Kerala Govt Approves New Barge to Boost Inland Water Freight Sector

By Admin

14 Jun, 2025

In a major step toward revitalizing its inland water freight infrastructure, the Kerala government has approved the construction of a 500-metric tonne (MT) capacity bulk barge for the Kerala Shipping and Inland Navigation Corporation Ltd (KSINC). This long-pending project, originally sanctioned in 2017, has finally received the green light after undergoing significant revisions in scope, cost, and compliance standards.

A Revival After Years of Delay

First sanctioned in October 2017 at an estimated cost of ₹4.5 crore, the barge construction project was put on hold after KSINC’s largest client, Fertilisers and Chemicals Travancore Ltd (FACT), shifted its import strategy. However, with demand rebounding strongly in recent years, KSINC submitted a revival request in 2022. FACT, which currently accounts for two-thirds of KSINC’s cargo operations, is set to double its freight requirements to 600,000 MT annually   a move that made the new barge a logistical necessity.

Rising Costs, New Regulations

The delay, however, came at a steep price. When the project was reconsidered, the cost had risen by nearly 48%, reaching ₹6.65 crore. A key factor behind the cost escalation was the Inland Vessel Act, 2021, and its associated implementation rules introduced in 2022. Under the new framework, all vessels exceeding 24 metres must comply with the stringent standards of the Indian Register of Shipping (IRS) or an equivalent classification society. These updated regulations required more robust safety features, improved design specifications, and additional certification   all of which contributed significantly to the rise in overall cost.

Smart Cost Management

Initial tenders following the project's revival drew high bids   some as high as ₹10.44 crore. In a strategic move to cut costs, KSINC decided to construct the barge at its own yard in Thoppumpady. This eliminated yard rental and launch-related expenses, bringing the revised estimate down to ₹6.65 crore.

According to the approved estimate:

• Steel works alone account for ₹4.19 crore.
  
  

• Machinery expenses total ₹57.63 lakh.
  
  

• Pipes and fittings are budgeted at ₹25.47 lakh.
  
  

The project was reviewed and approved by a three-member expert committee including marine engineering and shipbuilding professionals. A technical advisory committee also cleared the proposal, and the finance department gave its final nod with the condition that a detailed technical review be conducted.

Funding the Barge

The funding plan includes ₹5 crore from the state plan fund under the Cargo Barge Construction (KSINC) scheme, while KSINC will contribute ₹1.65 crore from its own resources. The final cabinet approval came on June 5, 2025, and the official sanction was issued on June 7.

Strategic Importance for Kerala

While the project’s delay highlights the complexities of executing public infrastructure under evolving regulatory and economic conditions, the green signal marks a crucial milestone for Kerala’s inland water freight ambitions. With rising demand from major clients like FACT and the potential to reduce road congestion and emissions, the new barge represents a strategic investment in modernizing Kerala’s water transport logistics.