COASTAL SHIPPING IN INDIA- COST AND REVENUE, CARGO

POTENTIAL,

INFRASTRUCTURE FACILITIES, GOVERNMENT REGULATIONS A PERSPECTIVE

A THESIS SUBMITTED IN PARTIAL- FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION IN SHIPPING AND LOGISTICS MANAGEMENT BY HARIANANDHAKUMAR.M.S Enrolment No: 9126100167

SCHOOL OF MANAGEMENT STUDIES TAMIL NADU OPEN UNIVERSITY DOTE CAMPUS, GUINDY, CHENNAI- 600 025.

DECLARATION CERTIFICATE

This is to certify that the work presented in the dissertation entitled COASTAL SHIPPING IN INDIA- COST AND REVENUE, CARGO POTENTIAL, INFRASTRUCTURE FACILITIES, GOVERNMENT REGULATIONS - A PERSPECTIVE in partial fulfillment of the requirement for the award of Degree of Master in Business Administration, in shipping and logistics Management from TAMIL NADU OPEN UNIVERSITY,CHENNAI. Is an authentic work carried out under my supervision. To the best of my knowledge, the content of this dissertation does not form a basis for the award of any previous Degree to anyone else.

Date

(Mr. _____________________) (Project Guide) Department of Management Studies

CERTFICATE OF APPROVAL

The foregoing dissertation entitled, COASTAL SHIPPING IN INDIA- COST AND REVENUE,CARGO POTENTIAL, INFRASTRUCTURE FACILITIES, GOVERNMENT REGULATIONS - A PERSPECTIVE is hereby approved as a creditable study of research topic and has been presented in a satisfactory manner to warrant its acceptance as prerequisite to the degree for which it was submitted. It is understood that by this approval, the undersigned do not necessarily endorse any Conclusion drawn or opinion expressed therein, but approve the dissertation for the purpose for which it is submitted.

(Internal Examiner)

(External Examiner)

Head of the Department Department of Management Studies

ACKNOWLEDGEMENT

I would like to express my gratitude to our respected Chairman Mr. J. Ramchandran and our Vice Chancellor Capt. S. Bharadwaj for their kind encouragement. I am immensely thankful to my respected guide Mr. J.P.Thiagarajan for his guidance, support and encouragement rendered to me throughout the course of study. I also wish to address special thanks to Mr. N.Srinivasan, Dean Management Studies and Mr. J.P.Thiagarajan Head of Department Management Studies, AMET University who have been a constant source of inspiration and Motivation. My special thanks and admiration should be submitted to MR. JEBAKUMAR general manager (APL Tuticorin), without his help this study could not be completed in time. I am grateful for the time he spent with me and the valid information he shared with me. I would also like to thank everyone who took their time and contributed to this study by sharing their knowledge during their work.

CONTENTS

SR. NO PARTICULARS
I II III ABSTRACT INTRODUCTION TO COASTAL SHIPPING RESEARCH METHODOLOGY A. RESEARCH OBJECTIVES B. RESEARCH DESIGN C. SOURCES OF DATA D. LIMITATIONS OF THE STUDY COST AND REVENUE IV COST A. CAPITAL EXPENDITURE CAPEX B. DAILY COSTS C. TYPICAL ARRANGEMENTS OF COSTS D. TECHNICAL COSTS E. SUPPLIES COSTS F. INSURANCE COSTS G. IMPORT DUTIES H. TAXATION

PAGE NO
1 2-3 4-7

9- 23

I. SERVICE TAX J. ADMINISTRATION COSTS K. VOYAGE COSTS V VI REVENUE CARGO POTENTIAL FOR COASTAL SHIPPING IN INDIA A. COMMODITY MOVED BY COASTAL SHIPPING B. CARGO PROFILE C. MAGNITUDE OF POL MOVEMENT BY COASTAL SHIPPING D. LIQUEFIED NATURAL GAS (LNG) E. COAL F. CONTAINER TRAFFIC G. COMMODITY ANALYSIS VII INFRASTRUCTURE FACILITIES A. BERTH B. CARGO HANDLING EQUIPMENTS C. INLAND CONNECTIVITY I. II. III. ROAD RAILWAYS INLAND WATERWAYS 50-93 24 25-49

D. STORAGE FACILITIES

VIII

GOVERNMENT G\REGULATIONS A. GOVERNMENT POLICIES REGARDING COASTAL SHIPPING B. GOVERNMENT REGLATIONS I. II. III. IV. V. VESSEL CONVERSION MANNING REGULATIONS INDIAN REGISTER OF SHIPS CLASSIFICATION SOCIETIES CABOTAGE LAW

94-112

IX X XI XII

FINDINGS SUGGESTIONS CONCLUSION BIBLIOGRAPHY

113 114-117 118-119 120

TABLES AND FIGURES

TABLES

Table 1: Responsibility for ordering Table 2: Cost of Coastal and Bonded Bunkers Table 3: Vessel charges Table 4: Berth hire charges Table 5: Rate of Shifting Charges Table 6: Rate for supply of water to shipping Table 7: Cargo profile Table 8: Origin - Destination Pairs of POL Products Coastal Movement Table 9: Origin - Destination Pairs of Crude Oil Coastal Movement Table 10: Details of Crude Oil Pipelines Operating in India Table 11: Estimated Demand for POL Products Table 12: Coastal Shipping Tonnage as on 31st December 2008 Table 13: Coastal Tonnage as on 31-Dec-2009 Table 14: Traffic Estimates by Coastal shipping in million tonnes Table 15: Census of Cargo Handling Equipment Table 16: Container Handling Facilities

Table 17: Fertilizer Handling Facilities Table 18: Iron Ore Handling Facilities Table 19: Liquid Bulk Handling Facilities Table 20: Road Networks Table 21: Road Lanes Table 22: Storage Facilities in major ports in India Table 23: Existing Warehousing Capacity

FIGURES

Figure 1: Inland waterways in India Figure 2: National Waterway 1 Figure 3: IWT terminal at Patna, NW-1 Figure 4: National Waterway 2 Figure 5: IWT terminal at Pandu, NW-2 Figure 6: National Waterway 3 Figure 7: National Waterway 4 Figure 8: National Waterway 5

I. ABSTRACT Coastal shipping is an extremely economical, environmentally friendly, gainful and energy proficient mode of transport, especially for bulk transport, and has the potential to carry a large part of the traffic currently being served by rail and road. The development of coastal shipping has been low despite the fact that the entire coastal trade is reserved for Indian vessels. Low productivity at major ports, paucity of ship repairs services and the relative under development of minor ports affect coastal shipping operations adversely. Further, ship owners are reluctant to acquire dedicated coastal vessels due to various impediments such as complex customs procedures, time-consuming port clearance, high manning scales etc.

In order to make the sector more effective, there is a need to create adequate infrastructure facilities, simplify customs procedures and provide the necessary fiscal incentives for the development of the sector. It would also necessary to synchronize the development of minor ports with the needs of coastal shipping. It should therefore be accorded a status at par with other domestic modes of transport, especially with regard to customs and other procedures etc., which are hampering it from realizing its full potential. To encourage coastal shipping, measure has already been taken to grant priority berthing to coastal ships without priority berthing charges. It has also been decided to exempt coastal shipping and sailing vessels from the payment of light dues.

Coastal shipping involves no investment in line haul capacity except in navigational aids and appropriate terminal facilities. Considering the vast coastline and severe congestion faced by the land modes of transport, coastal shipping offers an effective alternative with increased energy efficiency and lower costs.

II. INTRODUCTION TO COASTAL SHIPPING What is coastal shipping? The movement of cargo by sea between ports in India. Not including the non-contiguous island trades.

India has a coastline of 7500 km comprising of 13 major ports, 187 non major ports and around 14,500 km of navigable Waterways which needs connectivity. The connectivity can only be possible if Coastal Shipping is vibrant and there are enough number of Ships to cater to the needs of the Indian Coast. Coastal Shipping should be granted infrastructure status so that applicable benefits accorded to infrastructure industries to be extended to Coastal Shipping. Implementation of the Centrally Sponsored Scheme (CSS) proposed by the Government for Coastal Shipping & Port infrastructural development may be expedited. Initially, under the CSS the development of seven Minor (non-major) ports has been proposed at an estimated total cost of around Rs.1,500 crore for which a grant-in-aid of Rs.500 crore (33%) would be provided by the Central Government through Government Budgetary Support with the remaining 67% to be contributed by the respective State Governments. States with non-functional ports to expedite development of such ports and Central Government to approve/provide requisite funds for basic infrastructure development. Also, draft of Minor Ports to be increased to minimum metres. Create Dry Docks & Ship Repair Yards at existing / new Non-Major Ports to accommodate smaller coastal vessels by providing draft of around 4 to 5 metres. Needs allocation of requisite land and water frontage exclusively ear-marked for this purpose. Enhanced / adequate connectivity for ports with Rail /Road transport. All Non-Major Ports to be also adequately connected to highways with four lane. The connectivity can only be possible if Coastal Shipping / IWT is vibrant and there are enough number of Ships to cater to the needs of the Indian Coast.

Coastal Shipping can ease traffic congestions and arrest loss of human lives caused due to accidents, which occur quite frequently in road transport mode. Annual losses due to road accidents in the country are reported to be in the range of Rs.200 Rs.300 billion and the cost on account of accidents Rs.100 billion, together aggregating to Rs.300 Rs.400 billion annually. The human life lost on the Indian roads is in excess of one lakh and thousands of people get seriously injured due to road accidents.

Besides, Coastal shipping has comparatively lower emissions of harmful chemicals such as carbon dioxide compared to road / rail transport thereby considerably reducing pollution related ecological and health hazards and the consequential socio-economic costs. It has been observed that the Cargo vessels between 2000 to 8000 DWT cause 21 gms per ton km of Carbon dioxide emissions while heavy trucks cause 50 gms per ton km of carbon dioxide emissions.

Inspite of having so many advantages for moving Cargo by Coastal Vessels / IWT Vessels, we see hardly any improvement in number of Ships being constructed or being used for Indian Coast. The Coastal Shipping / IWT Owner faces numerous problems right from the time of building the Vessel, taking loan from the Financial Institutions, getting various permissions to run the vessels from government bodies, the high Tariff from Indian Port which makes Coastal Shipping non viable and not to speak on the frequent checks on the Vessels by Port State controls.

The land route, particularly along the Chennai and Vishakapatnam on the East Coast, is parallel to the coast, thereby providing the potential for diversion of rail / road cargo to the sea route. For this, there is a need to develop coastal shipping as a part of a multimodal transport system, by connecting the minor ports with the hinterland in a cost-effective manner. The level of facilities for cargo handling at these ports would depend on the extent of traffic. Even without equipment, the ports could still be served by vessels with appropriate equipment.

RESEARCH METHODOLOGY

III. RESEARCH METHODOLOGY Research is an art of scientific investigation. The advanced Learners Dictionary of current English lays down the meaning of research as A careful investigation or inquiry specially through search for new facts in any branch of knowledge. Research is an academic activity and as such the term should be used in a technical sense. According to Cliffor Woody Research comprises defining and redefining problems, Formulating hypothesis of suggested solutions; collecting, organizing and evaluating data, making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis.

A. RESEARCH OBJECTIVES To understand the overall process of Coastal Shipping To identify the cost and revenue of the Coastal Shipping To analyze the cargo potential of the Coastal Shipping in India To identify the coastal shipping efficiency with the help of improved infrastructure facilities. To understand the government regulations in India for coastal shipping.

B. RESEARCH DESIGN A research design is the arrangement for the collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. In fact, the research design is the conceptual structure within which research is conducted; it constitutes the blue print for the collection, measurement and analysis of data.

a. Type of research Type of research is exploratory. The objective of the exploratory research is the development of hypothesis rather than their testing. C. SOURCES OF DATA Sources of data can be classified into two types. They are Primary data Secondary data

a. Primary data The primary data are those, which are collected afresh and for the first time, and thus happen to be original in character. In this research primary data is collected through Personal interviews

b. Secondary data Secondary data means data that are readily available i.e., they refer to the data, which have already been collected and analyzed by someone else. In this research secondary data is mainly collected through

Reports prepared by research scholars Public records and statistics Reports and publications journals Books, Magazines and newspapers Internet

D. LIMITATIONS OF THE STUDY There were certain limitations to the research that the researcher has forced: Companies do not ready to share their information Lack of sufficient data The Time was the major constraint for the researcher in collecting the data.

COST AND REVENUE

IV.COST A. CAPITAL EXPENDITURE CAPEX

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. This type of outlay is made by companies to maintain or increase the scope of their operations. These expenditures can include everything from repairing a roof to building a brand new factory. The amount of capital expenditures a company is likely to have depends on the industry it occupies. Some of the most capital intensive industries include Shipping , oil, telecom and utilities.

In terms of accounting, an expense is considered to be a capital expenditure when the asset is a newly purchased capital asset or an investment that improves the useful life of an existing capital asset. If an expense is a capital expenditure, it needs to be capitalized; this requires the company to spread the cost of the expenditure over the useful life of the asset. If, however, the expense is one that maintains the asset at its current condition, the cost is deducted fully in the year of the expense.

Capital expenditure are capitalized as assets( investment ) , depreciated over economic life of a vessel. Only annual depreciation is charged to profit. Depreciation is an accounting entry and

does not involve any cash flow. Thus , the measurement of profit excludes some cash-flows such as capital expenditure and includes no-cash items such as depreciation.

B. DAILY COSTS

Crew Costs The term crew is used to describe all who sail in ships and where further definition is required , the terms officers and rating are used. The word voyage is used in the former sense as with the often heard expression he signed on for the voyage. The costs of the crew with only two principal exceptions: victualling , which is contained in the supplies of costs, and the costs of insuring the crew , contained in the insurance costs. Crew costs are based on three related factors: The manning scale prescribed for the ship The nationality or nationalities of the crew The conditions of service

C. TYPICAL ARRANGEMENTS OF COSTS

Wages Basic Pay Overtime Special work payments Leave Pay Bonuses Social security Superannuation Crew overlap

Travel Rail , Road , Ship and Air fares Accommodation and meals

 Travel subsistence Baggage costs

Other costs Medical examination Medical treatment Union payments Manning agents fees Cadet training Levies Training costs Standby pay Recruitment

D. TECHNICAL COSTS The technical departments costs cover all costs associated with the maintenance and repair of the ship to the state required by the owners. Generally , this means keeping the ship fully operational for the maximum number of days possible in the year, but it can also cover lay up, modification and the sale or purchase of the ship. If operational the level of maintenance and repair must conform to statutory and classification standards , but beyond this the level of maintenance and repair depends upon the company policy at that time. The economies of the shipping industry are all too often reflected in the level of repairs , maintenance and appearance as more or less money is available. Insufficient maintenance can be a short-sighted policy as the incidence of breakdowns will inevitably increase, but when cash is in short supply long-sight usually suffers from shortage also. Technical costs are , The costs of labour, skills , expertise Parts & Materials Tools and Equipment

E. SUPPLIES COSTS The term supplies covers all consumable stores including victualling ,i.e. food. It also covers semi-consumable items such as crockery , linen, soft furnishing , cooking utensils and hammers. Again the cost centres are grouped as much for convenience and functions as for magnitude of costs. Items of common usage such as paint , are now supplied to the ship bulk and the arrangement of the costs of such item into second category groups reflects the ship department which has responsibility for ordering for the ship as a whole. Thus paint is included in Marine Stores and normally ordered by the 1st mate for all departments in consultation with the chief engineer and chief steward , the only exception being dry dock paints which are usually arranged by the shore staff. The chief engineer orders all lubricating oils and greases and the chief steward does likewise with all cleaning materials.

COST GROUP Marine stores : Paints Ropes & wires Fresh Water Engine Stores: Greases Packing Lubricating oils Steward Stores: Cleaning materials Stationery Linen Cutlery Laundry and soft furnishing Victualling Recreational

RESPONSIBILITY FOR ORDERING 1st Mate

Chief Engineer

Chief Steward

Clothing Handling Charges Bar and Canteen Table 1: Responsibility for ordering

F. INSURANCE COSTS

The costs of marine, war and liability insurance as they apply to the running costs of ships. The insurance department of some shipping companies often lies outside the sphere of the ship manager , primarily because the nature of its work is both legal and financial and because decisions as to the amount of risk the company should take are usually made at a corporate level in view of the magnitude of the sums involved. Wherever the responsibility lies, the costs of the insurance are usually included in the running costs of the ship. Once the insurance and the ship management departments is essential, to ensure that whenever possible risks are avoided and that underwriters are promptly put on notice of possible claims and that legitimate claims under the policies are properly progressed.

