigation purpose. Second navigational lock is envisaged at Farakka and construction of a new lock at Jangipur for opening the Padma route. It is proposed to procure three tug-cum-buoy laying vessels and provision for maintenance of existing hardware like CSD units, HSD units and Survey launches have also been proposed. Construction of office complexes are proposed at Kolkata, Bhagalpur, Varanasi and Allahabad during 2008-12. The estimated cost of these works is Rs 488 crores.

Thus the total outlay proposed for the above works is Rs. 603 crores, with following break-up:- (Rs in crores)

Maintenance

Fairway (20+80) - 100 Vessels (5.58+30=35.58) - 36 Procurement

Vessels (88.77+12=100.77) - 101

River Training (RT) work

Study and constn of semi-permanent RT work - 20

Construction of Permanent RT work - 100

Others

Construction of navigation locks - 200

Setting up of gauge stations - 4

Setting up of DGPS stations - 32

Construction of offices - 10

Total - 603

ii) Navigational Aids

Projects costing Rs 29.77 crores have been identified and are under implementation with a view to provide 24 hrs navigational facilities for the entire waterway upto Allahabad. This also includes provision for maintenance of the existing night navigational facilities in Kolkata- Farakka stretch. Of this an expenditure of Rs 3.45 crores is expected in the year 2006-07 and therefore the balance amount of Rs 26.32 crores will spill over to 11^th Plan.

For maintenance of navigational aids thereafter (2008-12) an outlay of Rs. 68 crores is proposed (Rs 17 crores/ year).

Thus the total outlay proposed for the above work is Rs 94 crores.

3. 
   Construction of Terminals
   

Projects costing Rs 94.33 crores have been identified and are under implementation with a view to complete the balance work of Permanent terminal (high level jetty) at Patna, construction of low level jetty at Patna, RCC jetty at Haldia, Kolkata (BISN), permanent terminal at Varanasi, construction of road to the existing Pakur jetty, providing floating pontoon facilities at Rajmahal, Sahibganj, Manihari, Bhagalpur, Semaria, Doriganj, Ballia, Ghazipur, Chunar and Allahabad. Provision for setting up of floating pontoon jetty for manual handling at Haldia, Kolkata (BISN), Diamond Harbour, Katwa, Tribeni, Barhampur and Jangipur is also included. This also includes cost of operation of existing terminals and cost of project preparation for various new terminals. An expenditure of Rs 30.5 crores is expected in the year 2006-07 and therefore the balance amount of Rs 63.83 crores will spill over to 2007-08 and beyond for these projects.

It is also proposed to construct permanent terminals at Diamond Harbour, Farakka, Rajmahal, Sahibganj, Bhagalpur, Semaria, Ballia, Ghazipur and Allahabad. It is also proposed to provide mechanical handling facilities at the floating terminals namely Chunar, Doriganj, Manihari, Katwa, Triveni, Berhampur and Jangipur. Provision for maintenance of permanent terminals and floating terminals are also proposed. The total estimated cost of these works is Rs 330 crores for the period 2008-12.

Thus the total outlay proposed for the above works is Rs.394 crores, with following break-up:- (Rs in crores)

Maintenance of terminals (3.83+46= 49.83) - 50

Construction of terminals (60+270) - 330

Provision of mech.hanlding facilities - 14

Total - 394

3. 
   Procurement of Cargo Vessels
   

During 10^th Plan period it was decided to procure more cargo vessels to demonstrate the viability of transportation through IWT mode. Under this, one vessel was already procured and is under operation under fixed schedule sailing in NW-1. Projects costing Rs 35.43 crores have been identified and are under implementation with a view to procure/ acquire two 300 tonnes vessels and one 600 tonne vessel. Projects also envisages acquisition two units of Push tug plus two dumb barge combination of 300 tonnes capacity and one unit of Push tug plus two dumb barge combination of 750 tonnes capacity. An expenditure of Rs 16.53 crores is expected in the year 2006-07 and therefore the balance amount of Rs 18.90 crores (including Rs1.9 crores for maintenance) will spill over to 11^th Plan .

It is also proposed to procure one 600 tonnes vessel for operation in Haldia – Patna sector and three 300 tonnes vessels for operation in Patna - Allahabad stretch for demonstration purpose. The estimated cost of this procurement is Rs 25 crores during 2008-12. Further, a provision of Rs 8 crores is proposed for maintenance of vessels.

Thus the total outlay proposed for vessel procurement including maintenance of existing vessels is Rs. 52 crores, with following break-up:-

(Rs in crores)

Maintenance of vessels (1.9+ 8=9.9) - 10

Procurement of vessels (17+25) - 42

Total - 52