E-Paper
Steering India’s inland waterways and coastal shipping sector
This article is authored by Ashish Suman, partner, JSA.
Aligned with the government’s Maritime Amrit Kaal Vision 2047, the Union Budget of 2026 provides further impetus to expand inland waterways sectors’ potential to enhance sustainability, lower logistics costs, and strengthen India’s transport framework. The proposal to operationalisation 20 new National Waterways (NW) will provide stimulus not only to the logistics sector but also to other sectors such as manufacturing. The NW-5 in Odisha connecting mineral-rich regions and industrial hubs such as Talcher, Angul, and Kalinga Nagar to key ports, including Paradip and Dhamra is indeed a welcome step.
The government has recognised that there is a need to diversify India’s freight modal mix to reduce dependency on roads and railways. The government has been trying to reduce burden of freight traffic from roadways and railways, the announcement of the Coastal Cargo Promotion Scheme may incentivise coastal shipping but the interstate last mile connectivity and infrastructure enhancement will have to be navigated before the dream is to turn to reality. At present inland waterways and coastal shipping only carries 6% of India’s freight traffic with the aim of the government being to increase this to 12% by 2047. This is necessary as part of India’s goal to decarbonise its economy and achieve net zero by 2070 with it being recognised that transportation of freight through waterways and maritime sector is environmentally sustainable, as compared to roads and railways, and will go a long way in decarbonising the logistics sector.
While the overall policy prescriptions is a step in the right direction, but these waters are to be navigated with cautious. Earlier government initiative to bring in PPP (VGF) saw limited private sector participation and was not operationalised. To enhance participation and brining in private capital, the proposed Coastal Cargo Promotion Scheme need to ensure that there are adequate incentives for the private sector participation, including ensuring that the coastal shipping projects and routes are financially viable and bankable as well as ensuring that the risk sharing framework in the concession agreements is framed in a manner which incentivizes private sector participation. It is expected that the detailed modalities and guidelines of the Coastal Cargo Promotion Scheme will be announced in the coming financial year and it will be interesting to observe whether the scheme, in the medium and long term, will help in unlocking investments in this sector.
In terms of usage of inland waterways, the outlook is more positive, as highlighted in the Economic Survey. As on November 2025, 32 national waterways (out of 111 identified under the Inland Waterways Act, 2016) were operational, spanning 5,155 km, with cargo movement through IWT increasing from 18 million metric tonnes in 2013-14 to 146 million metric tonnes in 2024-25, reflecting strong multimodal integration and the impact of sectoral reforms. However, certain hindrances have to be ironed in order for this sector to grow seamlessly over the coming years.
The first mile/last mile connectivity remains a key concern, as waterways needs to be integrated seamlessly with road and rail networks to offer competitive door-to-door freight delivery. Further, as seen in other sectors, delays in land acquisition for inland waterway terminals (IWT) and supporting infrastructure can slow project implementation and undermine the economic potential of the sector. Greater prioritisation by state governments in allocating land to Terminal Development Operators (TDOs), including through concessional allotments, could play a decisive role in accelerating project development.
Along with land, the other significant issue which needs to be addressed is adequate maintenance of the national waterways with some of these waterways facing challenges of navigability during certain times of the year. This would include regular dredging, maintenance of the river banks as well as having adequate navigation aids. In order to ensure that there is adequate maintenance of these waterways, the government may consider taking the assistance of private players who have domain knowledge and personnel with requisite expertise. In the long run, there is a need to ensure that India provides skill-based training to its youth for maintaining these waterways. The Budget recognises this requirement and has proposed the establishment of Training Institutes for development of the required manpower for these waterways.
From a regulatory perspective, inland waterways have historically faced fragmented governance. Although, the Classification of Inland Waterways Regulations, 2022 required prior clearance from IWAI for construction of structures across national waterways, the absence of a detailed approval mechanism created uncertainty for private participants. Addressing this gap, the National Waterways (Construction of Jetties/Terminals) Regulations, 2025, formulated by IWAI, provide a structured framework for development and operation of inland waterway terminals by private, public, and joint venture entities. The Regulations introduce a No Objection Certificate mechanism applicable to both new and existing terminals, allowing permanent terminals to operate for the lifetime of the facility and temporary terminals for an initial 5-year term with extensions.
Overall, the Union Budget signals governments intent to be more integrated and pragmatic to inland and coastal shipping, combining infrastructure expansion and targeted incentives. The extent to which these measures translate into sustained private investment and modal shift will ultimately depend on effective implementation, coordinated Centre-State action, and continued focus on reducing project risk across the value chain. These will ensure that investment in Inland waterways is not considered by investor as sailing in choppy waters.
This article is authored by Ashish Suman, partner, JSA.