Ship insurance is arranged to provide the ship owner with: Protection against physical loss or damage Protection against liability to third parties Protection against loss or interruption of earnings

Hull and Machinery insurance Just as the comprehensive coverage in auto insurance protects the insured individuals against physical damage to their cars, so does hull and machinery insurance provide physical damage protection for the ships or vessels and the machinery which is part of them. Since the soundness and normal operation of the hull and machinery of a ship is key to the safe transportation and delivery of any cargo or freight, it is highly advisable that ship owners purchase hull and machinery insurance.

Characteristics of Hull and Machinery Insurance Hull and machinery insurance is a type of ocean marine insurance, which protects the insured vessel or fleet against physical damage caused by a peril of the sea or other covered perils while the vessel is in transit over water. Although the most commonly insured vessels are those operating in the ocean or the sea, hull and machinery insurance can cover vessels that work in any kind of waterway, such as tugboats, barges, floating machinery, and even oil rigs which operate in coastal areas. Hull and machinery insurance policies can be written to cover a single vessel or the whole fleet of a ship owner. A deductible specified in the policy declarations is payable in the event of a hull and machinery insurance claim. A very important provision of hull and machinery insurance is the running down clause, also referred to as "the collision liability" provision. Just as its name suggests, it protects the owner of the craft against legal liability which may arise out of the owner's vessel colliding with another ship and damaging its property or cargo. It is very important to note that the collision liability clause does not apply to legal liability arising out of bodily injury or death, or property damage to fixed installations such as piers. If you wish to get insurance against this kind of liability, you will need to purchase a protection and indemnity coverage. Protection and indemnity insurance Protection and indemnity insurance, commonly known as P&I, is a club with similarity to a marine insurance against third party liabilities and expenses arising from owning ships or operating ships as principals.

G. IMPORT DUTIES

Coastal ships, unlike oceangoing vessels, have to pay duties on bunker oil. Bunker fuel oil for a coastal vessel is estimated to cost about 28% more than for an oceangoing vessel and around 36% for high flash high speed diesel.2 On the other hand, the diesel used in road transport is subsidized. Import duties on capital goods and spares also cast a burden on coastal vessels, which depend heavily on imported spares. Only if the ships are repaired at ship repair units registered with Director General Shipping, the imported spares are not subject to taxes. Given that coastal shipping is much more environment-friendly and fuel-efficient than any other mode of transport, there is a case for providing tax concessions both for fuels and spares.

Bunkers

Coastal ship owners are required to pay duty on oil bunkers unlike foreign going vessels. This results in significant increase in the cost of operations of these vessels, furthermore, when a foreign going vessel is converted into a coastal vessel it entails assessment of duties payable on bunkers remaining on board. This exercise is highly cumbersome and leads to further delays.

Analysis shows that while FO bunkers for coastal vessels cost 27.55 percent more than foreign going vessels and in the case of HFHSD bunkers cost rises to 36.35 percent.

Rs. MILLION TONNES FO HFHSD 15848.01 24806.20

PER COASTAL BONDED

DIFFERENCE

DIFFERENCE. %

12268.24 18192.61

3579.77 6613.59

27.55% 36.35%

Table 2: Cost of Coastal and Bonded Bunkers

This factor by itself does not put the coastal shipping at a disadvantage vis-to-vis road or rail, as fuel consumed by these modes is also dutiable. The cost of diesel to the road transport operator for example is more or less the same as it is for the coastal operator. Nevertheless there is a

strong case for duty exemption here because it is relatively more efficient and environment friendly. At any rate, this mode of transport in initial stages will require such props to translate its potential into reality.

Spares

Capital goods and Spares imported by shipping companies for their coastal vessels are dutiable as per the prevailing customs tariff. Imported as well as Indian made coastal vessels are heavily dependent on foreign made spares. The duty on imported spares however significantly increases the burden on coastal ship-owners. Ironically, while tax relief is available to the coastal shipowner on spares imported for repairing his vessel through a ship repair unit registered with the DG Shipping and also fitted by the same unit on board; tax is leviable for spares imported other than through this channel. The ship repair unit also charges a fee for its services typically up to 10 percent. All this effectively adds to a burden of around 15 percent of the landed cost of the spares estimated at around 3 percent of the total cost of operation.

Here to the burden on duty of import of spares merits review especially for coastal vessels at least built overseas.

H. TAXATION

Corporate Tax. Till recently, Indian shipping companies had to pay corporation tax at 36.75% or the minimum alternate tax at 7.5%. The industry also enjoyed benefits under Section 33 AC of Income Tax Act in which amounts transferred to a reserve specified under this section were not considered as a part of book profits. In the Union Budget 2004-5 tonnage tax has been adopted. Shipping companies with oceangoing vessels have the option of choosing between corporate tax and tonnage tax, but not coastal shipping companies. This would act as a further disincentive for investment in coastal tonnage; oceangoing vessels are also not entitled to tonnage tax on coastal movement. Tonnage tax should also be extended to coastal fleet. Personal Income Tax. Indian seafarers employed on foreign vessels or Indian vessels which ply outside Indian territorial

waters for more than 183 days in a year are entitled to nonresident status and pay no taxes. This does not apply to officers and seafarers on coastal ships.

Personal taxation

An Indian seafarer who is employed on a foreign vessels for 183 days or more in a year is entitled to non-resident status as per Section 6 of the Income Tax Act, 1961 and therefore eligible for income tax exemption.

The CBDT has however held that an Indian seafarer who is employed on foreign-going Indian vessels will be entitled to such status only if he spends 183 days or more outside Indian territorial waters.

In other words this means the amount of time spent at Indian ports or in Indian territorial waters will be reckoned as spent in India, neutralizing the claim of such a person for non-resident status. Therefore a seafarer employed on Indian coastal vessels is not entitled to count the period on towards non-resident status and the exemption from tax is not available to him.

I. SERVICE TAX Coastal shipping / Inland Waterways compared to foreign going has great disadvantage in running their vessels between various ports within the country. Ships pay Service tax at each and every port for the same cargo. For example if Container A moves from Bombay to Goa, then service tax is liable in Mumbai and when the Container is discharged in Goa, again the Port levies Service Tax at the time of discharging Cargo. We have to pay service tax twice.

J. ADMINISTRATION COSTS

Administration or Overheads are the names given to the costs of providing a base or central point from which the shipping company is run or administered. The function of the shipping companys administration is split into two distinct but related parts: the corporate , which directs the company as a whole and makes long term plans, and the ship management and operations which deal with the day to day management of costs. The cost of administration are usually allocated separately to corporate management, ship operations and ship management unless the company is very small when they may be considered as one cost. The prime functions of ship management administration are: Ship support Record keeping Accounting Communications The cost centres of administration can be grouped as follows: Staff Travel Entertainment Occupancy Communications Printing and Stationary Professional charges Other charges Depreciation and Amortisation

K. VOYAGE COSTS

Bunkers:

This is one of the major cost in operating a vessel. Bunker has to take from any port to complete the intended voyage. It may be that there remains on board the vessel at the commencement of the proposed voyage sufficient bunkers to reach the final discharge port . If this is the case , the estimator has merely to enter the total fuel-oil and diesel-oil required for the voyage . Fuel-oil for main engine Diesel-oil for ships auxiliaries
Port dues & charges Port charges are generally divided into three broad categories, general tariffs, facility tariffs and service tariffs, each of which are subdivided into a series of individual charges.

Table 3: Vessel charges Rate of Port Dues for vessels calling at the Port: A coastal vessel, which after paying 50% of the Port Dues as per provisions prescribed at 3 above, re-enters the port within the period of exemption of 30 days with cargo or passengers or in ballast shall be charged the difference viz., 50% of the Port Dues previously conceded.

A coastal vessel, which, after paying 75% of Port Dues as per provisions prescribed at 4 above, re-enters the port within the period of exemption of 30 days with cargo or passengers or in ballast, shall be charged the difference, viz., 25% of the Port Dues previously conceded.

(a) Conservancy and port dues It is common to establish a charge to recover the cost incurred in providing the facilities and services which are necessary to ensure the safe navigation of vessels within the area under the port's jurisdiction. It may include dredging, the provision of breakwaters, training walls, navigational aids and harbour surveillance facilities, but usually excludes the costs of providing pilot and tow services which are charged by separate tariffs. Conservancy is a port charge which is levied for the utilization of general nautical facilities in the approaches to the port (i.e., outside the port area), whereas port dues are levied for the services or utilization of facilities within the port, including channels, vessel traffic service, emergency fire services, breakwaters, pollution control and marine security. Port dues on ships are based on the type and size of the vessels. The charging units would be the carrying capacity of the vessel measured in gross registered tonnage (GRT), net registered tonnage (NRT) and deadweight tonnage (DWT) or some combination of length, beam and draft, and the unit of differentiation should be the type of the vessel. (b) Wharfage Wharfage is normally a cargo-related charge to recover the costs associated with the provision of the basic infrastructure and superstructure of the port to facilitate the movement of cargo from shipside to hinterland and vice versa. It includes the costs of providing roadways, railways, quays, parking areas, transit shed facilities, police surveillance etc. Similar to port dues, wharfage is charged by freight ton, metric ton, cubic metres or TEU, and its differentiation unit is the type of cargo. (c) Berth hire (dock or berth due)

This is a charge, normally related to the ship, to recover the costs associated with the berthing of the vessel and for the use of the berth for a stated period of time. It may include expenditure on the provision, maintenance and operation of docks, maintenance of dredged depths alongside and in the dock basin, fendering, provision of quays and facilities provided on the quay apron. The charging unit of the berth due is meter-hours, computed as the length of the vessel multiplied by the hours that the vessel is at the berth. The unit of differentiation distinguishes among the berths by their characteristics, such as alongside depth, back-up area and cargo handling capacities.

Table 4: Berth hire charges

(d) Transit storage This is the charge to recover the costs of the storage of goods in transit sheds or areas. The temporary storage rates are usually set to minimize cargo dwell time and maximize throughput. The charging unit is the amount of storage occupied multiplied by the period of storage measured in days. The storage can be differentiated based on the dwell time so as to charge higher rates for an extended period of storage. Separate tariffs can also be used to distinguish between open and closed storage and among different types of cargoes. (e) Pilotage Pilotage arises in two areas: the seaway gaining access to the river estuary and the port area itself. In many instances, the pilot service is compulsory. The pilotage may be based on the GRT of the vessel or a charge per ship. In general, as the cost of providing pilot service does not vary for different sizes of vessels, it is appropriate to charge pilotage simply based on the vessel's port call. However, it can be differentiated by the location where the pilotage starts and ends. (f) Towage

This service is usually optional. Occasionally, the towage tariff is included in another charge such as pilotage. Towage is usually based either on the characteristics of the ship or the tugs performing the operation. Towing costs increase with the size of the tugboat used and the time of use. Therefore, the common practice is to charge a towage per hour and to differentiate based on the size of the tugboat used. However, in some cases it is charged as a fixed rate irrespective of the time taken for the operation and differentiated by the vessel's type and size.

(g) Mooring/unmooring (berthing/unberthing) This is a specific tariff applied for berthing/unberthing and mooring operations. This tariff is charged simply by the vessel movement, but can be differentiated by the vessel's size measured in GRT, NRT or some combination of length, beam, and draft

(h) Stevedoring Stevedoring costs should be directly related to the costs involved in handling commodities. Stevedoring companies in many ports are characterized by the high level of variable costs, for example, labour and a comparatively low level of fixed costs such as mobile plant, buildings. Therefore, in stevedoring operations the marginal costs and average costs may be identical. The stevedoring charge is usually levied per freight ton, metric ton, cubic metres or TEU of cargoes. Stevedoring firms often reserve the right to calculate the charge on the volume or weight of the cargoes. It is common for all cargoes to be divided into groups according to various criteria and a uniform rate applied to each group. (i) Warehousing In most ports, there is a free period during which no charge is made for storage. Warehousing charges apply to goods that need to remain longer in the port and are, therefore, transported to special premises reserved for that purpose.

After the free period has expired, the tariff usually takes account of the length of stay of the goods in the storage place. In some cases, this charge per unit of time, usually the day, remains constant, regardless of how long cargo remains in storage after the given free period. However, in many cases, the charge per unit of time increases with the length of time spent in storage in order to discourage any abusive lengthy storage. This charge can be differentiated by type of storage, such as open, closed or frozen storage and by different types of cargo. (j) Other tariffs In addition to these specific tariffs, some ports levy other tariffs for services to the ship or to the cargo. These services may include fuel, water and electricity supply, labour supply, rent of equipment and cargo processing, such as weighing, marking and repacking.

Table 5: Rate of Shifting Charges

Table 6: Rate for supply of water to shipping

k) Transshipment Charges: The Coastal Vessels, which brings cargo from minor ports to major ports for transshipment or to export, the ports charge wharfage twice. That means when the Cargo is discharged by Coastal Vessels, wharfage is applicable and when the same Cargo is again loaded for final destination, Port levies wharfage again. Hence we suggest that every Major / Minor Port must have Transshipment charges for all Cargo and not only for Containers which are existing in some of the Ports. L) Commissions It is customary to express the remuneration for the brokers time and efforts in negotiating and arranging the contract as a certain percentage of the money earned by the ship owner. In marine insurance , the broker is generally paid a commission by the underwriter although the assured is the brokers client and the services are for the client. V. REVENUE Revenue can be classified into two methods based on the operation ,

In Voyage charter Freight This means the price payable to the carrier for carrying cargo in a good condition and delivery to the owner of an interest in the cargo. The word refers to many other issues related to chartering, such as freight taxes, freight prepaid, etc. The payment for the consecutive voyages or contracts of affreightment. Even in the liner trades the price is called freight although here the list of freight rates are termed a Tariff.

In Time charter Hire In a time charter the charterer is obliged to pay hire for the vessel in the agreed manner. The charter hire per calendar month can be based on the vessels total deadweight carrying capacity. This is the deadweight capacity on the vessels summer loadline, irrespective whether the ship may be loaded down to her winter or summer loadline at the time of fixture on time charter. The quantity of cargo carried has no bearing whether upon the charter hire. It is entirely up to the charterers to provide full cargo in order to utilize the vessels cargo carrying capacity to a /maximum extent. Hire can be also paid at a fixed sum per day of hire.

CARGO POTENTIAL

VI. CARGO POTENTIAL FOR COASTAL SHIPPING IN INDIA A. COMMODITY MOVED BY COASTAL SHIPPING

I. II. III. IV. V. VI. VII. VIII. IX. X.

Crude oil Petroleum Oil and Lubricant products (POL) Liquefied Natural Gas (LNG) Coal Iron ore Iron and Steel Cement Fertilizers and Fertilizer Raw materials (FRM) Food Grains Containers

B. CARGO PROFILE STATE NAME MINERAL MINES Asbestos Coal Graphite Iron Andhra Pradesh Limestone Manganese Mica

Silica sand Arunachal Pradesh Copper Gold Dolomite Graphite Assam Cement & Mortar Coal Crude Oil Gold Graphite Assam Limestone Salt Bihar Bauxite Cement & Mortar Dolomite Glass Sand Mica Salt Chattisgarh Limestone Cement Plants Aluminum

Lead & Silver Iron ore Gold Goa Iron ore Manganese ore Bauxite ore Gujarat Agate Asbestos Cement Mortar Crude oil Dolomite Fire Clay Graphite Gypsum Kasolin Lignite Limestone Manganese Mica Quartz Vermiculate

Salt Silica sand Ochre Haryana Coal Dolomite Feldspar Iron ore Kaolin Limestone Quartz Sulphur Himachal Pradesh Glass Sand Limestone Iron Copper Gypsum Dolomite Salt Sulphur Coal Gold

Jammu & Kashmir

Coal Glass Sand Copper Natural Gas Bauxite Chromium Graphite Gypsum Gold Lignite Limestone Manganese Sapphire Zinc

Jharkand

Mica Graphite Manganese Lead & Silver Copper Aluminum

Karnataka

Limestone

Gold Dolomite Black Granite Iron ore Chromites Bauxite Pink Granite Manganese ore Kerala Glass Sand Limestone Iron Copper Kaolin Lignite Mica Titanium Graphite Madhya Pradesh Coal Copper Diamond Feldspar

Dolomite Fire Clay Gold Iron Kaolin Lead & Silver Limestone Manganese Mica Quartz Silica Sand Ochre Maharastra Bauxite Limestone Iron Copper Manganese Dolomite Silica sand Coal Mica

Manipur Meghalaya

Chromite Limestone Flux & Chemical Grade lime

Nagaland

Limestone Nickeliferous cromite

Orissa

Aluminum Chromium Coal Dolomite Fire clay Glass sand Granite Iron Kaolin Lead & Silver Manganese Mica Silica Limestone

Rajasthan

Feldspar Dolomite Copper ore Bentonita Asbestos Lead & Zinc ores Kaolin Gypsum Gem Abrasive gernet Fluorspar Phosphorite Mica Phyrophilite Limestone Chemical

Tamil Nadu

Bauxite Limestone Beach sand Graphite Manganese

Vermiculite Lignite Uttar Pradesh Coal Diaspore Dolomite Glass Sand Pyrophylite Limestone Soap stone Bauxite Uttarakhand Limestone Gypsum Iron ore Graphite Copper West Bengal Cement & Mortar Coal Copper Iron Lead & Silver Lignite

Gold Kaolin Limestone Zinc Dolomite Fire clay Manganese Quartz Silica

Table 7: Cargo profile

C. MAGNITUDE OF POL MOVEMENT BY COASTAL SHIPPING Assuming that the modal share of coastal shipping as 17 percent of overall POL products movement, it is estimated that the quantity of POL (Coastal movement) to be moved at major and minor ports together will be around 32.5 million tonnes by 2011-12 . Considering observed loading and unloading pattern of POL and the location specific plans of industries, future POL traffic in terms of loading and unloading at major and minor ports is worked out. However most of the forecast figures are dependent on the business decisions of coast based and hinterland industries to which these ports serve.

