Development of

National
Waterways
September 2022
MitKat Advisory Services Pvt. Ltd.

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Table of Contents
INTRODUCTION.................................................................................................................. 3

NATIONAL WATERWAYS PROJECT .................................................................................... 4

ADVANTAGES OF INLAND WATERWAYS TRANSPORT ........................................................ 5

IMPACT ON ECONOMY……………………………………………………………………………………………………5

LOGISTICS COST………………………………………………………………………………………………………….5

CONNECTIVITY TO NORTH-EAST…………………………………………………………………………………5

EMPLOYMENT AND INFRASTRUCTURE DEVELOPMENT………………………………………………6

DIVERGENCE FROM ROAD AND RAIL INVESTMENT…………………………………………………….6

NEW MARKETS…………………………………………………………………………………………………………...7

IMPACT ANALYSIS…………………………………………………………………………………………………………..7

CHALLENGES…………………………………………………………………………………………………………………..8

CONCLUSION………………………………………………………………………………………………………............9

AUTHOR'S PROFILE……………………………………………………………………………………………………….10

CONTACT US…………………………………………………………………………………………………………………11

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Introduction
India, since 2014, has witnessed a renewed policy orientation towards developing Inland
Waterways Transport (IWT) as the world faces the fuel crisis and environmental
degradation. Multiple factors, including lack of political will, displacement issues, and
seasonal rivers, have frequently posed a challenge in realizing India’s dream of flourishing
its IWT system. In comparison, China conducts 47 percent of its trade through waterways,
Europe 40 percent, and Bangladesh conducts 35 percent. India’s trade through waterways
is relatively less as compared to these nations.

Source: World Bank

The introduction of the National Waterways Act of 2016, has opened up avenues for the
growth of inland waterways as 111 rivers or river stretches, creeks, and estuaries have
been declared as national waterways. The increased focus on developing a network of
national waterways will help in freight & passenger movement at a lower cost than rail

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and road transport while also exerting a lesser environmental pressure due to it being
relatively more eco-friendly.

National Waterways Project

Earlier, the cargo movement of tea, jute, and spices in the eastern sector, connected to
the river port in Kolkata, was among the major commercial freight movement. The IWT
constituted a major transportation medium for the Mughals and East India Company;
however, with time, the IWTs lost their prominence due to a lack of policy incentives and
non-availability of infrastructure.

The National Waterways Project (NWP) aims to revitalize the IWT, an economical, fuel-
efficient, and environment-friendly mode of transport. The inland waterways range from
navigation in rivers, lakes, and other water bodies by smaller vessels connecting places
not far from each other to large-scale commercial shipping. The primary aim of the NWP
is to create such commercial shipping and navigation systems.

Source: The Indian Express

The project envisions delivering cargo and passenger traffic, including tourism and cruise,
offering connectivity at a lower per-unit cost, and making transportation more efficient
and eco-friendly. The investment in inland waterways transport is expected to have a
positive impact on the Indian economy.

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Advantages of Inland Waterways Transport
Many developed countries in the Western hemisphere utilize their inland waterways
network to move the cargo. Due to its increasing traffic congestion and pollution, India
needs to invest in inland waterways as an alternative to rail and road transport. An
extensive and well-coordinated inland waterways network will help bring a significant
change in the logistics scenario of the country. Inland Waterways can be promoted as a
primary mode of transportation for shorter distances as it will de-congest the roads by
facilitating alternate cargo routes and working on a single-time investment.

Impact on Economy
Logistics Cost
The principal reason behind the promotion of IWT as an alternative is its positive impact
on the reduction of overall logistics costs. As per reports, one litre of fuel will move 24
tons through one kilometre on the road, 95 kilometres on the rail, and 215 kilometres on
IWT. Similarly, the transportation cost is about 25 paise per kilometre in compared to INR
1.50 per kilometre and INR 2.50 per kilometre by rail and road, respectively.

Source: World Bank

Connectivity with North-East

The development of inland waterways at a national level will also help the North-Eastern
Region (NER) connect with other parts of India. The connectivity will lead to enhanced

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trade and people-to-people contact. In its National Waterways Act 2016, the government
listed 20 NWs in the NER, out of which NW2, constructed on the River Brahmaputra
between Dhubri (Bangladesh border), and Sadiya (Assam), is already operational, and NW
16 (Barak River) is under construction along with other 18 NWs. Through developing IWTs
in the NER, the government aims to connect the region with its neighbours, which will
boost the regional economy.

Source: Economic Times

Employment and Infrastructure Development

The development of National Waterways is an ambitious project meant to improve how
India transports its cargo. In addition to cargo transportation, the project also envisions
contributing to community development in terms of employment opportunities,
infrastructural development, and connectivity. Under the Integrated National Waterways
Transportation Grid, the government plans to link many national waterways to each
other, along with roads, railways, and major ports. Such infrastructural development will
also increase investment opportunities from domestic and international investors.

