The Centre is framing a policy to enable all major ports to set up subsidiary companies to develop inland waterways. This is part of its plan to cut logistics costs for exporters by moving more cargo on water instead of over land.
The establishment of separate units will facilitate easy foreign funding for inland waterway projects by capitalizing on the financial credentials of the government owned ports, Union Minister for Shipping, Highways and Waterways Nitin Gadkari said on the sidelines of a summit organised by the Indo-American Chamber of Commerce on Monday.
“We are framing a policy at the department level,” Mr. Gadkari said. “As nobody will give loans to inland waterway projects, we will use the financial credential of ports, which will set up subsidiary companies for developing inland waterway projects. We will be framing it in 15 days,” he said.
The objective of the government is to reduce logistics costs to make exports competitive and all ports will be asked to improve inland waterways in their periphery to divert large part of the cargo on waterways which is cost effective.
India’s biggest container port Jawaharlal Nehru Port Trust (JNPT), which posted a profit of Rs.1,000 crore last year, has been asked to set up a subsidiary for this purpose.
“JNPT will set up a subsidiary that will take care of all rivers in Maharashtra. They will raise about Rs.4,000 crore at 2.75 per cent interest rate from foreign banks and this will improve economic viability of the projects. Anybody will give loan to JNPT,” Mr. Gadkari added.
JNPT will develop waterways on seven to eight rivers in Maharashtra which flow from Madhya Pradesh. Goa Port will be the next to follow and will develop inland waterways on two rivers. The Detailed Project Report (DPR) has been prepared.
“We need Rs.80,000 crore to develop 20,000 km inland waterways in the country and it cannot be met through Shipping Ministry’s annual budget of Rs.1,800 crore,” the minister said. “The inland waterway projects are economically viable, but raising funds for them is not a successful practice in our country as they don’t have any financial credentials now,” Mr. Gadkari said. “But we can raise foreign funds at low interest costs for such projects through the ports.” All major ports have a combined turnover of Rs.4,000 crore and based on that an amount of Rs.50,000 crore can be raised as foreign loans at 2.75 per cent interest as against 12 per cent from Indian banks for inland waterway projects, he said. The shipping ministry has also urged the finance ministry to allocate 5 per cent of the money collected as cess on diesel and petrol for inland waterways.