Petroleum Oil and Lubricants (POL products) Petroleum products comprise petrol, diesel, ethane, LPG, aviation gasoline, motor gasoline, jet fuels, kerosene, heavy fuel oil, naptha, white spirit, lubricants, bitumen, paraffin waxes, petroleum coke and other products like coal tar etc. While usage of oil and gas as primary sources of energy is well below the world percentages in India, it is second primary energy source after coal however. The lead players in the crude oil refining are Indian Oil Corporation (IOC - 32 percent), Reliance Petroleum Limited (RPL - 25 percent), Hindusthan Petroleum Corporation Limited (HPCL - 12 percent) and Bharat Petroleum Corporation Limited (BPCL 8 percent) with combined share of 77 percent. Other refineries are located at Kochi, Mangalore, Chennai, Bongaigaon and Numaligarh. Recently ONGC also entered into refining sector by acquiring the Mangalore Refinery (MRPL).

ORIGIN Kandla Cochin Mormugao Mangalore Sikka Chennai Mormugao Haldia Mumbai

DESTINATION Vizag Vizag Hazira Ranpar Kandla Sikka NMPT Cochin Mormugao Sikka Bedi

ORIGIN

DESTINATION Tuticorin

Mumbai

Kandla

Kandla Kandla

Paradip Vizag Dahej Kakinada Chennai Vizag Paradip

Haldia Paradip Vizag Port Blair Haldia Haldia Haldia

Chennai

Mumbai Kolkata Tuticorin

Table 8: Origin - Destination Pairs of POL Products Coastal Movement

D. LIQUEFIED NATURAL GAS (LNG) Natural gas is the worlds third largest source of primary energy following coal and oil. Since early 1970s, known reserves of natural gas have been increasing steadily, at the rate of five per cent per annum. Similarly, the number of countries with known reserves has also increased from around 40 in 1960 to about 85 today. Natural gas is considered to be the most environment friendly fuel and also expected to last longer than crude oil. Because of these reasons natural gas (LNG) is now preferred over other traditional feedstock such as coal or liquid fuel. More than four-fifths of world production is consumed locally while the rest is traded internationally. Transportation is an essential aspect of gas business, since reserves are often quite distant from the main markets. Pipelines transport is most preferred mode of transport for gas and there is a well-developed network in the former USSR, Europe, and North America. LNG use in India shows that out of total consumption around 37 percent is used for power generation followed by 36 percent in fertilisers sector in India. Other sectors like steel and manufacturing industries, transport etc. also make use of LNG.

Production Exploration and Reserves India's natural gas reserves are currently estimated at 22.9 trillion cubic feet (tcf). The area northwest of Mumbai in the Arabian Sea, 110-200 kilometers off the coast, is India's major natural gas producing region housing the Bombay High, Heera, Panna, South Bassein, Neelam, Bombay L-II, and Bombay L-III fields. The region is also rich in crude oil. There are additional gas off the East Coast, in the Bay of Bengal, which includes the Krishna-Godavari and Kaveri Basins. The Krishna-Godavari Basin houses the Rawa Field while the Kaveri Basin contains the PY-1, PY-3, and KH-3 fields. There was a major increase in the production of natural gas in the late seventies with the development of the Bombay High fields and again in the late eighties when the South Bassein field in the Western Offshore started production. Most of production of gas comes from the Western offshore fields. Assam, Andhra Pradesh and Gujarat are other major producers of gas. Smaller quantities of gas are produced in Tripura, Tamil Nadu and Rajasthan. 60 percent of natural gas is produced along with crude oil as associated gas while the rest is produced as free gas. The South Bassein and Tapti fields in the Western Offshore and the gas fields in Tripura and Andhra Pradesh (Krishna-Godavari Basin) are main producers of free gas. Oil & Natural Gas Corporation Limited (ONGC) and Oil India Limited (OIL) are main producer companies of gas.

Production and Consumption of LNG in India Consumption India's natural gas consumption is currently met entirely through domestic production. However, demand for natural gas likely to outstrip production. India will have to begin importing natural gas within a few years to supply new gas-fired power plants. India's consumption of natural gas

has increased faster than any other fuel in recent years and now accounts for around 7 percent of the country's energy demand. Natural gas in India has nearly doubled during the last decade. Existing Modal Share in Transport and Movement Pattern Gas produced in the western offshore fields of Bombay High, is brought to Uran (Maharashtra) and partly moved to Hazira (Gujarat). Gas brought to Uran is utilised in and around Mumbai. Gas brought to Hazira is partly utilised at Hazira and rest is fed into the Hazira-BijaipurJagdhishpur (HBJ) pipeline, which passes through Gujarat, Madhya Pradesh, Rajasthan, U.P., Delhi and Haryana. The gas produced in Gujarat, Assam, etc; is utilised within the concerned states. While the proposals for import of gas through pipeline from Oman and Iran have not moved forward for technical & geo-political reasons, it was considered that importing Liquefied Natural Gas (LNG) for Southern India as well as other coastal locations would be a viable alternative however. Estimation of Production and Consumption The production of natural gas in the country is expected to level off in near future. As per Hydrocarbon Vision - 2025 India will require 231 million standard cubic metre per day(MMSCMD). Recent Finds in India Some of the recent finds in natural gas sector having potential for yield are listed below: On Eastcoast, Krishna - Godavari Basin by Reliance Petroleum Ltd. (reserves - around 7 Tcf) ONGC has discovered rich gas reserves estimated to contain 30 to 50 billion cubic metres in the Daman offshore field north of the prime Mumbai high field. ONGC anticipates a yield of 3 to 4 million cubic metres of gas per day when the field goes onstream. Cairns Energy reported finds in late 2002 offshore from Andhra Pradesh as well as in Gujarat (reserves - around 2 Tcf)

Import of Natural Gas Gas imports involves costs for liquefying the gas at the supplier's end and re-vaporising it at the receivers end. India can import gas from Qatar and other Persian Gulf countries, Indonesia and even from relatively distant places such as Nigeria and Australia in the form of Liquefied Natural Gas (LNG). Further, it has to be delivered inland at various points by Indian pipelines. India is currently considering several LNG projects, which are heavily capital-intensive. The proposed LNG terminals are along the coastline of India. Locations of Proposed LNG Import Terminals in India Future LNG Projects Impacting Coastal Shipping

LNG import terminals are planned at Jamnagar, Dahej, Hazira, Pipavav, Trombay, Dabhol, Mangalore, Kochi, Ennore, Kakinada, Gopalpur, and Paradeep. However, after The Indian government has decided not to extend sovereign payment guarantees to power projects, it has resulted in several companies cancelling or delaying LNG projects. The import terminal at Dahej (by Petronet) currently is under construction, and isexpected to start its operations in late 2003. The Dahej terminal has advantages over some of the other proposed projects because of the existing HBJ pipeline network. The Cochin import terminal by Petronet is expected to commence by 2007. The advantage of setting up the terminal here is that the NTPC could make available LNG to other prospective buyers in and around Kochi such as FACT apart from providing natural gas as feedstock to the Kayamkulum power station. Shell also has begun construction of its LNG import terminal at Hazira in Gujarat, and has contracted for LNG supplies from Oman. The facility is scheduled to begin operation in 2005. Like the Petronet Dahej terminal, it is to be linked into existing natural gas pipelines. The Dabhol LNG terminal was nearly complete. The construction was halted in June 2001, and it is likely to be completed by another firm but no definite timeframe is known.

 No definite timeframe for completion is available for the LNG import terminal projects at Pipavav, Trombay, Ennore and Kakinada. Along with LNG imports by sea, imports of natural gas by pipeline will also play an important role eventually in meeting India's natural gas needs. One possibility would supply India with natural gas from Iran's huge South Pars field via a pipeline, either subsea or through Pakistan. Another possible import route would link the natural gas reserves of Bangladesh into the Indian gas grid. Current proven reserves of natural gas in Bangladesh are at least 14 Tcf. The new natural gas reserves discovered off Andhra Pradesh in 2002 could compete with imports from Bangladesh, thus increasing the pressure to reach a decision in the near future.

E. COAL Coal is the worlds most widely distributed fossil fuel and is the most important source of energy for electricity generation in India. Electricity is one of the most vital infrastructure inputs for growth and around two third of the coal in the country is consumed for generation of electricity. The prediction of coal consumption estimated upto 1,40,000 MW by 2009-10. Other major industries like steel, cement, fertilizers, chemicals and paper products and several medium and small-scale industries are also dependent on coal for processing and their energy requirements. Production India is the third largest coal producer in the world, after the USA and China. Local coal production of around 320 MTPA is growing at around 5 percent per annum. Though there are several coal mines distributed across India as depicted in Figure 4.7 the major coal-fields are located in North-Eastern States, West Bengal, Bihar, Jharkhand, Madhya Pradesh, Chattisgarh, Uttar Pradesh, Maharashtra, Orissa, Andhra Pradesh, Assam, Arunachal Pradesh, Meghalaya and Nagaland. There are lignite fields at Neyveli in Tamilnadu and Gujarat. A large quantity of the totalcoal production in the country is produced by various subsidiaries of Coal India Ltd(CIL), which is the largest supplier of coal in the country. The only other major producer outside of Coal India Limited is Singareni Collieries Company (SCCL) located in Andhra Pradesh. Sea

transport offers several advantages in terms reduction of costs, decongestion of road & rail networks, savings on fuel consumption etc, but additional handling at load and discharge ports lead to longer transit time. The land based transport networks have over 25,000 OriginDestination (O-D) pairs between major production and distribution / consumption centers spread across the country. For the purpose of analysis O-D pairs were selected on the basis of some criteria like type of cargo, location, proximity to seaports, land leads and sea distances etc.

F. CONTAINER TRAFFIC The movement of International containers is predominantly laden for containers moving in to JNPT the only port where majority of transshipment is taking place today. Similarly the traffic carried from JNPT to other ports is significantly less in terms of volume and constitutes a large volume of empties. This shows that the decision of a shipping line for use of an Indian transshipment port is of very complex nature. Containers continued to be transshipped from Indian ports to foreign ports even when Coastal service is available for connectivity to the transshipment at JNPT port. Although main line vessels are calling at Tuticorin and Chennai, no transshipment is taking place at these two ports for boxes of other Indian ports. Since Chennai is located on East Coast and Main line services to Far East destinations are operated from Chennai some movement of containers from/to other Indian ports should have been evident. Mother vessels continue to use near by foreign hub port like Colombo, UAE for off loading containers for India instead of over-carrying them to JNPT port where they have a scheduled port call immediately before or after the foreign hub port. Mundra, Pipavav, Chennai, Vizag, Tuticorin ports have been developed with private participation mainly to attract Main Line vessels but the absence of any transshipment activities at these ports is very conspicuous. Mother vessel operations, routings, their trading areas and ports of call, are very vital elements that go in to selection of a transshipment port by a main line.

Share of Coastal Shipping General cargo volume is expected to reach 160 MTPA by 2011-12. The Consultants assumed that the containerisation level would attain 55 to 60 percent in the next ten years. Keeping in line the above explanation and assumption, the container traffic projected will be 5.0 and 7.4 MTEUs for the above horizon years. Assuming the shares of coastal shipping as coastal shipping 4 percent and 5 percent for the year2011-12, the container traffic is worked out to be 0.4 MTEUs in the respective year. Return cargo Information on the origin and destination details of the coastal cargo was gathered during the visits to ports from the corresponding port officials and also consulted the published documents on port statistics. Origin-Destination (O-D) matrices were developed for the year 2002-2003 for selected commodities using the information collected (presented in chapter 3). From the O-D matrices, it was evident that return cargo is not available for (major commodities) coastal movement except for the O-D pair Vishakapatnam- Magdalla. There was a movement of Iron ore of 3 million tonnes from Vishakapatnam to Magdalla and Iron &Steel was moved from Magdalla to South and East Coast of India. There is a large quantity of coal movement between ParadipChennai and POL movement between Chennai-Paradip. However, the nature of commodities, demands different types of vessels. In the present situation, return cargo is available for container traffic between Gujarat ports-JNPT-Cochin-Tuticorin.

Long land leads at either or both ends (>150 km) Such O-D pairs that are separated by a long distance but have port location advantage at only one end were considered to observe the impact of high percentage of land movement in the overall sea + land transportation The O-D pairs examined are: Talcher - Kottayam via Paradip and Kochi ports

Tughlakabad - Bangalore via Kandla and Kochi / NM ports Tughlakabad - Chennai via Kandla Bangalore - Trivandrum via New Mangalore and Vizhinjam ports Jamshedpur - Bangalore via Kolkata and Chennai ports Mangalore - Udaipur via Kandla port Bajva (IOC) - Bangalore via Magdalla and Kochi Ports

Sea transport over short sea distances (<1000km) Such O-D pairs that are located at or near port location but inter-modal transport between them involve short distances by sea were chosen to examine economic viability The O-D pairs examined are: Jamnagar - Mumbai via Sikka port Tuticorin - Kollam Visakhapatnam Steel Plant - Chennai via Vizag Port

Sea transport over long sea distances (>1000 km) With the North- South-East-West corridors and the Golden Quadrilateral coming up on the road network linking the four major metro cities with linkage to Ports, whether taking the sea route is a viable option or not becomes a point to ponder especially since three of the four metros are port cities separated by long sea distances as well. The capital and the land locked metro Delhi has the biggest container freight station located at Tughlakabad that generates heavy traffic to & fro

hence these O-D pairs plus some other O-D pairs with long sea voyages were considered for analysis. The O-D pairs examined are: Mumbai - Kolkata Mumbai - Chennai Tughlakabad - Chennai via Kandla port Talcher - Kottayam via Paradip & Kochi ports Tuticorin - Chennai Bangalore - Trivandrum via New Mangalore and Vizhinjam ports

G. COMMODITY ANALYSIS Commodities analyzed for estimating their future movements are shown below. The later part of this chapter deals with a status quo situation of following commodities and the estimates for future years: (a) Crude Oil (b) Petroleum Oil and Lubricant Products (POL) (c) LNG (Liquefied Natural Gas) (d) Coal (e) Iron Ore (f) Iron & Steel

(g) Cement (h) Fertilizers and Fertilizer Raw Material (FRM) (i) Food Grains and (j) Containers

Origin Port Mumbai Rawa

Destination Port Kandla / Chennai / Cochin / Mangalore Vizag / Chennai

Table 9: Origin - Destination Pairs of Crude Oil Coastal Movement

PY-03 (Cuddalore) Nagapattinam Out of total annual production of crude oil of around 32 million tonnes, coastal shipping moves about 16 million tonnes. As the domestic production of crude is likely to remain around 32 million tonnes in the coming years (based on the Ministry of Petroleum and Natural Gas estimates) the Consultants do not foresee any significant change in the pattern of coastal movement offshore. The only competing mode of transport with coastal shipping for crude movement is pipelines, which directly transport crude from oil fields to refineries. The details of operating crude oil pipelines in India. Pipeline Nahorkatiya Bauroni Salaya Mathura Ankleshwar Koyali Length(km) 1156 1881 95 Capacity (MTPA) 5.5 21.0 2.0 Owner OIL IOCL ONGC

Kalol - Navagam Koyali Bombay High Uran Haldia - Barauni

127 203 506

2.0 15.0 4.2

ONGC ONGC IOCL

Table 10: Details of Crude Oil Pipelines Operating in India The estimated POL products for the year 2011-12. Year 2011-12 Demand (MTPA) 190

Table 11: Estimated Demand for POL Products

NO OF VESSELS 607

GRT 959575

DWT 998601

Table 12: Coastal shipping tonnage as on 31st December 2008

Coastal tonnage SR. NO. 1 2 3 Dry cargo liner Tug Dry cargo bulk carriers TYPE OF VESSEL NO. OF G.R.T VESSEL 72 212 12 121821 61392 237220 179301 20658 364928 D.W.T

4 5 6 7 8 9 10 11 12

Tankers(product carriers) Tankers(crude oil carriers) Passenger-cum-cargo Passenger service Ethylene gas carriers Ro Ro Dredgers Offshore supply vessel Specialized services vessel for offshore

14 2 30 50 3 1 25 106 37

54995 50080 82912 16423 8727 956 113761 110737 87492

6723 2246 27232 1925 6558 1386 72652 129876 50183

13

Port trust & Maritime boards

93

45199

15702

Total (vessel) coastal trade Table 13: Coastal tonnage as on 31-Dec-2009

657

991715

1019370

Summary of commodity wise traffic The consolidated commodity-wise forecast for the year 2011-2012. COMMODITY CRUDE OIL POL COAL IRON ORE 2001-02 16.00 12.70 15.90 04.66 2006-07 16.00 25.00 20.00 09.75 2011-12 16.00 32.50 25.00 13.30

IRON & STEEL CEMENT CONTAINER OTHERS TOTAL

00.28 03.16 01.04 00.26 54.00

00.76 08.65 02.60 00.52 83.28

01.04 13.00 05.20 01.04 107.08

Table 14: Traffic Estimates by Coastal shipping in million tonnes

INFRASTRUCTURE FACILITIES

VII. INFRASTRUCTURE FACILITIES A. Berth B. Cargo handling equipments C. Inland connectivity D. Storage facilities

A. BERTH

Is the place beside a pier, quay or wharf where a vessel can be loaded or discharged.

