India is aiming for public-private partnerships (PPP) in coastal shipping

On February 1st, the Indian government announced its plan to invest in coastal shipping. According to the latest budget allocations, India will follow the public-private partnership or PPP model to improve passenger and cargo movements on the east and west coasts.

The focus is on developing low-cost, energy-efficient systems using VGF and profitability gap financing.

Because the coastal waterways have low logistics costs and a high degree of environmental friendliness, it is the best solution for domestic cargo movements, the finance minister said when presenting the budget.

Despite a 7500km coastline and extensive inland waterways, India’s water-based modal traffic is lower than Thailand and Bangladesh at 12% and 16% respectively. In comparison, India sits at a meager 6%. This is highlighted in the 10-year roadmap for the Indian maritime sector called Maritime India Vision 2030, which states that India has not made good use of its coastline for efficient supply chain ventures.

Apart from that, the maritime vision 2030 calls for PPP in RoRo and ferry services through management-based contracts or operations and maintenance (O&M) contracts.

This lowers costs for end users and reduces pollution (noise and air pollution). The proposed plan will also reduce accidents.

However, to support this, we need better last and first mile connectivity as cost and lead times become key competitive factors.

In the past, the Ministry of Shipping has lowered coastal freight tariffs, given coastal ships priority when docking, created green channels for faster cargo handling and ship availability, relaxed cabotage rules. All of this will work together to improve coastal shipping facilities.