Centre bets on inland waterways, coastal shipping to drive logistics efficiency The Union Budget aims to enhance logistics efficiency by boosting inland waterways and coastal shipping, targeting a significant modal shift. By T E Raja Simhan

 

The 2026-27 Union Budget has provided a major boost to the Inland Waterways Transport (IWT), with 20 new national waterways to be operationalised over the next five years.

Despite being economical and cost effective, only 2-3 per cent of the country’s overall freight movement is through IWT. Road transport has a lion’s share of nearly 65 per cent and followed by rail at 26 per cent, said sources.

Freight corridors

Finance Minister Nirmala Sitharaman in her Budget speech to promote environmentally sustainable movement of cargo, proposed establishing new dedicated freight corridors connecting Dankuni in the East to Surat in the West. Further, starting with NW-5 in Odisha to connect mineral rich areas of Talcher and Angul and industrial centres like Kalinga Nagar to the Ports of Paradeep and Dhamra.

A coastal cargo promotion scheme will be launched to incentivise a modal shift from rail and road, to increase the share of inland waterways and coastal shipping from 6 per cent to 12 per cent by 2047.

Coupled with new dedicated freight corridors and incentives for coastal and inland shipping, the Budget is clearly targeting logistics efficiency and modal shift. The challenge now lies in execution — particularly in translating ship repair hubs, container manufacturing and coastal cargo incentives into a competitive and viable domestic maritime ecosystem, Jagannarayan Padmanabhan, Senior Director & Global Head, Consulting, Crisil Intelligence on Ports and Shipping.

Coastal shipping

According to Suresh Kumar, MD, Allcargo Terminals Ltd, as inland waterways and coastal shipping gain scale, locally manufactured containers — a major push given in the Budget — can support smoother cargo movement across road, rail and water, improving modal efficiency and lowering overall logistics costs.

India has about 14,500 km of navigable waterways which consist of rivers, canals, backwaters, creeks, etc. About 145.5 million tonnes (MMT) of cargo is being moved annually by IWT, a fuel-efficient and environment-friendly mode.

Its operations are currently restricted to a few stretches in the Ganga-Bhagirathi-Hooghly rivers, the Brahmaputra, the Barak river, the rivers in Goa, the backwaters in Kerala, inland waters in Mumbai and the deltaic regions of the Godavari-Krishna rivers.

Besides these organised operations by mechanised vessels, country boats of various capacities also operate in various rivers and canals. A substantial quantity of cargo and passengers are transported in this unorganised sector as well, according to information in IWT website.