Shipping Ministry for VGF scheme change to push operational expenditure

In a bid to promote coastal shipping, the shipping ministry has asked the finance ministry to consider changes in the viability gap funding scheme so that operational expenditure (opex) can be supported.
"Under the present guidelines, VGF (viability gap funding) is offered for capital expenditure, but in our assessment, it is required for opex due to the multiplicity of handling points in coastal shipping," an official said, adding that the shipping ministry has taken up the matter with the finance ministry. The official said the ministry has sought changes in the VGF norms.

At present, VGF support is available for projects in metro and road construction, development of food grain silos, and setting up of transmission lines, among others.
But according to shipping ministry officials, VGF for coastal shipping will be required for companies such Shipping Corporation of India (SCI) which are in the business of operating the service on the Indian coastline to help develop the sector.

In her Budget speech, finance minister Nirmala Sitharaman had said that coastal shipping will be promoted as the energy-efficient and lower cost mode of transport, both for passengers and freight, through the public private partnership (PPP) mode with viability gap funding.

The shipping ministry has identified a potential of 340 million tonnes of cargo movement by coastal shipping per annum. But it requires commodities to be loaded onto trucks or rail wagons and then moved to the originating ports, from where a round of unloading and reloading on to the ships takes place.