Inland Waterways Authority of India (IWAI) was set up in 1986 with an objective of development and regulation of inland waterways for shipping and navigation. In a freewheeling interaction with The Dollar Business, Amitabh Verma, Chairman, IWAI, talks about the progress the country has achieved on this front so far and discusses how inland waterways can boost exports from India.

Ahmad Shariq Khan | December 2016 Issue | The Dollar Business

TDB: Inland waterways hold the potential to transform transportation in India. What are the hurdles that stop us from realising this potential?

Amitabh Verma (AV): Inland waterways could have played a much bigger role in independent India. After all, the potential of waterways for shipping and navigation is immense. However, Indian policymakers have unfortunately not paid much attention to the development of this body. In our country the development of roadways and railways have always taken precedence over waterways.

While ushering the green revolution, and even for irrigation purposes, we have drawn water from waterways, and in the process, have depleted the level of water in national waterways. Secondly, while making dams for hydroelectricity or for irrigation purposes, the government did not make use of navigation locks and ended up blocking the possibility of navigation through these dams.

Moreover, road and rail bridges have been built across our rivers without leaving sufficient horizontal and vertical clearances. From 1986 to 2015, we spent about $200 million for the development of waterways and could declare only five national waterways – NW1 to NW5. The development of only three of these waterways could be taken up till 2014. China, on the other hand, has spent over $15 billion just in the last five years or so. Even when we compare India’s expenditure on railways and roadways against that on inland waterways, the expenditure on waterways is insignificant – in FY2014, the government spent $19 billion on railways and $12 billion on roadways, while for waterways the budgetary allocation was only about $40 million.

TDB: What are the contemporary dynamics of the Indian economy that are pushing the need for an efficient inland waterways mechanism?

AV: As a growing economy, we are increasingly seeing more cargo movement, particularly steel and cement (and other building materials), to fuel our urban expansion. And then along the way, in addition to the high cost of construction of railway and roads (due to heavy land acquisition costs), we need to address concerns with regards to the environment (increasing pollution levels) too. All of this is increasingly forcing the Indian policymakers to explore the future possibilities of inland waterways as a better mode of transport.

I would say, inland waterways could prove to be a game changer in national connectivity and can cut the cost of transportation for passengers and goods in a big way, reduce congestion on roads, apart from playing a crucial role in pollution reduction.

Also, the waterway transportation cost is estimated at 50 paise per km, compared to Rs.1 per km by rail and Rs.1.5 per km by road. This explains why, today, an increasing number of automakers including Maruti Suzuki, Mahindra & Mahindra and Honda among others are inking various MoUs with us. Major automobile manufacturers are planning to transport cars to dealers in Kerala from factories in Tamil Nadu, Gujarat and Haryana through waterways.

TDB: As you just pointed out, there has been a disparity in terms of investment made into rail and road sector vis-à-vis waterways. Going forward, how do you plan to fund your major projects?

AV: These projects require a good amount of investment and for this we are looking at different options. Firstly, there is the expectation for an enhanced budgetary support from the government. Then, we are also looking at extra budgetary resources. Thirdly, we are looking at signing joint ventures with different ports and states of the country. They will work with us and supplement human, technical and financial resources.
We have inked pacts with both Paradip Port Trust (PPT) and Dhamra Port Company Ltd. (DPCL) for developing the National Waterway-5. Under the plan, we will furnish the future cargo projections for these ports. The project will connect the ports at Dhamra and Paradip with the steel and coal hinterlands of Kalinganagar and Talcher, respectively. Odisha government, apart from giving free land to IWAI would develop cargo terminal facilities at Pankapal and Jokadia through a special purpose vehicle (SPV) with PPT, DPCL and other stakeholders. A similar SPV is also being signed with the Andhra Pradesh government.

We are exploring options via PPP (public private partnerships) whereby we are looking at all the avenues where the private sector can collaborate with us. In a first, we have identified development and operation of Kolkata Terminal’s GR Jetty-I, GR Jetty-II and BISN and Patna Terminal’s Gaighat and Kalughat on National Waterway-1 i.e. River Ganga under the PPP model. Now, under the transactional structure worked out by International Finance Corporation (IFC), the operator will undertake the operations and maintenance services at both Kolkata and Patna clusters and invest in equipment handling mechanism, container loading and unloading equipment and warehousing.

We are looking at multilateral funding as well. The World Bank has already shown confidence in our projects and we are working on more such projects.

TDB: In actualising a PPP project, what is the biggest challenge you face?

AV: Since no development of national waterway has ever happened through the PPP route, the on-ground knowledge base and preparedness levels (especially keeping into account the unique characteristics of Indian rivers) required for executing such projects is not adequate.

TDB: Could you apprise us on some of the major challenges you face due to unique characteristics of Indian rivers?

AV: The biggest challenge that we face is that our rivers are very alluvial in nature with characteristics of braiding, meandering and large water level fluctuations, especially in the summer and monsoon months. On these rivers, several shallow areas come up during the low water season. Least available depth, particularly in upper reaches, becomes a tricky affair. Many rivers are seasonal, with water flows declining sharply soon after themonsoon. Navigating such rivers in the lean season may require regular and extensive dredging and desilting. We have roped in globally acknowledged consultants and experts to guide us on this.

