The Public Investment Board (PIB) has approved a proposal from the Ministry of Ports, Shipping and Waterways to extend dredging assistance worth ₹1,839.41 crore to the Syama Prasad Mookerjee Port Authority (SMPA) for seven years starting FY25. The subsidy will support maintenance dredging in the Hooghly River and the navigation channel serving the Kolkata Dock System and Haldia Dock Complex.
The approval, granted during a PIB meeting on November 12 chaired by the Expenditure Secretary, stipulates that the assistance will remain in place until FY31. After that, SMPA will be required to fully fund dredging operations internally.
The port’s dredging requirement is estimated at ₹3,765.45 crore over the seven-year period. “The continuation of the dredging subsidy will have a sunset in FY31, beyond which the dredging has to be fully funded by the Port Authority,” a government source said.
Legacy Liabilities Delay Full Self-Funding
SMPA argued that legacy liabilities at the 155-year-old port have constrained its ability to take over full dredging expenses until at least 2030. “Therefore, financial assistance from the government is required to be extended… for seven years from 2024-25 to 2030-31,” a source familiar with the proposal noted.
The PIB acknowledged that while the port’s financial health has improved—with net surplus turning positive and revenues rising from land monetisation—the burden of outstanding liabilities still necessitates transitional government support. It noted that the port is progressing toward self-sustainability following the Cabinet’s 2013 decision to support dredging in tandem with productivity-linked reforms.
KPIs for Higher Efficiency
While approving the subsidy, the PIB directed the Ministry to link the assistance to defined Key Performance Indicators (KPIs) to ensure improved operational efficiency at the country’s only major riverine port in Eastern India. The proposal will now be sent for final approval by the Union Cabinet.
A Challenging Riverine Channel
SMPA oversees one of the world’s longest and most unpredictable navigational channels—232 km along the Hooghly River—requiring continuous dredging to maintain safe draft levels. The port spends ₹300–500 crore annually on dredging. Depth limitations force vessels to partially offload cargo at neighbouring ports before calling at Kolkata or Haldia, leading to “dead freight” losses and additional sailing time.
The port authority has stressed that river dredging in major maritime economies—including Europe, the US and Singapore—is financed by federal governments, and that similar support is essential for maintaining competitiveness in Kolkata and Haldia.
Between 1992 and 2013, the Centre fully funded the port’s maintenance dredging. Since 2013, government support has been gradually reduced and will account for about 58% in FY25.
PPP Push for Modernisation
SMPA is undertaking a major modernisation of cargo handling operations through Public-Private Partnership (PPP) projects, aiming to mechanise 75% of berths and 85% of cargo handling by 2030. The PIB agreed that continued dredging support is crucial for the success of these initiatives.
Strategically located, the port is linked to National Waterways 1 and 2, the India-Bangladesh Protocol Route, and serves the landlocked countries of Nepal and Bhutan. SMPA currently has a cargo-handling capacity of 87.5 million tonnes, which is expected to rise to 115 million tonnes by 2030.
