Greener Waterways: Shipping Ministry Unveils ₹15,000 Crore Plan

India’s shipping ministry is taking a bold step towards a greener future for inland water transport. Aiding this transition is a proposed ₹15,000 crore viability gap funding (VGF) plan designed to incentivise companies to adopt eco-friendly vessels over the next decade.

The Need for Greener Vessels

Currently, the inland water transport sector relies heavily on diesel-powered vessels, contributing to air and water pollution. The VGF scheme aims to accelerate the shift towards cleaner alternatives like Liquefied Natural Gas (LNG), Compressed Natural Gas (CNG), electricity, green hydrogen, and green methanol.

Making Green Profitable

The VGF scheme functions as a financial bridge, providing partial grants to large-scale infrastructure projects. This reduces the upfront capital cost for companies, making greener technologies more commercially viable and attractive for private investors. Industry experts like Pushpank Kaushik, CEO of Jassper Shipping, believe this initiative will significantly enhance the appeal of green solutions.

Aligning with National Goals

The VGF scheme for inland waterways is an extension of the government’s broader “Harit Sagar” plan, launched in 2023. This comprehensive strategy aims to decarbonise the maritime sector by promoting renewable energy usage, reducing emissions, and improving waste management practices. The ultimate goal is to achieve a 30% reduction in carbon emissions per tonne of cargo handled by 2030 and a staggering 70% reduction by 2047.

Looking Ahead

The VGF scheme has the potential to revolutionise India’s inland water transport landscape. With an estimated 10,000 vessels currently operating, the potential impact on emissions reduction is significant. Additionally, the plan complements the government’s focus on developing 25 major river systems for inland navigation. By promoting domestic shipbuilding and fostering a sustainable maritime sector, India can emerge as a leader in clean and efficient water transportation.

What is VGF?

A viability gap funding (VGF) scheme provides partial government grants to large public-private partnership (PPP) infrastructure projects. These grants bridge the gap between project costs and revenue generation, making them commercially attractive and accelerating project completion. Typically, VGF support is capped at 20% of the project cost.

The shipping ministry’s commitment to the VGF scheme and the Harit Sagar plan demonstrates a clear vision for a sustainable future for India’s waterways. By encouraging the adoption of cleaner technologies, the government is paving the way for a more eco-friendly and efficient maritime sector.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.