Budget 2026-27: How Inland Waterways and Coastal Shipping Are Set to Transform India’s Logistics and Economic Growth

The Union Budget 2026-27 marks a significant evolution in India’s infrastructure and logistics strategy, with inland waterways and coastal shipping emerging as central pillars of the government’s long-term growth vision. By tapping into India’s extensive river systems and vast coastline, the government aims to fundamentally restructure freight movement, reduce transportation costs, and promote more environmentally sustainable modes of transport. This water-led approach is positioned as a structural reform that goes beyond short-term infrastructure spending and seeks to redefine how goods move across the country.

The emphasis on waterways reflects a broader policy understanding that road and rail networks alone cannot support India’s expanding industrial and trade ambitions. With congestion, rising fuel costs, and environmental pressures mounting, water transport offers a cost-effective and cleaner alternative, particularly for bulk commodities and long-distance cargo.

A coastal cargo promotion scheme will be launched to incentivise a modal shift from rail and road, to increase the share of inland waterways and coastal shipping from 6 per cent to 12 per cent by 2047. | Business Line

Coastal Cargo Promotion Scheme and the Push for Modal Shift

A major highlight of the Budget is the introduction of the Coastal Cargo Promotion Scheme, designed to encourage a systematic shift of freight from roads and railways to coastal and inland water transport. The government has set an ambitious target to increase the share of freight moved through waterways and coastal shipping from around 6 per cent today to 12 per cent by 2047.

This shift is expected to ease pressure on highways and railway corridors, reduce logistics costs for businesses, and lower carbon emissions associated with heavy freight transport. The policy direction signals a clear intent to mainstream water-based logistics as a core component of India’s national supply chain, rather than treating it as a supplementary mode of transport.

Strengthening Domestic Container Manufacturing and Maritime Self-Reliance

The Budget has also announced a ₹10,000 crore container manufacturing scheme aimed at building domestic capacity and reducing reliance on imported containers. India currently depends heavily on foreign suppliers, particularly for standard shipping containers, which exposes exporters and logistics operators to supply disruptions and pricing volatility.

By encouraging large-scale domestic manufacturing, the government aims to stabilise container availability, support export competitiveness, and strengthen India’s maritime self-reliance. This initiative complements the Bharat Container Shipping Line concept, which seeks to expand India’s control over coastal and regional cargo movement and reduce dependence on foreign shipping operators for critical trade routes.

Expansion of National Waterways and Rising Cargo Volumes

Over the past decade, India’s inland waterways network has expanded rapidly, with the number of National Waterways increasing from just five prior to 2014 to 111 today. The Budget roadmap further commits to operationalising 20 additional waterways over the next five years, significantly widening the geographic reach of river-based transport.

Cargo movement through inland waterways has also witnessed strong growth, rising from approximately 18 million metric tonnes in 2013-14 to over 145 million metric tonnes in 2024-25. This expansion reflects growing industry confidence in inland shipping as a commercially viable alternative for transporting bulk goods such as coal, cement, fertilisers, foodgrains, and construction materials.

National Waterway-5 and Eastern India’s Industrial Integration

One of the most strategically important projects announced in the Budget is the focused development of National Waterway-5 along the Mahanadi river system in Odisha. This corridor is designed to link mineral-rich regions such as Talcher and Angul with major industrial hubs and ports including Paradeep and Dhamra.

By improving connectivity between mining areas, industrial clusters, and export gateways, National Waterway-5 is expected to play a key role in strengthening eastern India’s industrial ecosystem. With an estimated investment of around ₹13,000 crore, the project is projected to handle approximately 10 million tonnes of cargo by 2032, with capacity expected to double by 2047. This development is aligned with the broader objective of port-led industrialisation and regional economic rebalancing.

Multimodal Connectivity Through Dedicated Freight Corridors

To ensure that waterways are fully integrated into the national logistics grid, the Budget has proposed new Dedicated Freight Corridors linking eastern and western India. These corridors, including proposed links between Dankuni and Surat, are intended to strengthen east-west industrial connectivity and improve access to ports.

The focus on multimodal transport reflects a shift from isolated infrastructure projects toward integrated logistics systems. By connecting waterways, railways, and ports into a unified network, the government aims to reduce transit times, improve supply chain reliability, and enhance overall logistics efficiency.

Skill Development, Ship Repair, and Regional Capacity Building

Recognising that infrastructure alone is not sufficient, the Budget also places emphasis on human capital and operational capacity. Regional Centres of Excellence for skill development are to be established in cities such as Kolkata, Varanasi, and Dibrugarh to train specialised manpower for inland navigation, vessel operations, and logistics management.

In parallel, dedicated ship repair ecosystems are planned in Varanasi and Patna to support inland vessel maintenance and improve operational reliability. These initiatives are expected to reduce downtime, lower operating costs for inland shipping operators, and generate skilled employment, particularly in eastern and northern India.

Seaplanes and Enhanced Connectivity to Remote Regions

The Budget has also outlined plans to promote indigenous seaplane manufacturing, supported by viability gap funding. This initiative is aimed at improving connectivity to remote and island regions such as the Andaman and Nicobar Islands and Lakshadweep, while also supporting tourism and regional mobility.

By integrating seaplanes into the broader waterways and coastal transport framework, the government is seeking to diversify transport options and strengthen regional access, especially in areas where conventional infrastructure is limited or economically unviable.

The MGMM Outlook

The Union Budget 2026-27 places inland waterways and coastal shipping at the centre of India’s long-term logistics transformation, signalling a strategic shift away from overdependence on roads and railways. By prioritising river and coastal transport, the government is targeting structural reductions in logistics costs, decongestion of transport corridors, and improved environmental sustainability. The Coastal Cargo Promotion Scheme and the expansion of National Waterways underline a clear intent to mainstream water-based freight as a core pillar of national supply chains. The rapid growth in inland cargo volumes and the planned operationalisation of additional waterways reflect rising industry confidence in waterways as a commercially viable and scalable alternative for bulk and long-distance freight movement.

At the same time, the Budget strengthens maritime self-reliance through a ₹10,000 crore domestic container manufacturing scheme and the push for Indian-controlled coastal shipping capacity. Strategic projects such as National Waterway-5 are designed to integrate mineral-rich and industrial regions with major ports, reinforcing eastern India’s role in national and export-oriented supply chains. The focus on multimodal connectivity, skill development, ship repair ecosystems, and seaplane connectivity demonstrates an integrated approach that combines infrastructure, manufacturing, and human capital. Together, these measures position waterways not as supplementary routes, but as critical economic arteries supporting India’s industrial growth, regional development, and long-term competitiveness.

(Sources: OpIndia, Economic Times, Business Line)