The Centre will launch a Coastal Cargo Promotion Scheme to incentivise a modal shift from rail and road to waterways, aiming to increase the share of coastal shipping and inland waterways from 6 per cent to 12 per cent by 2047, Finance Minister Nirmala Sitharaman announced in her Budget speech.
As part of the push, the government will operationalise 20 new National Waterways over the next five years, beginning with National Waterway-5 (NW-5) in Odisha. The project will connect mineral-rich regions such as Talcher and Angul and industrial hubs like Kalinga Nagar with the ports of Paradip and Dhamra, improving bulk cargo movement.
This marks the second attempt in three years to promote coastal and inland water transport—modes considered energy-efficient, cost-effective, and environmentally friendly. In the 2023 Budget, the government had proposed promoting coastal shipping through the PPP model with viability gap funding, but the initiative failed to take off due to lack of committed cargo volumes.
Despite India’s 11,098.81-km-long coastline and extensive navigable waterways, water-based transport accounts for only 6 per cent of the freight modal mix, compared with 16 per cent in Bangladesh and 12 per cent in Thailand, highlighting significant untapped potential.
According to the Maritime India Vision 2030, water transport remains underutilised despite its lower costs. “Industrial development has not fully leveraged efficient coastal supply chains,” the report noted.
Industry sources said earlier efforts faltered as dedicated coastal vessels were commercially unviable without assured cargo. “Operators sought cargo guarantees from government departments, which were not forthcoming,” a source said.
In contrast, inland water transport has seen strong growth, with cargo movement rising from 18.1 million tonnes in FY14 to 145.5 million tonnes in FY25, a nearly 700 per cent increase, driven mainly by coal, iron ore, sand and fly ash.
To further boost inland shipping, the government has brought inland vessels under the tonnage tax regime, lowering tax burdens for operators. It also announced the development of a ship repair ecosystem for inland vessels at Varanasi and Patna.
The modal shift to coastal shipping is one of the four focus areas identified to improve logistics efficiency and reduce costs. Besides lowering freight expenses, water transport offers environmental benefits, including reduced emissions, noise pollution and road accidents.
However, experts stress that success will depend on robust multimodal connectivity, especially first- and last-mile infrastructure, to match the door-to-door efficiency of road and rail transport.
The Ministry of Ports, Shipping and Waterways has already taken steps such as lower port tariffs, green-channel clearances, priority berthing, dedicated coastal berths and relaxed cabotage norms, resulting in double-digit growth in coastal cargo movement.
Yet, officials acknowledge that the full potential of coastal shipping remains unrealised, calling for a more integrated and focused approach to unlock long-term gains.