Berth facilities and Proposed berth projects in some of the major ports in India. Kandla The port has eleven cargo berths for dry bulk and break bulk cargoes with a total length of 2.268 m. The berths are equipped with electric quay cranes. In addition the port has six oil jetties for handling POL, LPG and chemicals. Proposed projects Container Terminal 1 (restructuring of berths 11 and 12); Container Terminals 2 and 3 (restructuring berths 7 to 10); Multi cargo berths 13 to 16;

Mumbai The Indira dock has 21 berths within a locked basin and five berths along the harbour wall. The water depth inside the dock is some 9 m. The Victoria dock has 15 berths and 6,7 m water depth. Princes dock has 14 berths and a water depth of only 3,7 m. Crude oil and POL is handled at four jetties in Jawahar Dweep (Butcher Island). Tankers up to 125.000 dwt can be handled. Proposed projects 5th oil Berth at Butcher Island

JNPT (Jawaharlal Nehru Port) The port handling facilities include container terminals, a liquid bulk handling terminal (two berths) and a shallow water berth for vessels with a maximum length of 165 m, which can handle breakbulk and containers. The total length of berths is some 3.000 m. Proposed Projects Expansion berth towards NSICT

Mormugao The port has a waterfront of some 2,9 km developed into a number of berths. The main commodity iron ore is handled at berth 9 with a mechanised ore loading system. The iron ore for export is transported to the port by barges which are unloaded at the barge berths between berth 9 and 10. The iron ore is transported from the barge berth to a stack yard behind berth 9 with a conveyor system. Three stackers are used for the purpose. Loading operations include reclaiming the iron ore with reclaimers, transport via a conveyor system to berth 9 and loading with ship loaders. The loaders have a capacity of 4.000 tons per hour. The entire operations constitute the Mechanical Ore Handling Plant (MOHP). Proposed projects Integration of berth 8 and 9 New coal berth Liquid bulk berths Cruise vessel berth

New Mangalore The lagoon consists of 14 berths with a total length of some 3.250 m. Berths nos 9 to 13 are related to liquid bulk with berths 10 and 11 for crude oil. LPG is handled at jetty 9. Berth no 8 (300 m length) is the dedicated berth for KIOCL. Berth 14 is 350 m long and recently constructed. The berth with the largest water depth (15,1 m) is berth 14. The liquid berths have permissible drafts up to 14 m. Proposed Projects Mechanisation of the new iron ore berth 14 Berth 15 of new Western Dock for handling coal Restructuring of berth 1 and 2 for container handling Construction/conversion of berth 13 for handling liquid bulk

Tuticorin The port has 8 berths with a max permissible draft of 8,6 m to 10,9 m and total quay length of 1.770 for the handling of dry bulk, breakbulk and containers. Containers are handled at a dedicate container terminal behind berth no 7. Furthermore the port has two shallow water berths, an oil jetty and two (thermal) coal jetties. Proposed Projects Conversion of berth 8 into Container Terminal 8 North Cargo Berth for thermal coal handling

Chennai The port has 24 berths spread over three docks, i.e. Ambedkar Dock, Jawahar Dock and Bharati Dock. The Bharati Dock with 1,9 km of quay length provides handling facilities for POL,containers and iron ore. The iron ore berth can cater for vessels with a draft up to 16,5 m.

Ennore Two coal berths of each 280 m length with an alongside depth of 15 m are available. Proposed projects Upgrading existing Coal berths for handling thermal coal

Visakhapatnam The port includes two harbours, i.e. the Outer Harbour with 7 berths and the Inner Harbour with 19 berths. The seven berths in the Outer Harbour include: Two ore berths General cargo berth Proposed projects Mechanization General Cargo Berth in outer harbour

B. CARGO HANDLING EQUIPMENTS Census of Cargo Handling Equipment (In Nos.) Port Crane Mobil Whar Container e f Qua Yar y d Forklif Tractor Trailer t Truck, Toplift s s Shovel Dozer & Pay Load Locomotiv e

Truck, Reach Stacke r Kolkata Haldia Paradip Vishakapatna m Chennai Tuticorin Cochin New Mangalore Mormugoa Mumbai ## JNPT 1 8 2 41 2 8 3 17 10 40( @) 21 7* 9 199 3 524 15 98* 235* 1 3 7 3 10 5 14 3 7* 2* 24* 4* 29 3 47 7 * 29 1 * 32 1 14 2 4 12 5 25 3 1 23 $ 7 5 34 1 1 67 5 1 -

& Excavator , etc.

12 3 -

4 11 7 18

2 1

14 1 -

4 **

2 5 -

16 * 64 * Kandla Total: 44 16 131 35 117

2 24

62

Table 15: Census of Cargo Handling Equipment

Note: (**) - 2 Pay Loader, 1 Excavator, 1 JCB. (*) - BOT Operator; ($) 16 FLTS, 2 Medium duty FLTs, 1 Toplift Truck, 2 Reach Stacker (##) - In addtion, Floating Crane - 1 no. (@) - Inclusive of 10 electric forklifts trucks for departmental use.

Container Handling Facilities

PORT NO. OF VESSEL BERTHS SIZE (IN DWT) KOLKATA ** 4 21,000 QUAY SIDE GANTRY YARD EQUIPMENT(In nos.) TOP LIFT TRACTORS FORKLIFT TRAILERS

GANTRY TRUCKS/REACH CRANES 3x35.5 T, 1x40 T (RTG) STRACKERS TLT - 1x35 T RST - 4x45 T* 22x40 T (HIPPO) 2x 6.5 T (Medium Duty) 1x35 T 2x45 T RTGC - 2 2x10 T 1x10 T 7 1x5T 19x40 T and 6x20 T 5 16

HALDIA VISAKHAPATNAM

2 1 (Under BOT Operator)

40,000 1,00,000

RMQC- 2 Nos 2X 355 t (SWL)

1x30 T

Nos.

CHENNAI

4 ( Under BOT Operator)

20,000 TO 45,000

2x40 T 24x40.0 T 5x60 T#

2x35 T 3x25 T 2x40 T

On Contract On Contract On Contract Basis Basis Basis

TUTICORIN

47,000

3X 40 t (SWL)

8x35 T (SWL)

12x50 T (SWL)

12x50 T (SWL)

COCHIN

3 (Under BOT Operator)

10,000 TO 20,000

2x35.5 T

4x35.5 T (RTG)

4x35 T 2x50 T 2*40 T

2 - 20 T 20 -30 T

25

35

MUMBAI

42,000

2x35.5 T

3x35.5 T (RTG)

2x42 T & 2x45 T &* (&- Reach Stracker)

27

47

J.N.P.T - JNPCT

70,000

3x35.5 T 2x50 T 3x40T(Hired)

RTGC12x40 T -6x40 T(hired)

2 x45 T (Reach Stackers)

20 104 Hired

10(3 to 5T)

78

- NSICT 85,000

RMGC1x35.5 T TLT- 2x40 T

2 - GTIPL 2 85,000

8 x 50 T

-2x40 T (hired)

3x40 T

50 Owned $ 100 Hired $

34 Owned** 100 Hired

29x40 T RTGC 8 x 61 T 3x40 T RMGC 4x40 T 85 $

29x50/61 T RTGC 3x61 T RMGC

KANDLA

Table 16: Container Handling Facilities

(#) - One Gantry with twin-lifter facility, (*) In addition, 4 nos Reach Stackers of 45 T capacity each have been hired by Port; (**) Two Mobile Harbour Cranes alongwith two Reach Stackers inducted on Own-Operate Maintain Basis were commissioned in March, 2005: ($) Tractor-Trailers combined

Fertilizer Handling Facilities PORT NO. OF BERTHS SHIP SIZE EQUIPMENT OTHERS

(IN DWT) HALDIA* 1 60,000 Grab 2x15 T with Transit Shed- Capacity Conveyors 30,000 Tonnes. This facility is also used for Coking Coal PARADIP 2 60,000 Fully mechanised handling system provided by User Agency, M/s Paradip Phosphates Ltd. & M/s IFFCO VISHAKHAPATNAM 1 35,000 BMH Screw type Mechanical facilities marine unloader of provided by User Agency, 400 TPH (owned, M/s. Coromandal operated and maintained by M/s Coromandal Fertilizer Ltd) COCHIN 1 87,000 Mechanical unloader and Mechanical system is provided by User Agency, Fertilizer Ltd.

conveyors system M/s. FACTt Ltd. capacity - 600 TPH Table 17: Fertilizer Handling Facilities (*) Not exclusively for fertilizer handling.

Iron Ore Handling Facilities PORT NO.O VESSEL WAG BARG F BER THS SIZE (IN DWT) ON E EQUIPMENT SHIP STAC OTHERS

STAC RECLA LOA K TIPPL UNLO KER IMER DER YARD ERS ADER CAPA CITY (IN 000 TONN ES)

HALDIA

65,00070,000

2x720 TPH

1500 TPH

1250 TPH

2x300 0 TPH 1x300 0 TPH 1000 535

PARADIP

60,00075,000

2x100 0 TPH Twin 100T lifting capacit

2x2500 2x1500 TPH TPH

VISAKHAP ATNAM

2x2700 3x4000 1x800 TPH each TPH each 0 TPH 1200 -

1,50,000

y & 27 tips per hr. Third Tippler

120T lifting capacit y & 30 tips per hr. Tempo rary convey Temp orary ENNORE Barag 40,000e loadin g Jetty 65,000 or system with barge Tempora ry conveyor system with barge 200 Temporar y facility created and operated by MMTC

loading loading arrange arrangem ment to load@ ent to load@

800TP 800TPH H 2x200 0 TPH 2x2000 2x4000 TPH TPH 2x400 0 TPH 1x600 0 TPH 2x400 0 TPH 1000 4 TRANSHI PPERS OWNED 550 600 -

CHENNAI

1,50,000

NEW MANGALO RE 2,75,000( MORMUG AO 1 335 LOA PART LOADIN GRAB 1 60,000 -

2x3500 TPH

UNLOA 3x3250 2x4000 DER 8x500 TPH TPH

G UPTO PERMIS SIBLE DRAFT of 13.00 MTS)

TPH

AND OPERAT ED BY PRIVATE PARTIES

CONTI NOUS UNLOA DER 1x1250 TPH -

LOADIN G RATE 10,000 TO 15,000 TONNES PER DAY

Table 18: Iron Ore Handling Facilities

Liquid Bulk Handling Facilities

DESIGNED/ CARGO TYPE ACTUAL DEPTH (IN MTS) POL KOLKATA (#) 7# PRODUCTS/ OTHERS 7.00

NO. OF PORT BERTHS

VESSEL SIZE (IN DWT)

PIPELINE MARINE DETAILS (NO.xDIA) ARMS

OTHERS

UPTO 38,000

4x14" 5 at HOJ II CRUDE/ POL HALDIA 3 PRODUCTS/ OTHERS 8.50 10.00 89,000 TO 1,50,000 2x8" 5x20" 1x30 2x24" 2 at HOJ I 2 at HOJ III -

2x4" 1x6" 1x12" 1x32", 1x 48" 1x600 MM FLEXIBLE 14 65,000 1x400 MM 1x200 MM HOSE 200 MM SUBMARINE 1 CRUDE 17.00 1,50,000 1x900 MM PIPELINE JETTY TO SHORE 3x600 MM POL 2* VISAKHAPATNAM PRODUCTS/ OTHERS 9.75 50,000 1x400 MM 7x350 MM 3x300 MM 3x200 MM 1 LPG 13.00 50,000 1x350 MM 2x400 MM 3x200 MM 4 Other Liquids 10.06 - 10.21 45,000 1x250 MM 3x300 MM POL PRODUCTS 15,00050,000 TEMPORARY 1x 600MM 1 - 300 MM FACILITY CREART 1x 762 CRUDE/POL CHENNAI 2 PRODUCTS/ OTHERS 16.00 1,40,000 MM 2x 350 MM 1x 500 MM TUTICORIN 1 POL 11.9 65,000 2x500 MM 2 -300 MM 7 - 300 MM 3 - 400 MM 3 - 400 MM EQUIPPED WITH BOOSTER PUMPS -

PARADIP

POL PRODUCTS

ENNORE

1$

15.00

PRODUCTS/ OTHERS

1x450 MM 1x404 MM 1x350 MM 2x250 MM 2x200 MM 1x100 MM

1 COCHIN 2

CRUDE POL PRODUCTS /OTHERS CRUDE/ POL PRODUCTS

10.7

25,000

2x750 MM 2x400 MM 4 - 300 MM 2x320 MM 1x900 MM 1x500 MM 6 - 200 MM (2000TPH 1x450 MM CAPACITY 2x300 MM EACH)

SUBMARINE PIPELINE JETTY TO SHORE

9.14

1,15,000

14.00

1,20,000

3 POL PRODUCTS/ NEW MANGALORE LPG 10.50 45,000

5x400 MM 2

POL PRODUCTS

12.00

30,000

4x300 MM FLEXIBLE HOSE 2x200 MM 200 MM 1x250 MM 1x250 MM FOR LPG

POL MORMUGAO 1 PRODUCTS /OTHERS 12.50 40,000

1x450 MM 1x850 MM 1x600 MM 1X42" 1X36" 5x12" DIA at 4JD; SUBMARINE -

MUMBAI

CRUDE/ POL PRODUCTS

10.97 TO 14.30

48,000 TO 1,25,000

5x12' DIA PIPELINE 3X30" at 3JD; 5.1 KM

3 x12'DIA FROM 1X8" at 2JD; ISLAND TO

5x12" DIA SHORE at 1JD

3x200 MM POL 2 PRODUCTS / CHEMICALS/ OTHERS 1x600 MM 35,000 & 47,000 7x300 MM 1x350 MM FACILITIES FOR 3x200 MM 1x250 MM 4x300 MM J.N.P.T. (**) B&C 1 CHEMICALS/ OTHERS 9.00 19,000 2x450 MM 2x600 MM 3x400 MM 4x8" DIA STORAGE & TRANSPORT OF LIQUID BULK BY PRIVATE TANKFARM OPERATORS AT JNPT LEASED LAND 3 SBM + VADINAR 1 ESSAR POL CRUDE Jetty 30.00 3,00,000 2x1050 MM 01x02" 01x06" 45x08" 4 (OJ-1 to KANDLA OJ-4) POL PRODUCTS/ OTHERS 10.00 TO 10.70 40,000 TO 56,000 09x10" 10x12" 02x14" 09x16" 09x20" 11x24" 1 POL 10.10 45,000 3x02" 1x12" 3x300 MM DIA 2x10 " DIA 3X10" DIA SUBMARINE PIPELINE 8 KM SUBMARINE PIPELINE 8 KM

7.50 To 12.00

1x12" 2x10" 3x8"

POL PRODUCTS

12.00

85,000 Displacement

(M/S IOC PRODUCTS

Jetty) (OJ-VI)

1x22"

1 IFFCO Captive Jetty(OJV)

PHOS ACID & AMMONIA 9.50 45,000

8x8" 1x12" 1x14"

2X8" DIA 1X8" DIA FLEXIBLE HOSES

Table 19: Liquid Bulk Handling Facilities

Note : * - Excludes one mooring in Outer Harbour used for transhipment of Crude & Products. Also excluding three pipe lines at OR 1 or OR 2 used for slops/Ballast # - Excludes anchorage at Saugor/Sandheads used primarily for transhipment of POL (Crude), where vessels of much higher DWT (including VLCC's) can work; ($) Temporary facility ** - Service berth is modified and created for handling oils & safe grade chemicals through pipelines.

