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Union Budget: Inland water transport in Uttar Pradesh gets big push, Varanasi gains
Eastern Uttar Pradesh poised to emerge as a major corridor for river-based trade and passenger movement
The Union Budget 2026-27 has given a major push to inland water transport with the announcement of ship manufacturing and repair centres at Varanasi and Patna, a move expected to transform eastern Uttar Pradesh into a key hub of river-based logistics and mobility.
Presenting the budget in Parliament, finance minister Nirmala Sitharaman said the government would develop a complete ecosystem to support vessels operating on inland waterways, along with plans to operationalise 20 new national waterways over the next five years to promote cost-effective and environmentally sustainable transport.
The selection of Varanasi, Prime Minister Narendra Modi’s Lok Sabha constituency, is being seen as strategically significant as the city lies on National Waterway-1 along the Ganga, one of India’s most crucial inland shipping corridors connecting the hinterland with eastern ports.
The proposed hub is expected to provide maintenance, repair and manufacturing support for cargo vessels, ferries and passenger boats, improving operational efficiency and reducing turnaround time.
The budget announcement builds on groundwork already laid in the state.
In late November last year, the Uttar Pradesh government signed a memorandum of understanding with the Inland Waterways Authority of India (IWAI) to strengthen inland water transport infrastructure and promote river tourism in the state.
The agreement envisaged developing Varanasi as a central node for vessel operations, logistics services and allied infrastructure along the Ganga.
UP has also planned operating water metro in several cities including Lucknow, Varanasi and Prayagraj. Kochi Water Metro is conducting a feasibility study of the same.
Out of the 111 National Waterways declared by the government of India, several pass through Uttar Pradesh, including the Ganga, Yamuna, Ghaghra, Betwa, Chambal, Gandak, Gomti and Ken rivers. The Inland Waterway Authority of Uttar Pradesh has already been set up in the state.
Officials said the new ship manufacturing and repair ecosystem would complement these initiatives by creating local capacity for vessel servicing and boosting confidence among private operators to expand river transport services.
“The proposed Varanasi hub could generate significant employment in marine engineering, operations, training and support services, while also benefiting small businesses linked to logistics and tourism,” deputy transport commissioner, Radhey Shyam said. Currently, he said, ships were manufactured and repaired in distant cities like Mumbai and Kolkata.
The government’s broader focus on multimodal connectivity — integrating waterways with road and rail networks is expected to help decongest highways, cut logistics costs for bulk commodities such as agricultural produce, construction material and fuel, and encourage greener transport options.
With the Centre placing renewed emphasis on inland waterways in Budget 2026-27, eastern Uttar Pradesh appears poised to emerge as a major corridor for river-based trade and passenger movement, strengthening the region’s economic prospects in the years ahead.
Welcoming the announcement, Varanasi divisional commissioner S Rajalingam said, “Establishing a ship maintenance facility in Varanasi on National Waterway-1 will support cargo movement. This will strengthen logistics, river-based transport, and generate skilled employment in the region. It will create a ship repair ecosystem for the vessels in Varanasi. Also, the work on the Ship Repairing Facility being set up at Varanasi will catch pace.”
Varanasi already has a Multi Modal Terminal that was inaugurated by Modi in November 2018.
On September 20, 2025, the prime minister laid the foundation of two projects worth ₹525 crore for Varanasi and its adjoining areas virtually, and announced three more projects worth ₹1150 crore that will benefit his parliamentary constituency.
The projects for which the foundation stone was laid were: Ship Repairing Facility Centre worth ₹325 crore and Multi-Modal Logistics Park (Freight Village) worth ₹200 crore.
According to IWAI, cargo movement on National Waterway-1 has witnessed 152.75% growth in 2023-24 (12.76 MMT) from 2014-15 (5.05 MMT).
(With inputs from Varanasi)
