Why in news?
The Shipping Ministry has allowed foreign flagged vessels to transport fertiliser between Indian ports by easing the cabotage law.
What does a cabotage law imply?
- It specifies that only Indian flagged vessels are allowed to carry cargo between Indian ports.
- Foreign vessels can ply in Indian waters only after obtaining a licence and only if an Indian vessel is unavailable.
- The norms to ply without license for foreign vessels has been relaxed earlier this year to transport agriculture, horticulture, fisheries and animal husbandry cargo.
- Fertiliser is the seventh item that has been freed from restriction imposed by the cabotage law.
What are the competitive advantages?
- The Golden Quadrilateral and Goods and Services Tax have helped move goods faster and easier within the country.
- But transporting goods through road still costs Rs.1.5 per tonne kilometre.
- Also, the 3,228 km dedicated railway freight corridor that the government is building will reduce both the time and cost of transportation.
- Currently, it costs Rs. 1 per tonne kilometre to transport goods by rail.
- But the waterways serve as both the cheapest mode of transportation costing as low as 30 paise per tonne kilometre and also less polluting.
- Also, with its natural advantage of a 7,500 km coastline and 14,500 km of potentially navigable waterways, India can take a lot of pressure from the road and rail infrastructure, which are costly to build and expand.
- For instance, the 3,228 km dedicated rail corridor under construction costs over Rs. 81,000 crores.
- Countries like china and Japan moves over 40% of goods over water while a little over 5% of the goods are moved over water in India
- India is still looking towards road transport (over 60%) and rail (over 30%) to shoulder most of the load.
- Hence, the relaxation of the cabotage law will increase the supply of ships for coastal shipping.
- This should push industries and others to move goods such as cement, fertilisers, agriculture and horticultural produce through sea at lower cost.
- This could be complemented by port connectivity and modernisation of existing ports through the Sagarmala project.
- Along with that, two barges carrying 1,233 tonnes of fly ash were recently flagged off on river Ganga (National Waterway-1) from Kahalgaon power plant.
- The barges will travel 2,085 km across multiple waterways to reach Pandu Inland Port in Assam.
- This could make our waterways establish themselves as possible for cargo transportation and make compete with other sectors.
What are the challenges ahead?
- The government has identified 106 more waterways for navigation apart from NW-1.
- But even NW-1 makes water transportation possible for only a few vessels and only during daytime.
- Also, only in monsoon months when the water levels are high, transportation could be made possible in such rivers.
- Hence measures that need adequate focus are -
- Dredging of rivers
- Building new ports
- A proper river information system
- Digital GPS for night navigation
- Need for better berthing facilities
- Ensuring quick evacuation of goods from the port
- Leveraging technology to offer single document for multi-modal transportation
- Lower port charges
- India’s logistics cost is currently at 14% of GDP, way above the 8-10% levels in evolved economies.
- High logistics costs blunt India’s competitive advantage, especially when it comes to the ‘Make in India’ initiative.
- The government is right in focussing on water-based transportation to sharply reduce logistics cost.
- It should be followed by internal reforms, so that Indian shipping companies will not be forced to under-invest in this rising sector.
Source: Business Line