C. INLAND CONNECTIVITY General As in many other countries, probably the most important transport/logistics challenge facing India is its infrastructure. While considerable private sector investment is now being directed into the development, expansion and modernization of Indian ports, the countrys road, rail and inland waterway systems have suffered from years of neglect and under-investment.

The average cost of freight is relatively high and Indias inadequate transport infrastructure is holding back economic growth according to Drewry. The system of distribution containers and containerized cargoes is highly concentrated with most containers for Delhi and north India being routed through the Mumbai/JNPT port complex. This route is already one of the busiest domestic freight arteries in the country. With new container terminal developments in Gujarat and with decent rail connections to and from the ports of Mundra and Pipapav this situation is changing gradually.

i.

ROAD

The most distinct part of Indias physical infrastructure development in recent years is the development of road network across the country; per sq. km. of surface area in India is now endowed with one km of roadways. India has one of the largest road networks in the world, aggregating to 3.34 million km. The countrys road network consists of Expressways, National Highways, State Highways, Major District Roads, Other District Roads and Village Roads. The Indian highway network is limited and many of the roads are in poor condition. A World Bank Report (Indias Transport Sector 2002) identified in 2002 only some 2% of the national highway system as being 4 lanes with the remaining 98% being double, single or intermediate. In the regional network, no state highways were 4 lanes and only 23% comprised 2 lanes. The backlog of years of under-maintenance is huge. The same report listed that 25% of state and national highways are congested. In the latter years capital expenditure on roads has been increasing amongst others for improvements to the national highway system. National Highways/Expressways 66590 km

State Highways

128000 km

Major and Other District Roads

470000 km

Rural Roads

2650000 km

Table 20: Road networks The regulatory environment and the reliance on regional/provincial operating agreements and licences has resulted in a very fragmented road haulage industry characterised by the presence of many small companies employing just a few trucks and by a shortage of modern specialised freight transport equipment. A number of schemes targeted at improving connections between main ports and the national highway network are either underway or in a planning stage. The majority of these projects are being realised through Special Purpose Vehicles (SPVs) set up between various (government) agencies.

Single Lane Double/Intermediate Lane Four Lane/Six lane/Eight Lane Table 21: Road lanes

32% 56% 12%

In this respect JNPT formed an SPV with NHAI (National Highway Authority of India) and CIDCO (City and Industrial Development Corporation of Maharashtra Ltd). To improve road connectivity at Chennai, the Port Trust formed an SPV with NHAI and the government of Tamil Nadu Chennai Ennore Port Road Company Ltd. One of the largest and most ambitious projects being implemented is the Golden Quadrangle and North-South and East-West Corridors project, which is being administered by the NHAI. The project involves the construction of four-lane road links between the four main cities of India (Delhi, Mumbai, Chennai and Kolkata) with a view to improve speed and raise safety and security standards for passengers and cargo.

The road network, as on December 2007, comprises 66,590 km of National Highways, 128,000 km of State Highways, 470,000 km of Major District Roads and about 2.65 million km of other District and Rural Roads. National Highways comprise only about 2 percent of the total length of roads and carry about 40 percent of the total traffic across the length and breadth of the country. Out of the total length of National Highways, 32 percent is single lane/intermediate lane, 56 percent is 2-lane standard and the balance of 12 percent is 4-lane standard or more. The National Highways Development Project (NHDP), the largest highway project ever undertaken by the country, is being implemented by the National Highway Authority of India (NHAI). NHDP Phase I & II envisage 4/6 laning of about 14,279 km of National Highways, at a total estimated cost of Rs.650 million (at 2004 prices). These two phases 109 comprise of Golden Quadrilateral (GQ), North-South and East-West Corridors, Port Connectivity and other projects. The Golden Quadrilateral (GQ-5,846 km) connects the four major cities of Delhi, Mumbai, Chennai and Kolkata. The North-South and East-West Corridors (NS-EW-7,300 km) connect Srinagar in the North to Kanyakumari in the South, including spur from Salem to Kochi and Silchar in the East to Porbandar in the West. By November 30, 2006, 6,776 km of national highways pertaining to NHDP had been completed, the bulk of which (5,475 km) lie on the GQ. Constraints faced in the timely completion of NHDP include delays in land acquisition, removal of structures and shifting of utilities, law and order problem in some States, and poor performance of some contractors. Nearly 93 percent works on GQ have been completed by November 2006, and the NS and EW corridors are expected to be completed by December 2009. With the completion of about 93 percent of the GQ, a substantial impact upon the economy is already visible. At this stage there is a need to focus attention on corridor management and road safety, and NHAI has already put in place a corridor management policy.

For implementation of NHDP Phases I and II, the main source of finance of NHAI is the fuel cess. The present rate of cess is Rs. 2 per litre on both petrol and diesel. A part of this cess is allocated to NHAI to fund the NHDP. This cess is leveraged to borrow additional funds from the domestic market. Besides, the Government of India has also negotiated various loans from World Bank (US$ 1,965 million), Asian Development Bank (US$ 1,605 million) and Japan Bank for 110 International Cooperation (Jap. Yen 32,060 million) for financing various projects under

NHDP. These loans from the multilateral institutions are passed on to NHAI by the Government partly in the form of grant and partly as loan. NHAI also negotiated a direct loan of US$ 165 million from ADB for one of its projects. The funds provided to NHAI, including its borrowings from the market, are utilized for meeting project expenditure as well as debt servicing. ii. RAILWAYS

Indian Railways is a vast network. Indian Railways, worlds second largest rail network under a single management, has been contributing to the development of the countrys industrial and economic landscape for over 150 years. Of the two main segments of the Indian Railways, freight and passenger, the freight segment accounts for roughly two-thirds of revenues. The importance of rail to the Indian transport market is obvious. Good rail connectivity is essential as large volumes of cargoes move to and from the port hinterlands. Within the freight segment, bulk traffic accounts for nearly 95 percent, of which more than 44 percent is coal. Improved resource management, inter alia, through increased wagon load, faster turnaround time and a more rational pricing policy has led to an improvement in the performance of the railways during the last two years. Rationalization of classification is aimed at securing eventual elimination of cross-subsidies in fares and freight, and evolving a more transparent and cost-based tariff regime. This process necessarily requires increase in freight rates for commodities being transported below cost and lowering the freight charges for commodities being 118 moved at abnormally high rates. In the freight segment, the number of commodities in goods tariff has been reduced from 4,000 commodities to 80 main commodity groups in 2005-06, and further to 27 groups in 2006-07. The total number of classes for charging freight has been reduced from 59 to 17. The high-density network connecting the four metropolitan cities of Chennai, Delhi, Kolkata and Mumbai, including its diagonals, popularly called the Golden Quadrilateral has got saturated at most of the locations. Given the present growth scenario, the Railways expect to carry 95 million tonnes incremental traffic per year and about 1,100 million tonnes revenue earning freight traffic by the end of the Eleventh Five Year Plan. This entails large investment for capacity augmentation.

Currently Mumbai port complex is one of the main rail cargo transfer centres in India. Congestion is experienced in the region due to lack of track capacity, shortage of rail cars and capacity limitations in rail cargo depots. Ocean carriers for this reason have been looking for alternative port gateways in the Northwest part of India as Mundra, Hazira and Pipapav in Gujarat. Another disadvantage of the railway system is the multi gauge character which often does not support through transport and seamless services and the relative high cost. Some progress is made in conversion of narrow gauge track to broad gauge, however progress is slow. The provision of rail services is being liberalised with the Indian Government ending the monopoly of Concor on moving containers by rail. In 2004-05 rail transport figures indicated that 30% of Indias international container traffic was moved by rail.

iii.

INLAND WATER TRANSPORT

Inland waterways, comprising of rivers, lakes, canals, creeks, backwaters etc, extend to about 14,500 km in the country. However, potential of this important mode of transport has not been fully exploited so far. Several countries of the world have successfully developed this mode of transport by giving required importance and attention and now Inland Water Transport (IWT) has substantial share in inland transport network of those countries.

In India, inadequate infrastructural facilities such as depth and width required for movement of IWT vessels for round the year operation, terminals for loading and unloading of cargo and connectivity with road and rail, navigational aids for safe and unhindered navigation during day and night and dearth of IWT vessels for carriage of cargo and passengers are the constraints facing the inland waterways sector. To achieve substantial step up in IWT traffic, major thrust is being given on the creation of infrastructure and at the same time on the augmentation of IWT fleet primarily by private sector.

With a view to provide

(i)

Navigable channel with adequate depth and width to enable navigation of cargo and passenger vessels of reasonable size,

(ii) (iii)

Navigational aids for safe and smooth navigation round the clock, and Terminals to provide facility for berthing of vessels, loading and unloading of cargo / passengers and connectivity with road and rail in the inland waterways, IWAI has prepared an Action Plan for making existing three National Waterways viz. (a) Allahabad-Haldia stretch (1620 km) of the Ganga-Bhagirathi-Hooghly river system (NW-1) (b) Sadiya-Dhubri stretch (891 km) of Brahmaputra river (NW-2) and (c) Kottapuram-Kollam stretch of the West Coast Canal, Champakara Canal and Udyogmandal Canal (205 km) (NW-3) fully functional by March 2010 subject to availability of funds. This Action Plan envisages fairway with 3 m/2m/1.5 m depth, a judicious mix of fixed and floating terminals and round the clock navigational facilities. Various projects under this Action Plan are under implementation. Detailed Project Reports (DPR) for the two new NWs are going to be completed soon. Based on the final draft DPR for NW-4, a consolidated project in PIB format has been prepared and it is in the process of sanction. For NW-5 also, as soon as the consultant submits the DPR, similar consolidated project will be prepared for sanction.

Advantages of IWT

Low capital cost Cost of development of inland waterway has been estimated to be a mere 5-10 percent of the cost of developing an equivalent 4-lane highway or railway.

Low maintenance cost Cost of maintenance of inland waterway is placed at 20 percent of that of roads. Low fuel cost Inland Water Transport is a highly fuel-efficient mode of transport. This fact is borne out by the estimate that one litre of fuel can move 24 tonnes km of freight by road, 85 by rail and 105 by IWT.

Inland Waterways Authority of India (IWAI)

The IWAI was set up on 27th October, 1986, vide Inland Waterways Authority of India Act, 1985, for regulation and development of inland waterways for the purposes of shipping and navigation. IWAI is primarily responsible for development, maintenance and regulation of National Waterways.

Earlier, the Government of India declared three waterways as National Waterways. These are (i) Allahabad-Haldia stretch (1620 km) of the Ganga-Bhagirathi-Hooghly river system (NW-1) (ii) Sadiya-Dhubri stretch (891 km) of Brahmaputra river (NW-2) and (iii) Kottapuram-Kollam stretch of the West Coast Canal, Champakara Canal and Udyogmandal Canal (205 km) (NW-3). IWAI undertakes development and maintenance of IWT related infrastructure facilities on these waterways.

In November 2008, two more waterways have been notified as National Waterways (NWs) vide two gazette notifications dated 25.11.2008. These are: (i) the Kakinada- Puducherry stretch of Canals and the Kaluvelly Tank, Bhadrachalam Rajahmundry stretch of River Godavari and Wazirabad Vijayawada stretch of River Krishna (NW-4- 1095 kms) and (ii) the TalcherDhamra stretch of river Brahmani, Geonkhali- Charbatia stretch of East Coast Canal, CharbatiaDhamra stretch of Matai river and Mangalgadi Paradip stretch of Mahanadi delta rivers (NW5-623 kms.)

The financial performance of IWAI has shown significant improvement in recent years. While the expenditure level of IWAI was about Rs 35.00 cr during the entire 8th Plan it rose to Rs 151 cr during 9th Plan and further to Rs 385 cr during the 10th Plan. During 2007-08 IWAI expenditure was Rs.79.63 cr. In 2008-09 the BE for projects of IWAI is Rs. 180 cr and 31.03.2009

In terms of physical performance, the IWAI had prepared an Action Plan in 2006-07 for making the three National Waterways fully functional. Many projects of this Action Plan have either been implemented and the rest are under implementation. Main achievements of IWAI during the past few years include the following: The overall cargo movement through IWT went up from 1.63 billion ton km (32.48 million tons) in 2003-04 to 3.38 btkm (55.82 million tons) in 2008-09. For the first time regular cargo movement was established between Haldia and Varanasi. Movement of fly ash, clinker and gypsum from Haldia/ Kolkata to Bangladesh Regular movement of HSD established between Numaligarh (Assam) and Budge- Budge (West Bengal) through Bangladesh inland waters. Construction of first IWT terminal capable of handling containers at Patna and Pandu (Guwahati) completed. Container handling cranes for these terminals have also been procured. Projects for construction of high level jetties at Patna and Pandu (Guwahati) terminals have been approved and construction work awarded to CPWD. To facilitate mechanical handling at floating terminals, nine floating cranes and four shore cranes procured for NW-1 & 2. Seven permanent cargo handling terminals have been constructed and commissioned in National Waterway 3 in Kerala 24 hrs navigational aids between Tribeni and Farakka in NW-1, between Dhubri to Silghat (440 km) in NW-2 and entire NW-3 provided and maintained. Construction of two cutter suction dredging units for NW-1 and four cutter suction dredging units for NW-2 underway. Construction of seven survey vessels for NW-1 and two survey vessels for NW-2 completed. Construction of one POL vessel and one Container vessel has been completed and vessels are in operation.

 Detailed Project Reports (DPR) for these two new NWs are being prepared and likely to be completed soon. Three Shareholders Agreements for setting up of joint venture companies have been signed by IWAI for acquisition, operation and management of barges on NW-1/NW-2 / Indo Bangladesh Protocol routes.

Central Inland Water Transport Corporation (CIWTC)

CIWTC was incorporated on 22nd February, 1967, by taking over all the assets of the erstwhile River Steam Navigation Co. Ltd. (A Sterling Company) and liabilities to the State Bank of India and Govt. of India under a Scheme of Arrangement, approved by the Calcutta High Court on 03.05.1967.

The Corporation is under the administrative control of the Ministry of Shipping . The registered office and corporate office of CIWTC are located at Kolkata and various branch offices are operating at Guwahati, Karimganj, Badarpur, Patna and many other places. The position of manpower on its payroll as on 01.12.2008 was 424 employees. The corporation is headed by a full time Chairman cum Managing Director. The principal activity of the Corporation is transportation of cargo by barges through Inland Waterways in the country and through the routes identified in the Protocol on Inland Water Transport between India and Bangladesh.

Figure 1: Inland waterways in India

NATIONAL WATERWAY-1 Ganga-Bhagirathi-Hooghly river system from Allahabad to Haldia (1620 kms) - declared as National Waterway in 1986.