Divergence from road and rail investment

The budget allocation for the Ministry of Road Transport and Highways has risen 68.5
percent to INR 1.99 trillion, whereas the Ministry of Railway’s budget allocation stands at
INR 1.18 trillion in FY22. Both road and rail infrastructure receive investments from the
government and private entities. However, with the development of national waterways,

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the significant investment that India needs to build its roads or highways infrastructure
network can be conserved through increased utilisation of the waterways.

New Markets
With the opening up of new IWT systems, the movement of goods and passengers is also
expected to rise, which will necessitate setting up a large number of loading or unloading
points. These points will then allow opening large and accessible hinterland for the supply
of goods which can be transported at low cost. The hinterlands will consequently lead to
the formation of new markets. Therefore, the development of national waterways allow
establishing in the northeastern as well as Bangladesh and Myanmar’s markets.

Impact Analysis
The IWTs have been accorded renewed attention since 2014. To revive the prominence
and usage of IWTs, the government introduced Project Sagarmala to revitalize India’s port
infrastructure development along the coastline. It has 150 initiatives with a total budget
of USD 5.9 billion, covering four areas- port modernization, port connectivity, port-led
industrialization, and coastal community development.

Another government initiative- Jal Marg Vikas Project, is for capacity augmentation of
navigation on National Waterway 1 in collaboration with the World Bank. In addition, the
enactment of the National Waterways Act, 2016; no service tax; and the rewriting of the
Indian Vessel Act, 1970 have changed the governmental approach towards IWTs.

The development of national waterways is an elaborate project with large investments,

opportunity costs, and trade-offs. It has positive and negative impacts on the economy,
community, environment, and marine biodiversity. The major emphasis is on the low-cost
and environment-friendly nature of the IWT. The Memorandum of Understanding (MoU)
between the Inland Waterways Authority of India (IWAI) and M/s Maruti Suzuki India Ltd.
stipulates the transportation of cars between Varanasi and Kolkata. The maiden trial took
off in August 2016, wherein 200 assembled Maruti cars, and 1,000 tons of building
material were transported between the two aforementioned port cities. The IWTs are
also being used for tourism, especially the NW2 on the Brahmaputra River, connecting
Dhubri on the Bangladesh border to Sadiya in Assam.

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Since the announcement of NWP, the country has seen a recent increase in Public-Private
partnerships in the waterways sector. The investments are in dredging, construction,
operation, and maintenance of barges, terminals, storage facilities, navigation, and
tourism. All of the initiatives at the public and private levels resulted in cargo movement
of 108.79 million metric tons (MMT) by inland waterways transport through NWs in 2021-
2022. However, due to the fear of privatisation of ports, the union workers are protesting
in major port cities, such as Kochi, Vishakhapatnam, Chennai, and Mumbai. These
protests signify the dangers of transportation and supply chain disruptions.

The National Waterways Project also presents a chance for Mumbai to lead as several
new water transport projects have been initiated, such as the Coastal Road Project,
Mumbai Trains Harbour Link, Thane-Borivali creek connection, etc. These projects will
help the industry and the city’s infrastructural development, becoming a prototype for
other cities. Amid the fuel crisis due to geopolitical tension, waterways have become an
essential method to resolve the issues. Therefore, the prospects of national waterways
are bright as these will become the new highways of the future.

On the other hand, developing waterways also brings in environmental impact, which
cannot be sidelined. A waterway is only successful when it has a channel of the depth of
two to three metres with widths of 45 to 60 metres. To get the desired depth, many
interventions are undertaken, such as constructing barrages to raise water levels, river
straightening to remove bends, bank protection works, and dredging. These interventions
have adverse consequences on the river ecosystem.

Challenges
• Nature of rivers- Most rivers are seasonal and lack a depth of two metres, which is
a prerequisite for IWT.
• Infrastructural- Dangers of displacement due to intensive dredging and
maintenance.

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 • Centre-State divide- uneven distribution of executive powers under the Union,
State, and Concurrent List.

Source: World Bank

Conclusion
Therefore, National Waterways Project portrays a future dedicated to developing Inland
Waterways Transport. The waterways have long been not utilized to their full potential
and need serious revision and funding. To make the process more conducive, the
government has collaborated with the World Bank to develop the NW1. The coming of
waterways as a primary mode of transportation is believed to be beneficial to both
commuters and the supply chain as it presents an economical and greener alternative to
over-pressurized road and rail transport networks. However, the authorities must be
mindful of the ongoing bottlenecks as development cannot occur without sustainable
development.

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Author Profile

Shivam Tiwary
Management Trainee

Shivam Tiwary is pursuing Masters in International Studies from CHRIST (Deemed to be

University). He is working as a Management Trainee in the Predictive Risk Intelligence
Team at MitKat Advisory Services.

Mentor

Madhura Chanda
Geopolitical Intelligence Analyst

Madhura Chanda is a Geopolitical Intelligence Analyst as a part of the PRI team at

MitKat Advisory. She holds a Master's degree in International Relations with focus in
Indo Pacific and is interested in the foreign policy behaviour of the APAC region.

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