Other challenges include, inadequate river conservancy measures, resulting in gradual deterioration of waterways, excessive silt loads from erosion of uplands due to bad catchment management and increased deforestation, non-availability of adequate navigational aids resulting in unsafe passage and high travel time and, inadequate vertical and horizontal clearances for plying vessels of economic size in many traditional waterway routes. Terminal facilities at the loading and unloading points being non-existent or inadequate is another major challenge.

TDB: What is the progress on the World Bank funded Allahabad-Haldia Waterway Project – NW 1?

AV: National Waterway-1 project, which envisages developing a fairway between 1,620-km Allahabad and Haldia stretch, is going on full throttle, thanks to a $3.5 million funding from the World Bank. It is a waterway of national significance passing through Uttar Pradesh, Bihar, Jharkhand and West Bengal, potentially serving the major cities of Haldia, Howrah, Kolkata, Bhagalpur, Patna, Ghazipur, Varanasi, Allahabad and their industrial hinterlands including several industries located along the Ganga basin.

We plan to use River Ganga as one of the arterial waterways for the country. The project would enable commercial navigation of vessels with a capacity of 1,500-2,000 DWT (Deadweight tonnage). In Phase II, the project will reach Kanpur. Similar projects are being tested on the Brahmaputra and other rivers.

Terminals are also being built at Sahibganj, Kalughat, Ghazipur and Haldia. Several jetties are also being constructed. The terminal in Varanasi, costing Rs.170 crore, is likely to be completed by August 2018. It will have road and rail connectivity with proposed links on National Highway-7 and Jeonathpur Railway station in Uttar Pradesh, respectively. The cargo handling capacity of the terminal on completion of Phase 1 is estimated to be about 1.2 million metric tonne per annum (MTPA).

The cargo that will be handled at the terminal includes stone chips, cement, food grains, fertilisers, sugar, etc. It will provide berthing space for two vessels simultaneously, storage area, transit shed, parking areas and a floating jetty for passenger transportation.

The project includes development of a fairway, construction of new multimodal transport systems at Varanasi, Haldia, and Sahibganj, conservancy works, modern River Information System (RIS), Digital Global Positioning System (DGPS), night navigation facilities, modern methods of channel marking and construction of a new state-of-the-art navigational lock at Farakka Barrage on River Ganga among others.

TDB: How can inland waterways provide a fillip to global trade? How do you see our neighbouring nations fit into your larger scheme of things?

AV: Once in place, the inland waterways system would prove to be a boon for the EXIM community of the country. Suppose, there are products in Varanasi that are to be exported – with inland waterways system in place they can be put on the barges which can sail right up to Haldia from where these can then be loaded onto bigger vessels to be eventually exported to global destinations.

Likewise, the import business would also benefit, as goods from countries such as Singapore and other adjacent countries can be first brought to Kolkata and then from there can be transported internally via waterways. Such a scenario will bring down the logistical cost of exports and imports in a big way. This will help both traders and consumers by bringing down the cost of goods.

To make this a reality, we have recently inked an MoU with Shipping Corporation of India Ltd. (SCIL). SCIL wishes to undertake inland waterways transportation on National Waterways 1, 2 and 5. We are constructing a terminal at Patna on the northern bank of Ganga with a view to cater to Nepal bound traffic.

With Bangladesh, we have the Indo-Bangladesh protocol in place that is on auto renewal mode, meaning that the pact will be renewed automatically each year unless either of the parties expresses an intent to act otherwise. I believe such a pragmatic mechanism gives a long-term commitment to investors, and will help increase bilateral trade between India and Bangladesh.

For tapping markets in the North East, presently there are three routes. One goes via Haldia to Dhubri Port in Assam. The second route is via Ashuganj route to Agartala and third is via the Barak river in Karimganj. Government of Bangladesh has also agreed upon extending trading avenues via the Ashugnaj route to Tripura. In addition to cargo operations, we are in discussions with Bangladesh to launch cruise operations.

Once that happens, vessels would be able to make use of the entire 3,000-km stretch from Allahabad upto Sadiya in Assam. We also aim to connect the eastern Indian seaport of Kolkata with the Sittwe Port in Myanmar.

TDB: What are your short and long term targets?

AV: The cost of logistics in India is 14-15% of GDP, whereas globally it hovers in the range of 7-8%. This is making Indian products uncompetitive in global markets. Hence, the need of the hour is to develop waterways.

The government has chalked out an ambitious plan to galvanise the inland waterways. We hope that by 2018, we should be able to ensure that at least 7% of India’s goods traffic is moved by waterways. Currently, only 3.6% of goods traffic is carried on rivers compared to 47% in China, 40% in Europe, and 35% in Bangladesh.

Presently we have identified about 111 rivers that need to be transformed into national waterways. We want to increase this number steadily in the coming years. We plan to add 12 to 13 rivers in the next few years.