Figure 2: National Waterway 1

Fairway Development: To maintain LAD of 2 m between Haldia and Varanasi and 1.5 m between Varanasi and Allahabad, RC works i.e. bandalling and dredging were carried out between Tribeni and Allahabad (1424 Km.). The stretch between Haldia and Tribeni (196 km) is tidal and the LAD of more than 2 m is maintained naturally therein. During 2007-08, 1020 m of bandals were erected and maintained in Tribeni-Farakka (364 km), and 15000 m in FarakkaAllahabad (1060 km) stretches. In addition, 92,000 cubic meter of dredging was also done in Tribeni-Farakka stretch by deploying one Cutter Suction Dredger (CSD), which is owned by IWAI. LAD of 2.5 m was maintained between Haldia and Farakka (560 km) round the year. While LAD of 1.8 to 2 m for 330 days was maintained between Farakka and Patna (460 km) except at one location just upstream of Farakka lock where regular dredging is required in the post monsoon season due to excessive siltation in the Farakka barrage pond. 1.5 m LAD Between Patna and Varanasi (363 km) and 1.2 m between Varanasi-Allahabad was maintained for about 237 days. During 2007-08, an important project for construction and supply of two

CSD units [a unit comprises one Cutter Suction Dredger (CSD), one Work Boat (WB) and one Accommodation Boat (AB)] was sanctioned by the Government at a cost of Rs 37.82 cr and work was also awarded to separate shipbuilders. The construction work was in progress. Construction of seven survey vessels was also completed during the year and the vessels were deployed on the waterway. Terminals: Fixed terminals at Haldia, Kolkata, Pakur, Farakka and Patna. Floating terminals at Haldia, Kolkata, Diamond Harbour, Katwa, Tribeni, Shantipur, Behrampur, Jangipur, Farakka, Rajmahal, Sahibganj, Manihari, Bhagalpur, Semaria, Doriganj, Ballia/Buxer , Ghazipur/Kaithi, Varanasi, Chunar and Allahabad. Construction of low-level jetty of fixed terminal (capable of handling containers) at Patna which was completed during last year was formally taken over by IWAI. For construction of high-level jetty of this terminal, CPWD completed the design and tendering process progressed. Based on tendered rates CPWD increased the cost from Rs. 13.73 cr to Rs 29.14 Cr due to which Revised Cost estimate (RCE) was prepared and submitted to the Department of Shipping (DoS) for sanction. Simultaneously, Government of Bihar was requested for acquiring 1 acre of land to be handed over to IWAI for this high level jetty. For permanent terminal at GR jetty, and floating terminal at Allahabad, IWAI had entrusted the work to CPWD on deposit basis and design/tendering etc was progressed by them. For construction of permanent terminal at Varanasi, M/s. MECON were requested to take up the construction work on turn key basis. For a permanent terminal at Haldia also, alternative sites were inspected and it was decided in principle that its construction and management may be taken up on PPP mode possibly under Project Development Organisation/Project Development Committee (PDO/PDC) mechanism, IWAI has with M/s. IL&FS - IDC. Floating terminals exist at Haldia, Kolkata, Rajmahal, Sahibganj, Manihari, Bhagalpur, Semaria, Patna, Ballia, Kaithy, Varanasi, Chunar and Allahabad. These terminals were maintained and used for transportation of cargo. For construction and supply of six terminal pontoons for upgrading floating pontoons at Haldia, Diamond harbour, Kolkata, Shantipur, Katwa and Farakka tendering was carried out which had to be repeated due to inadequate response.

Figure 3: IWT terminal at Patna, NW-1 Navigational Aids: Channel marks for day navigation were erected and maintained between Tribeni and Allahabad round the year. Besides, fortnightly thalweg surveys were carried out, river notices issued and pilotage provided to the cargo vessels. Night navigation aids were also maintained between Tribeni and Farakka (364 km). For providing state of art 24 hrs navigation aids in the entire waterway, a Committee under the chairmanship of Director General Light Houses & Lightships (DGLL) had suggested a combination of lights mounted on buoys/country boats, trestle towers and DGPS stations. For this, tenders for DGPS instruments, trestle towers, buoys and lights etc were invited. Action to take over land for setting up of DGPS stations at Shantipur, Bhagalpur, Patna and Varanasi were initiated.

NATIONAL WATERWAY -2 The Brahmaputra river from Sadiya to Dhubri (891 kms) - declared as National Waterway in 1988.

Figure 4: National Waterway 2

Fairway Development: To maintain LAD of 2 m between Dhubri and Dibrugarh (768 km) and 1.5 m between Dibrugarh and Sadiya (123 Km), RC works i.e. bandalling and dredging were carried out. During 2007-08, 21,900 m of bandals were erected and maintained in the entire

waterway. In addition, 71,000 m3 of dredging was also done by deploying one CSD and one Hydraulic Surface Dredger (HSD) which are owned by IWAI. Least Available Depth (LAD) of 2.0 m was maintained between Dhubri and Dibrugarh and 1.5 m between Dibrugarh and Sadiya round the year. During 2007-08, an important project for construction and supply of four CSD units was sanctioned by the Government at a cost of Rs 75.64 cr and work was also awarded to separate shipbuilders. The construction work was in progress. Construction of two survey vessels was also completed during the year and the vessels were deployed on waterway.

Terminals: Low level fixed terminal at Pandu. Floating terminals at Dhubri, Jogighopa, Tejpur, Silghat, Jamuguri, Neamati & Dibrugarh. Construction of low level jetty of fixed terminal (capable of handling container) at Pandu progressed and by the end of 2007-08, it was nearly completed. For construction of high-level jetty of this terminal, CPWD completed the design and tendering process progressed. Based on tendered rates, CPWD increased the cost from Rs 17.70 Cr to Rs 24.58 Cr due to which RCE was prepared and submitted to the DoS for sanction. Floating terminals exist at Dhubri, Jogighopa, Pandu, Tezpur, Silghat, Jamuguri, Neamati and Dibrugarh. These terminals were maintained and used for transportation of cargo. For construction and supply of 3 terminal pontoons for upgrading floating pontoons at Tezpur, Neamati and Dibrugarh tendering was carried out which had to be repeated due to inadequate response. Under the PDO/PDC mechanism project for developing coal handling terminal at Jogighopa under PPP mode was taken up and the team of IL&FS-IDC inspected the site and collected relevant data to formulate the project.

Figure 5: IWT terminal at Pandu, NW-2

Navigational Aids: Channel marks for day navigation were erected and maintained in entire waterway. Night navigation aids were also maintained between Dhubri and Pandu (255 km). Besides, fortnightly thalweg surveys were carried out, river notices issued and pilotage provided to cargo vessels. For providing state of art 24 hrs navigation aids in the entire waterway, a Committee under the chairmanship of DGLL, had suggested a combination of lights mounted on buoys/country boats, trestle towers and DGPS stations. For this, tenders for DGPS instruments, trestle towers, buoys and lights were invited. Action to take over land for setting up of DGPS stations at Jogighopa, Tejpur and Dibrugarh were initiated. NATIONAL WATERWAY -3 The West Coast Canal from Kollam to Kottapuram along with Champakara and Udyogmandal canals (205 kms) - declared as National Waterway in 1993.

Figure 6: National Waterway 3

Fairway Development: Fairway development works including maintenance dredging, and 24 hrs navigational aids are taken up on year to year basis. Accordingly, these works were taken up during 2007-08 also. Moreover, bank protection works in some stretches were completed during the year and for taking up more such works in critical areas the tenders were invited. Capital dredging for widening and deepening of canal between Kochi and Kollam was started in first phase during 1997-98. In Kochi - Kottapuram stretch, capital dredging was started in 2nd phase during September 2002. Work in Kochi-Allapuzha sector was completed and in KochiKottapuram sector barring 4.83 Km dredging was completed in the entire stretch of 30 km. But in the remaining reaches, it got delayed due to various problems such as disposal of dredged material, fishing nets, local issues leading to contractual problems etc. Out of entire length of 205 km of the waterway, the total shoal length has been estimated as 87.16 km out of which 59.75 km has so far been dredged and 27.41 km remains to be dredged. The total quantity which was to be dredged for deepening the entire shoal length was worked out as 40.33 lakh m3 out of which 23.98 lakh m3 has been dredged and 16.35 lakh m3 remains to be dredged. For completion of this capital dredging (which also includes widening of the narrow sections which necessitates removal of boulders, coconut trees, old bank protection etc), tenders were floated during the year to cover entire scope of balance works and based on the tendered rates of various items, revised cost estimate was prepared at a cost of Rs 89.74 Cr and after its approval by IWAI Board, it was submitted to DoS for Government sanction which was awaited. Terminals: Fixed terminals at Aluva, Viakom, KayamKulam, Kottapuram, Maradu, Trikkunnapuzha, Kollam and Alappuzha. Terminals at seven locations namely Kottapuram, Aluva, Maradu, Viakom, Taneermukham (Chertala), Trikkunnapuzha and Kayamkulam have already been provided and under PDO/PDC mechanism the PDO was entrusted the work of formulating a project for operation and maintenance of these terminals as a PPP project. The PDO had made a field visit and collected relevant data and they were in the process of formulating the project. Construction of 8th terminal at Kollam was entrusted to CPWD on deposit basis and the same was in progress. For Chratala,

providing facilities for mechanical handling at these terminals, 8 mobile cranes and 8 fork lifts were procured while procurement of 8 platform trucks for these terminals was in progress. Navigational Aids: Project for providing and maintaining 24 hrs navigational aids by way of buoys and lights had been completed during the year and now the entire waterway has the facility for 24 hrs navigation.

SALIENT FEATURES OF NATIONAL WATERWAY NO. 4 - GODAVARI & KRISHNA RIVERS & CANALS BETWEEN KAKINADA AND PUDUCHERRY (NW-4)

Declared as National Waterway 4 (NW 4) on 25.11.2008 Detailed Project Report (DPR) prepared by M/s. WAPCOS Total Length - 1027 km. River portion (328 km), Irrigation canals (302 km) Salt water canals (397 km)

Estimated Cost (at 2009 prices) - Rs 1515 Cr Phase - 1 - Rs. 609 crore Development of stretch comprising of Godavari & Krishna rivers, and Kakinada & Eluru canals, which has maximum cargo potential, at an estimated cost of Rs.390 Crore & land acquisition for remaining stretch at an estimated cost of Rs.219 crore Phase - 2 - Rs .906 crore Development of North & South Buckingham Canal, Commamur canal & Kaluvelly Tank at an estimated cost of Rs.906 crore Period of Completion - 7 years Land Acquisition

in Tamil Nadu - 300 Ha in Andhra Pradesh -1380 Ha in Puducherry - 27 Ha

Estimated cost of land acquisition - Rs. 391 Crore Details of dredging: in canals - 20 million cum at an estimated cost of Rs. 333 Crore Potential Cargo - 11 million tonnes per annum EIRR Phase - I 34.63% Entire waterway 16.12% Coal on Godavari river, cement on Krishna river rice in both Krishna and Godavari

Figure 7: National Waterway 4

SALIENT FEATURES OF NATIONAL WATERWAY NO. 5 - BRAHMANI RIVER & MAHANADI DELTA SYSTEM ALONG WITH EAST COAST CANAL (NW-5)

Declared as National Waterway 5 (NW 5) on 25.11.2008 Detailed Project Report (DPR) prepared by M/s. WAPCOS Length - 588 km. River portion (371 km) Canal portion (217 km)

Estimated Cost (at 2009 prices) (i) Cost for development of River portion Rs. 2230 cr (Barrages- 1843 cr) (ii) Cost of development of canal portion Rs. 1979 cr (Dredging- 1273 cr) (iii) Total Cost Rs. 4209 crore Period of Completion - 7 years Land Acquisition: in West Bengal - 846 Ha in Orissa - 1172 Ha required

Estimated cost of land acquisition - Rs. 176 Crore Details of dredging River portion - 10.07 million cum Canal portion - 44.77 million cum

Barrages To maintain LAD of 2 m in the Brahmani river all through the year, 5 barrages with height equal to the highest flood level are proposed to be constructed at every 26 km between Talcher and

Jokadia. Each barrage will have a navigational lock to allow passage of two 500 tonne vessels at a time. Cargo potential Coal from Talcher to Dhamra and Paradip ports is the most important potential cargo for this waterway. Immediately after the development of the waterway, it is estimated in the DPR that about 11 million tonne of cargo can be transported per year which can go up to 23 million tonne in next 15 years or so. EIRR River portion 31.77% Canal portion 12.75% Rive and canal together 23.75%

Figure 8: National Waterway 5

D. STORAGE FACILITIES Storage facilities in major ports in India (IN SQ. METRES) SL. NO. PRIVATE AND TYPE OF STORAGE PORT USER AGENCIES KOLKATA 1. Covered Area (a) Transit Shed (b) Warehouse 134722 10794 654078 KL 134722 10794 9000 174465 654078 KL 328981 + 654078 KL TOTAL

(c) Container Freight Station 9000 2. 3. Open Area Liquid Cargo (Tank forms, etc) TOTAL : 174465 -

328981

654078 KL

HALDIA 1. Covered Area (a) Transit Shed (b)Warehouse 2. 3. Open Area Liquid Cargo (Tank forms, etc) 25040* 892840 ** 25040 892840 -

TOTAL :

917880

917880

PARADIP 1. Covered Area (a) Transit Shed (b)Warehouse 2. 3. Open Area Liquid Cargo (Tank forms, etc) TOTAL : 16100 7700 1500000 1523800 12300 532000 544300 16100 20000 1500000 532000 2068100

VISHAKHAPATNAM 1. Covered Area (a) Transit Shed (b)Storage Shed 30525 29909 615929 tonnes 30525 28909 +615929 tonnes 10483 + 66230 tonnes + (100-125) TEUs 81500 tonnes 1243380 + 114884 tonnes & 309356 Sq. mtrs.

(C)Warehouse

10483

66230 tonnes + (100-125) TEUs 81500 tonnes 114884 tonnes and 309356 Sq mtrs

(d) Sylos

2.

Open Area

1243380

3.

Liquid Cargo (Tank forms, etc) TOTAL : 1314297

1216648 Tonnes + 1216648 Tonnes + 121437 KL 121437 KL

2095191 tonnes + 1314297+ 2095191

309356 Sq. mtrs.121437 KL

tonnes + 309356 Sq. mtrs. + 121437 KL + (100-125) TEUs

ENNORE 1. Open Area TOTAL : 42000 42000 42000 42000

CHENNAI 1. Covered Area (a) Transit Shed (b)Warehouse (c)Others 2. 3. Open Area Liquid Cargo (Tank forms, etc) TOTAL 42350 39960 636275 33062 19897 585330 141601 (KLs) 638289 + 141601(KLs) 42350 73022 19897 1221605 141601 (KLs) 1356874 + 141601(KLs)

718585

TUTICORN 1. Covered Area (a) Transit Shed (b)Warehouse 2. 3. Open Area Liquid Cargo (Tank forms, etc) TOTAL 10800 20550 533000 564350 459000 146810* 605810 10800 479550 533000 146810 1170160

COCHIN 1. Covered Area a) Transit Shed (b)Warehouse 13234 14489 125400 (Tonnes) 125400 Tonnes 13234 14489 Also Available 126740 154463 Tonnes

(c) Container freight Station 2. 3. Open Area Liquid Cargo (Tank forms, etc) TOTAL Also Available 1340 29063

NEW MANGALORE 1. Covered Area a) Transit Shed & Overflow Shed (b)Warehouse 2. 3. Open Area Liquid Cargo (Tank forms, etc) 23634 6980 60357 15330 221800 (KL)) 48500 (Tonnes) 15330 + TOTAL 91151 221800 (KL) + 48500(Tonnes) 23634 22310 60357 221800 (KL) 48500(Tonnes) 106481 + 221800 (KL) + 48500(Tonnes)

MORMUGAO 1. Covered Area a) Transit Shed (b)Warehouse 8250 18832 14480 8250 33312

2. 3.

Open Area Liquid Cargo (Tank forms, etc)

405389 -

253506 (KLs)+ 15000 (t) 14480 +

405389 253506 (KLs)+ 15000 (t) 446951+ 253506 (KLs)+ 15000 (t)

TOTAL

432471

253506 (KLs)+ 15000 (t)

MUMBAI 1. Covered Area a) Transit Shed (b)Warehouse (c) CFS Sheds 2. Open Area 122971 121357 66534 309787 + 8534 Ground Slots 771 to 10224 3. Liquid Cargo (Tank forms, (KLs) (8 nos.) etc) Total: 39,571kls Approx 620649 + TOTAL 8534 (Slots) +39,571 kls 139 tanks; 487000 Tonnes (Approx.) 620649 + 8534(Slots) + 39571 (KLs) + 487000 Tonnes 139 tanks; 487000 39,571 kls Tonnes (Approx.) 487000 Tonnes 122971 121357 66534 309787 + 8534 Ground Slots

J.N.P.T. 1. Covered Area a) Shed (6 Nos) (b)Warehouse/CFS for 215000# 1872158 ## 2087158

container Open Area( Bulk Storage 2. Area) Open Area (Container) Liquid Cargo (Tank forms, etc) Storage Capacity TOTAL 391841 MT 118 Tanks : 629990 MT 833014 3068599 391841 MT 118 Tanks : 629990 MT 3901613 618014 804600 1422614

3.

KANDLA 1. Covered Area a) Transit Shed (b)Warehouse/Godowns/CFS Sheds/Bulk Storage/Bagging 113223 Plant, etc 2. 3. Open Area Liquid Cargo (Tank forms, etc) TOTAL 1394394 2126108 KLS 7560 + 2126108 KLS 1070660 2126108 KLS 1521033 + 2126108 KLS 7560 120783 5856 5856

1513473

Table 21: Storage facilities in major ports in India (*) Includes Transit Shed Leased to the port users inside the dock; (**) Includes open storage area leased to the port users inside the dock (#) JNP CFS (Outside, but in Port's Land); (##) Private CFS (Outside Port Area)

Storage spaces Existing warehousing capacity

Name of Port

Warehousing capacity

Kolkata Paradip Visakhapatnam Chennai Mumbai Jawaharlal Nehru

1,55,000 Sq. m 23,771 Sq. m 65,326 Sq. m 45,766 Sq. m 1,78,457 Sq. m JNPT has no warehousing facility inside the port area. Warehousing facility is available at all container fright stations (CFSs) in and around on JN port. At present 22 CFSs are operational in and around JN Port having capacity of 1.5 million TEUs per annum.

Tuticorin Cochin New Mangalore Mormugao Kandla Ennore

1,07,104 Sq. m. 64,000 Sq. m 21,000 tonnes 35,348 Sq. m 1,44,000 Sq. m Nil

Table 22: Existing warehousing capacity

Current warehousing infrastructure in respect of Paradeep, Chennai, Mumbai, Jawaharlal Nehru, Visakhapatnam, Tuticorin, Cochin, New Mangalore & Mormugao Ports is able to meet the requirements. Current warehousing infrastructure in respect of Kolkata and Kandla ports is not able to meet the requirement and needs to have more warehousing facilities.

In Ennore Port the nature of cargo handled at present and projected to be handled during the next 5 years does not require warehousing infrastructure to be developed in Ennore.

In Kolkata port possibility of expanding the warehouse facility in the vicinity of the dock is being explored in consultation with customs authority. At Haldia Dock Complex (HDC) warehousing capacity is able to meet the cargo being presently handled. However, keeping the increased requirement of storage area action has already been initiated for creation of additional storage area. Kandla port is regularly constructing new godowns and open plots to meet the cargo storage requirements. At some ports Container Freight Stations (CFSs) to cater the future need of exim traffic are being developed.

GOVERNMENT REGULATIONS

A. GOVERNMENT POLICIES REGARDING COASTAL SHIPPING

In India coastal shipping comes under the purview of the Directorate General of Shipping (DG Shipping).It frames the and implement the policies regarding coastal shipping as well as the construction specifications of coastal vessels, Cabotage law, taxation, etc.

Cabotage law in most countries reserves the movement of coastal trade to their own flag vessels. Policies measures involve crewing restrictions, ownership restrictions, provision for domestic fleet subsidy, reflagging restrictions, etc. In India , the Merchant Shipping Act bars foreign bottoms from carrying cargo between Indian ports; exceptions are made if no suitable Indian vessel is available. The market of shipping industry being highly volatile, such protection creates a certain degree of stability for the Indian bottoms. Action plan for the development of coastal shipping in already on the anvil with the central government. With a view to promote coastal shipping and sailing vessel industry, the home trade vessels and sailing vessels have been exempted from the payment of lighthouse dues under the provisions of the Lighthouse Act,1927.

a) Indian merchant shipping act 1958

The terms Admirality law or Maritime Law or Merchant Shipping Law are generally regarded as more or less synonymous and could only be distinguished on the basis of the emphasis given to one or the other aspects of the merchant shipping. The Law of the sea (a part of public international law dealing with uses of seas) is sometimes confused with practice, Admirality and maritime Law are for most purposes virtually synonymous.

Maritime law comprises the most important part of private international law that deals with the shipping industry. Its long history and separate international traditions, as well as its link with a single industry, make it distinct from other branches of law. Its rules and practices deal with such matters as marine insurance, carriage of goods by sea, chartering, mariners rights, collision, salvage and limitation of liability. However, public and private international law overlap in such matters as pollution caused by ships, sea Lanes, maritime communications, safety of life at sea and also on questions of jurisdiction over ships at sea.

Customer rules, usages, conventions and principles of international property and natural justice, as have been accepted or recognized by the nations of the world, constitute, as it were, the general International Law governing any particular subject of inter-state relationship weather maritime or otherwise. In determining, therefore, the national law applicable to shipping of a particular state, it is necessary to ascertain the international conventions which have been duly ratified by it and also the bilateral treaties which that country has negotiated and ratified. There are in addition the executive pronouncements or Presidential Proclamations which in the case of India have been made to define the limits of territorial waters and this must also be regarded as a part of the municipal Law of the land.

The municipal legislation which regulates the shipping industry, has one respect or the other be connected with merchant shipping. However, some of the more important ancillary statutes are mentioned below: 1. The Customs Act, 1962 As Customs and sanitary regulations govern both passenger and cargo traffic by sea transport, the relevance of this statute to merchant shipping operations is obvious. 2. Acts relating to Ports a) The Bombay Port Trust Act, 1879 b) The Calcutta Port Trust Act, 1890 c) The Madras Port Trust Act, 1905

d) The Indian Ports Act, 1908 (applies to all ports) e) The Major Port Trusts Act, 1963 (applies to all major ports other than Bombay, Calcutta and Madras). Since every merchant ship enters inland harbour waters and has to comply with the port regulations, it is necessary that every owners and master of a vessel must be conversant with the port regulations. 3. The Indian Lighthouse Act, 1927 As lighthouses guide merchant shipping, there is no doubt that enactments on this subject would come under the category of ancillary statutes concerning merchant shipping. The aforesaid enumeration of statutes is confined to the more important ones which deal with merchant shipping. The lesser enactments have not been mentioned here. The intention is to give an indication of the vastness of the Statute Law which regulates merchant shipping and constitutes its legal regime. Before Independence, India had hardly any definite shipping policy. On 15th August 1950, the Government of India declared its national shipping policy and in February, 1958, a draft Bill on merchant Shipping Act, 1958 was enacted. The merchant Shipping Act, 1958 applied to all the ships registered in India or which are required to be registered in India. Every Indian ship, unless it is a ship which does not exceed fifteen tons net and it is employed solely in navigation on the coasts, of India, is required to be registered under the 1958 Act. The Director General of Shipping is required to implement the Merchant Shipping Act, and oversee registration of ships, issue trading licence for ship routes, conduct survey work, implement manning provisions, hold examinations for officers, and crew ensure seaworthiness of vessels and ensure compliance of employment norms for crew and officers.

B. GOVERNMENT REGLATIONS

i. ii. iii. iv. v.

Vessel conversion Manning regulations Indian register of shipping Classification society Cabotage law

i. VESSEL CONVERSION The ship owner wants to convert his vessel from the Foreign in to Coastal Vessel, he has to follow some procedures, as follows; Inform to the respective agents Ship registry From where the ship has came Covering letter (Foreign-to-Coastal) Produce the licence copies Send the letter to the Customs of the particular port Boarding Officer (will seal the provisions) Bunker duties Duty {NRT-Net Register Tonnage (per tonnes Rs.8.00}

(Note: It will take at least one day)

Customs Procedures

Cumbersome customs procedures have since long been impeding the growth of coastal shipping. Our examination of the current situation reveals however that through the notifications of on 07.10.97 and P.N.190/97 dated 20.10.97, coastal ships have been exempted from the provisions of Section 92, 94, 97 and 98 (1) of the Customs Act, 1962.

This means that coastal ships no longer have to file a bill of coastal goods at load ports, bill of entry at discharge ports or obtain written permission before leaving a port. Given this customs procedure can no longer be said to border on rigidity.

ii. MANNING REGULATIONS

Employment of seamen on Indian ships There are two types of employment offered to Indian seamen on board Indian vessels, that is, 1. Permanent employment by a Company; 2. Registration at the Seamens Employment Office (S.E.O) The former, for example, Machinists, Fitters, Head Waiters, Butlers, Chief Stewards, Carpenters, Etc. (generally called Petty Officers) are employed directly by the Company concerned and are issued a Continuous certificate of Discharge (C.D.C) by the Shipping Master and identity Card by the S.E.O. (Nowadays Passports are made for this category). They are subject to and governed by: i. ii. iii. The Merchant Shipping Act, 1958 Articles of Agreement; and Terms of conditions signed between the employees and the employers.

The ratings belonging to the second category are either borne on the Company Roster or on the general Roster, are registered with the S.E.O. and are issued a C.D.C. by the shipping Master, and a Registration Book by the S.EO. The registered ratings who are employed through S.E.O. are subject to and protected by:

i. ii. iii. iv. v.

The Merchant Shipping Act, 1958; Articles of Agreement; Seamens Employment Office Rules, 1954; Decisions of the Seamens Employment Board, and Terms and conditions of service as agreed to at National Maritime Board, which is a bipartite organization of ship-owners and seafarers.

Under Section 3(12) of the M.S.Act, 1958 a seamen means every person (except a Master, pilot or apprentice) employed or engaged as a member of the crew of a ship.

Manning scales

There are no fixed manning scales for Indian ships, however, the strength of crew for each individual ship is mutually decided between the Owner and the concerned Seafarers Union. Under Section 88 of Merchant Shipping Act, 1958 the Central Government has authorized the National Maritime Board to enter into an agreement with the Seafarers Union and make rules for the classification of seamen into different categories and for the minimum manning scale of seamen of such categories for different ships. The N.M.B. Agreements are for home-trade, foreign-going and general purpose crews. For the purpose of defining equivalent ratings in conventionally manned ships in relation to GP crews the following shall apply:

G.P Ratings CPO (GP) Machinist I (GP) CPO Fitter (G)

Conventional Ratings : Deck and engine Serangs

: Fitter

GP Fitter Machinist II (GP) P.O.I. (GP) P.O.II (GP) G.P I : Assistant Fitter : Tindal, Deck Maintenance Hand, Pump man : Deck Tindal, Engine Tindal, Assistant Pump man : Seaman/Helmsman, Desk Cassab, Engine Cassab, Donkey man, Donkey Greaser GP II GP III GP Chief Steward GP Cook I GP Chief Cook GP Cook II GP Crew Cook GP Bhandary GP Cook III GP General Steward GP Scullion GP JUS GP Laundryman : Seaman I, E.R. Rating I : Seaman II, E.R. Rating II : Chief Steward, Steward : Chief Cook and Baker : Chief Cook and Baker : 2nd Cook : Deck, Engine Room and Catering : Bhandaries, Crew Cook : 3rd Cook : General Steward, GS/Utility : Galley and Pantry Scullion : Junior Utility Steward : Laundryman

Repeated pleas over the year for lowering of manning scales standards for coastal ships Vis-to Vis foreign going vessels have not been heeded. The point made in support of this argument was that coastal ships spent must less time at sea unlike foreign going vessels, they do not undertake deep sea voyages and officers on board these vessel do not need the same level of training and sophistication as for officers for foreign going vessels calling at different ports in various countries.

The 1978 & 1995 STCW conventions permitted special concessions to ships plying within near coastal areas, which were to be defined precisely by the maritime administrations. Since India did not act upon it on the engine side particularly, no concession became available for vessels trading along or near the coast. Since the manning scales were statutorily fixed (Section 76 of the MS Act) no alteration was possible without the amendment of this provision. The 2002 amendment of Merchant Shipping Act however vested the powers to prescribe manning scales in the Central Government. In exercise of thus manning scales for near coastal vessels (NCV) plying between India, Bangladesh, Sri Lanka, Myanmar, and Maldives have been made less stringent.

Since no separate scales for coastal vessels plying exclusively between Indian ports have however been prescribed and these vessels too have to comply with NCV scales. Some segments of the industry have however been demanding that the manning scales for the coastal vessels should be much less stringent than for NCVs.

The Consultants however feel that existing NCV scales prescribed for coastal vessels between Indian ports should not be relaxed further in the interest of safety.

iii. INDIAN REGISTER OF SHIPPING History Recognising the necessity for a leading maritime nation such as India to have it's own classification society, the Government of India constituted a Steering Committee (known as

Mudaliar Committee) whose recommendation for formation of an Indian classification society was accepted by the Government of India in 1974. Thus, in 25th March 1975, Indian Register of Shipping was established as a public limited company under section 25 of the Indian Companies Act, 1956 with no share capital, no shareholders and distributing no dividends and seeking to promote the objects for which it was established which include:

To provide faithful and accurate classification and record of mercantile shipping classed with IRS To establish standards and formulate rules for the construction and maintenance of ships, amphibious installation, marine equipment and industrial and general engineering equipment.

To approve designs of, to survey and to issue reports on land installations, machinery, materials and apparatus of all kinds. To aid and develop the merchant marine industry of India To evaluate, assess and certify quality management systems in industries and to carry out pre-registration audits and certification audits for quality management systems.

Within a short span of its inception, IRS has already established itself as an international ship classification society and is in many ways on par with leading ship classification societies of the world, which have been in existence for over a hundred years. It's highly skilled and motivated technical personnel, which continue to be it's main source of strength, coupled with it's enviable safety record, allows IRS to enjoy the confidence of the entire marine fraternity - ship owners, ship builders, underwriters, government, industries allied to shipping, et al. It's reputation for efficient, prompt service of the highest order based on it's technical, financial and moral integrity has in fact made common the acronym "IRS" by which the organisation is recognised today Integrity, Reliability & Safety. Within 24 years of its inception, IRS has many significant achievements to its credit, some of which include:

Associate Membership of the elite International Association of Classification Societies (IACS), which comprises a dozen members, who are the most advanced ship classification societies of the world.

95% of the Indian fleet is already classed with IRS. IRS is the sole authority for final assignment of Loadline on behalf of the Government of India. Indian Register Quality Systems (IRQS), a department of IRS, established as a certification body for Quality Management Systems to ISO 9000/equivalent standards, was the first Indian organisation to be accredited by Raad voor Accreditatie (RvA), Holland.

IRS is also in full compliance with Quality Systems Certification Scheme (QSCS) of IACS and is also recognised by the United States Coast Guard in terms of IMO Regulation 739 (18) as a "recognised organisation".

Overview With the advancement of technology, an industrial plant of today may be provided with complex pressure systems, equipment and controls to handle hazardous material and heavy loads. This advancement has been accompanied by an increased public awareness about the effects of the failure of any part of an industrial plant on environmental and personnel safety. Consequently, now there are more statutory controls and liability laws affecting industrial plants and their working. There is now more emphasis being placed on independent design appraisal and inspection during manufacture including pre service inspection and in service inspection. This is where the services of third party inspection agencies become vital. IRS began offering third party inspection and certification services to the general engineering industry, beginning in the eighties. Today, the IRS certificate has become synonymous with compliance with the code of construction, and with the agreed technical specifications. While providing third party inspection or certification services, IRS follows the principles of impartiality, confidentiality and a uniform interpretation and application of codes and standards.

This is backed by actions such as close involvement with the project to avoid unnecessary delays; issue of progress reports, if required, and certification on completion of the project. IRS has offered, and can offer, third party inspection or certification to industries involved in general engineering, chemicals, petrochemicals, electrical power generation and transmission, pipelines for transportation of petroleum products, and cross-country pipeline projects.

Inspection has been carried out for equipment such as pressure vessels; lifting gears; piping systems; forging; castings; and rolled products; mechanical equipment like engines, gear boxes and couplings; storage tanks; electrical machinery, cables, and switch gear. Other projects include in-service inspection; evaluation and audits of safety systems; and general structures. In carrying out inspection services for industry, no project is too small or too large. IRS services are tailored to meet individual requirements. With offices situated all over the country, IRS can respond to a client's needs with prompt and efficient service at a very competitive cost. IRS surveyors can also be placed at the work site during construction and installation of large plants, for example in the chemical or petrochemical industry. They can provide in-service inspection during the maintenance of large plants to ensure that activities proceed according to contractual specifications and quality system requirements. IRS field surveyors are supported by a highly qualified team at the Head Office. They are given full technical support and are qualified to carry out professional design appraisals of plans for compliance with accepted industry code, rules, regulations etc. general engineering practice and the owner's own technical specifications. IRS is actively involved in the development of codes and standards. IRS representatives participate in technical committees and working groups set up by the Bureau of Indian Standards (BIS) and other institutions which evolve codes and standards.

Technical committee A Technical Committee has been constituted to consider the formulation and updating of the rules for classification, surveys, building of ships, their machinery and equipment for adoption by IRS. The Technical Committee comprises of highly qualified technical personnel of various disciplines in the marine field representing the shipbuilders, engine builders, various learned bodies. Research Institutions, organisations, departments associated with shipping. The Technical Committee can co-opt to the main body other members of high technical and managerial position in shipbuilding, engineering, naval architecture, marine insurance, steelmaking etc.

Classification sub-committee Another important organ of IRS is the Sub-committee of Classification comprising of various members nominated from among the members of the Committee of Management, so chosen as to represent the interest of Shipowners, Underwriters, Shipbuilders, Ship repairers, etc. This Classification Sub-Committee deals with various aspects of Classification of Ships and since various groups interests are represented the decisions arrived at by it reflects a balanced and fair view in keeping with the best traditions of established Ship-Classification Societies.

Agreements with other societies IRS has entered into dual-class agreements with six established foreign classification societies which enable surveys to be conducted in all foreign ports of the world on ships classed with IRS. All surveys in India are carried out by the Exclusive Surveyors of IRS. The Societies with whom such agreements have been signed are; American Bureau of Shipping (ABS), New York

Bureau Veritas (BV), Paris Det Norske Veritas (DnV), Oslo Germanischer Lloyd(GL), Hamburg Lloyds Register of Shipping(LRS), London Nippon Kaiji Kyokai(NKK), Tokyo

These agreements also provide for exchange of technical information and training of IRS Surveyors as and when required. These agreements are also helping IRS to earn substantial amount of foreign exchange because a ship classed with IRS or intended to be classed with IRS is surveyed abroad by these Societies.

IRS also has reciprocal agreements with Polish Register of Shipping and Romanian Register of Shipping Which enable Indian ships to be surveyed in Poland and Romania by these societies whereas in India ships classed with these societies are surveyed by IRS when they are in Indian ports. IRS has been carrying out such surveys on Romanian, Polish and other such ships in all the Indian ports.

Staffing It is a well-known fact that the success of a Classification Society which is a service organisation, depends primarily upon the performance and competence of its staff which is its main asset. Recognising this principle, the committee has bestowed great care in their selection of the staff members with a view to ensuring that highest standards of technical as well as moral integrity are consistently maintained. The Committee has steadily built up a cadre of technical and non-technical staff to serve at the Head office and other and other offices. Since this is the time that a classification society is having its head office in India, considerable thought and great care has been bestowed on selection of highly qualified and experienced technical personnel of right caliber who not only

will undertake surveys on ships but will also provide the necessary head office back-up such as formulation and updating of Rules in keeping with the rapid technological advancements, scrutiny of survey reports, maintenance and retrieval of records pertaining failures, defects technical information and data etc.

Training The success of any Classification Society depends upon the integrity, high technical ability of its staff and the efficient surveying service it can provide to its clients. This simply means that a Classification Society must have on its rolls services of exclusive technical staff of the very highest caliber. Further, if the technical staffs are to keep pace with the rapid rate at which the technology is advancing, a comprehensive programme of continuous training for such technical staff is essential. Bearing in mind these factors, IRS has set down following: To provide efficient initial training for all new entrants so that they become effective members of the staff. This training is being imparted under the guidance of the Principal Surveyor and other Senior Surveyors prior to stationing new entrants at outports. Such training is imparted in two ways: on the job training in survey work and in-house theoretical and practical training some specialized subjects such as Advanced courses in ship-building, Naval Architecture, engineering, welding, metallurgy, strength of materials, Non-destructive Testing (dyePenetrant, Magnetic Particle, Radiography, ultrasonics, Eddy-current etc.), use of Glass Reinforced plastics, Classification Survey procedures, statutory survey procedures, etc. Special Training courses in India and Abroad on subjects ranging from Radiography, Ultrasonic, NDT, Welding, Quality Assurance System and certificate, Risk Analysis, Diving, etc.

iv. CLASSIFICATION SOCIETIES

While many hazards of the sea can only be guarded against by the skill and courage of those who man the ships, a great deal depends upon the structural fitness and reliability of the machinery/equipment on the ship. It was to fulfill the demand for independent technical opinion on the fitness of ship by the commercial and business interests connected with the operations of the ships that Classification Societies came into existence. It is not surprising that the Underwriters whose involvement in a venture is relatively more should have taken the initiative to first classify ships according to whether, from the construction, maintenance and manning points of view, they constituted good or bad risks. It was not long before the shipowners themselves recognising the advantages inherent in complying with accepted standards joining hands with the Underwriters in the creation of a system of ship classification based on defined technical standards. From such a beginning were created reliable organisations for the inspection and maintenance of character of merchant ship. These organisations are normally known as Ship Classification Societies. A ship Classification Society is a service organisations which is highly technical in nature and completely independent in character. Normally, it is collectively managed by those whom it serves such as shipowners, underwriters, shipbuilders etc. It has no profit motive and aspires only to enough income for self-support, self perpetuation and growth.

v. CABOTAGE LAW This words origin is French caboter means sail along the coast. Cabotage Law of any country specifies usage of only countrys own vessels in its coast. India has also applied this law to its coastal operation

Under the Cabotage law the movement of coastal trade of the country is to be reserved for its own flag vessels. The impact of such reservations is significant where the country has along coastline and domestic trade is robust.

India's Cabotage regulations, which restrict the operation of foreign vessels in Indian waters, are provided under the Merchant Shipping Act, 1958 (MSA).

A new shipping policy was initiated in 1990-91 to promote Indian shipping, with the objective of:

(i) reducing dependence on foreign shipping services;

(ii) safeguarding imports of essential supplies for India's economy;

(iii) reserving 100% coastal trade for Indian flag-bearing ships;

(iv) ensuring adequate shipping services to meet India's requirements for coastal trade, and

(v) improving the balance of payments position through import substitution and export of shipping services

Though Indian flag-bearing vessels must be owned only by Indian entities, foreign entities are permitted to invest up to 100% in Indian ship-owning and ship-operating companies, thus enabling foreign investors to obtain the privileges granted to Indian shipping companies. Since foreign investors can acquire shareholdings in Indian companies owning ships which fly the Indian flag, 100% overseas debt/equity financing will enable 100% control by foreign operators of Indian coastal trading companies.

International competition can integrate domestic and international services through different patterns and improve technical efficiency It may lower freight rates in the process. At the same time, relaxation or repeal of Cabotage laws could be a threat to domestic tonnage as it will open the door for foreign flag vessels to carry coastal cargoes.

The current trend is for foreign companies to acquire Indian subsidiaries of shipping companies, which buy Indian flag-bearing vessels. Such acquisitions are funded by the foreign holding company or the ships are transferred to the Indian subsidiary on the credit sale.

Indian regulations require Indian ships and foreign ships chartered by Indian Ship owners to acquire trading licenses from the director-general of shipping (DG) before proceeding to sea.

Control is exerted over Indian ships by a licensing system which envisages that Indian ships or ships chartered by Indian citizens/companies are not permitted to be taken to sea from a port or place in India except with a license granted by the DG, and by issuing executive orders restraining the movement of ships. The DG may revoke or modify any license granted, subject to the licensee being given an opportunity to represent against such revocation or modification of the license.

Although by law a vessel owned by a foreign company may operate in India under a license granted by the DG, in practical terms, attaining a license is difficult inasmuch as the foreign company must establish that no Indian flag-bearing vessel is available which meets the specifications of the foreign vessel seeking the license. Moreover, the license is usually for a year or two and would have to be renewed, with similar conditions. Sections 406 & 407 of the Merchant Shipping Act, 1958 provide that a vessel is to be licensed by the DG shipping if it is to engage in coasting trade of India. In practice, foreign flag vessels are permitted to carry coastal cargo only if suitable Indian tonnage is not available.

Cabotage provisions in other countries vary in the extent of protection they provide to the national flag. The most stringent provisions are perhaps those in the Jones Act of the USA, which reserve domestic cargoes for vessel owned, built, flagged and manned in the USA. No Waivers are allowed. In the European Union, Regulation (EEC) 3577/92 has thrown upon the domestic sea-borne trade of any member state to all member states, but not to others. Australia permits foreign flag vessels to carry its coastal cargo if no suitable Australian ship is available. At the other end of the spectrum, New Zealand repealed its Cabotage laws in 1994 and opened its domestic sea-borne trade to international competition. International competition can integrate

domestic and international services through complex voyage patterns including a coastal leg, improving technical efficiency and lowering freight rates in the process. At the same time, relaxation or repeal of Cabotage laws could be a threat to domestic tonnage as it will open the door for foreign flag vessels to carry coastal cargoes. This issue was discussed extensively at the Stakeholders.

IX. FINDINGS Lack of policy measures to promote coastal shipping is another reason why it accounts for only 7% of domestic cargo movement. The average public sector investment in shipping in the fiveyear plans was only 5% (almost entirely allocated to overseas shipping) as against 51% for railways and 32% for the road sector. Maritime states and the Government of India have invested scantily to develop minor ports to create earmarked facilities for coastal cargo. Other factors that have slowed down the growth of coastal shipping are: Cumbersome customs procedures Nonavailability of concessional finance to acquire coastal vessels High import duties on bunker oil and spares High tariffs in major ports High manning scales which increase operational costs Stringent specifications relating to construction of vessels, leading to higher capital costs Incidence of corporate tax for coastal as against tonnage tax for oceangoing vessels and personal income tax which discourages quality officers from continuing on Indian coastal vessels Non availability of concessional finance for acquisition of vessels. Rigid conditions for dry docking coastal vessels in foreign yards. Absence of special Coastal Shipping legislation Lack of separate berthing facilities at major ports and inadequate cargo handling facilities at minor ports.

X. SUGGESTIONS

A. DEDICATED BERTH On the operator front, lack of dedicated berths for coastal ships at various Indian ports. Providing the dedicated berth for the coastal shipping.

B. DUTIES Duty exemption on fuel bunkers can be considered for coastal shipping in initial stages.

C. CARGO HANDLING Slow handling of the cargo at port and undue port delays inflict heavy losses on shipping.Given the inherent advantages of coastal shipping, there is an urgent requirement to promote the growth of this sector.

D. PORT AND HINTERLAND CONNECTIVITY Port and Hinterland Connectivity are essential components of the logistic chain and integral for the development of Port Sector. Hence, a synergetic policy to be formulated for which it is essential that all the Maritime States prepare consolidated proposals in this regard.

E. CENTRALLY SPONSORED SCHEME FOR IWT The significance of the scheme was emphasized by the Maritime States and it was recommended that the continuance of the scheme be taken up with the Planning Commission.

F. CONCESSIONAL TAX REGIME Concrete proposals to be sent by the Maritime States for putting in place a conducive tax regime for encouraging investment in port development and associated infrastructure. G. CABOTAGE LAW Cabotage law in most countries reserves the movement of coastal trade to their own flag vessels. Policy measures involve crewing restrictions, ownership restrictions, provision for domestic fleet subsidy, reflagging restrictions, etc. To promote greater coastal shipping, India's government has also relaxed the cabotage laws for container ships and lash barges, provided greater freedom to time-charter Indian ships to foreign shipowners and reduced the controls on freight. The development of coastal shipping in India has been measured. Ship owners are reluctant to acquire dedicated coastal vessels due to impediments such as complex customs procedures, time-consuming port clearances, high manning scales at par with overseas shipping and poor port infrastructure. At the same time, an excessive relaxation of cabotage regulations could threaten domestic tonnage insomuch as it would open the door for foreign flag-bearing vessels to carry coastal cargoes and enter a market generally closed by most countries.

H. PORTS: ONE BERTH RESERVED IN EVERY PORT FOR COASTAL VESSELS. There is a big congestion in Indian Ports and due to congestion the ship-owners looses revenue whenever ships get delayed in getting berth. Each and every port in India should ensure one

berth for coastal ships on priority basis and if they do not have coastal vessels on the berth the same could be used for other vessels.

I. WHARFAGE The loading and unloading of cargo in the ports is very costly and it requires special attention. The Wharfage should be reduced to 10% of the Tariff being charged for foreign going vessels. For the development of Coastal Shipping, separate tariff to be formulated, so that all Major/Minor Ports will be cost effective and user friendly.

J. TRANSSHIPMENT CHARGES The Coastal Vessels, which brings cargo from minor ports to major ports for transshipment or to export, the ports charge wharfage twice. That means when the Cargo is discharged by Coastal Vessels, wharfage is applicable and when the same Cargo is again loaded for final destination, Port levies wharfage again. Hence we suggest that every Major / Minor Port must have Transshipment charges for all Cargo and not only for Containers which are existing in some of the Ports.

K. SERVICE TAX Coastal shipping / Inland Waterways compared to foreign going has great disadvantage in running their vessels between various ports within the country. Ships pay Service tax at each and every port for the same cargo. For example if Container A moves from Bombay to Goa, then service tax is liable in Mumbai and when the Container is discharged in Goa, again the Port levies Service Tax at the time of discharging Cargo. We have to pay service tax twice. Hence our suggestion is that the service tax for coastal ships should be completely exempted, if not, the nominal tax can be paid on yearly basis for the coastal vessels registered in India.

L. SHORTAGE OF MANPOWER There is huge shortage of Manning personnel prevailing in the Indian Coast. Sometimes vessels are held up because of manpower. Our country has enough manpower to man Indian ships but unfortunately most of the Officers leave the country and serve foreign ships rather than the Indian ships. The foreign ship owners pay less amount of money than the Indian ship owners but since they have to pay the tax on Indian ships, the Officers tend to leave the company and go abroad. The tax can be reduced to 5% from the present 30% in order to retain the Officers on the Indian ships. Till such time the shortage persists, we should have minimum manning scales in which the number of certified Officers should be two on Deck and two in Engine Room. This should be good enough to run the vessels up to 10,000DWT in Indian Coast. Policy also should be made for any Officer passing exams in India will compulsorily has to serve three years on Indian ships before they can join foreign owned ships.

M. CREATE DRY DOCKS & REPAIR YARDS At existing / new Non-Major Ports to accommodate smaller coastal vessels by providing draft of around 4 to 5 meters. Needs allocation of requisite land and water frontage exclusively earmarked for this purpose.

N. ENHANCED / ADEQUATE CONNECTIVITY FOR PORTS WITH RAIL / ROAD TRANSPORT All Major Ports to be also adequately connected to highways with four lane roads for speedy cargo evacuation.

O. FORMULATE COMPREHENSIVE LIST OF SEPARATE RULES Regarding Design, Construction, Operation, Safety, Pollution aspects etc. for Coastal Vessels.

P. ORGANIC INTEGRATION OF COASTAL SHIPPING AND IWT Modes / operations by bringing the two modes under a single organization for their development in a focused manner.

XI. CONCLUSION Coastal shipping has several inherent advantages over modes of transport such as road and rail. It is fuel efficient, environment friendly, can ease traffic congestion and arrest the loss of human lives due to accidents. Several coastal countries are making optimal use of this mode of transport. In the European Union, for example, coastal shipping has an enviable 43 percent modal share in tonnes km, which is expected to increase further.

In India development of Coastal shipping is hampered by lot of barriers such as lack of infrastructure facilities in minor ports, high tariffs in major ports, cumbersome customs procedures, customs duties on bunkers and spares, high manning scales etc.

The cabotage restrictions, while protecting Indian tonnage, discourage the growth of coastal shipping in as much as Indian tonnage is not adequate and the Indian industry is not aggressive enough to increase the share of coastal shipping.

Relaxing cabotage laws would not create a level playing field. It would be desirable to allow foreign vessels to compete for coastal cargo and this would help bring in technology and efficiency, which would reduce the cost of logistics and make Indian products more competitive in the international market.

Permitting foreign flag carriers for coastal movements would bring in cost efficiencies, technology and the network to connect the various ports in the country to the ICTT at Kochi, the sources said.

They also cited some of the main factors for the slow growth of coastal shipping nonavailability of concessional finance for acquisition of coastal vessels; high import duties on bunker oil and spares; high manning scales, which increase operational costs; incidence of corporate for coastal as against tonnage tax for ocean-going vessel and personal income tax, etc.

Coastal ships, unlike ocean-going vessels, have to pay duties on bunker oil. This duty increases the cost of operation.

The cost of bunker fuel oil for a coastal vessel is reported to be higher than that for an ocean-going vessel to the extent of around 28 per cent to 36 per cent.

Similarly, import duties on capital goods and spares also cast a burden on coastal shipping, as these vessels are heavily dependent on imported spares.

Generally speaking the productivity on the berths is on the low side, a capacity increase can be achieved through mechanization of cargo handling and other efficiency improvement measures.

Coastal freight traffic is expected to rise up to 138 million tonnes by the end of year 2011-12

XII. BIBLIOGRAPHY

a) Books C.R.Kothari, Research Methodology,2nd Revised edition 2004 P.K.Samanta & A.K Mohanty, Port Infrastructure and Economic Development, published in 2005 b) Magazines, Journals and Newspapers The Hindu Business Line Times Shipping Journal Fairplay International Journal c) Online Sources http://www.shipping.nic.in/ http://www.iwai.nic.in/ http://www.tariffauthority.gov.in/ http://www.dgshipping.in/ http://www.ipa.nic.in/ http://www.infrastructure.gov.in/ http://www.ieindia.org/pdf/88/88MR102.pdf d) Reports

 Port Development Plans (Volume 1 & 2), 2009 Infrastructure Development in India, 2009 Report of the Committee of Secretaries Road Rail Connectivity of Major Ports, 2009 Inland waterways Authority of India, Annual Report, 2008-09 A study on the Development of Coastal Shipping, Tata Consultancy Report, 2003 Working Group Report on Shipping and IWT