River-sea shipping is non-existent in India despite a change in the MS Act to that effect two years back. Captain Philip Mathew explains why seamless navigation between sea and rivers has a transformational capability.Shipping share of domestic cargos for both coastal and inland water transport (IWT) is at four per cent and 0.16 per cent respectively. Considering the overstressed road and rail infrastructure in India we have no choice but to migrate more cargo to the water transport mode. This potential will be realised with the River Sea Rules.The Merchant Shipping (MS) Act in India defines the requirements for sea going vessels. The Inland Vessel (IV) Act defines the requirements for vessels on inland waterways. These two Acts truly do not meet the needs of the industry.In China, Russia, European countries and the United States, they all have something that straddles the IV Act and the MS Act. In China it is called the Coastal Act, in Europe it is called the Short Sea Shipping Act and in Russia it is called the Russian Coastal Shipping Act. India never had such an Act and was trying to manage the Coastal Shipping under the MS Act. In India the regulatory authorities felt the need to have an Act specifically to regulate shipping on the Indian coast. But due to the constraints of our parliamentary system, a change in the MS Act wasn't possible till September 2008, when the Director General of Shipping under an order promulgated the River Sea Act. This Act has the transformational ability to revolutionise coastal shipping in India.Vallarpadam ICTT is expected to take over from Colombo at least the Indian-origin transshipment cargos. The ICTT will require feedering from the other ports of India, which can be accomplished by vessels working under the new River Sea Rules. The new rules allow a significantly lower capex and opex compared with the present MS Act vessels servicing this trade.Economy: Water transport deserves a much more holistic perspective. Let's look at transport on our national waterways. The government is giving a serious push to developing the National Waterway network. We have three National Waterways in India (Kolkata to Patna, Kolkata to Guwahati and Kodungalloor to Kollam). Now the government has declared National Waterways 4, 5 and 6 in Tamil Nadu, Andhra Pradesh and Orissa, respectively.Waterway has had the ability to attract economic activity around the world. The intensity of economic activity along the Danube in Europe or the intracoastal systems in United States is very high, reducing progressively as we move away from the waterways. In India, however, coastal shipping is limited mostly to a major port-to-major port activity despite the presence of 182 minor ports. So when a River Sea vessel which is specifically built to call into a minor port with a lower draft, economic activity in minor ports will burgeon, including employment generation, services, economic activity, trucking, etc.Competitiveness: Competition only increases the size of the pie. Currently, only four per cent of domestic cargo is carried on waterways. The situation is reminiscent of the telecom and airline industries, pre-deregulation. As those sectors became more competitive, the pie blossomed too.But, as in the above two sectors, the government can only make the regulatory change. It is up to the private sector to bring in the expertise. The River Sea rules is at a tipping point that could transform the coastal shipping in India, encouraging innovative waterways such as Water Metro for Kochi, on the lines of Metro rail, and Roll On-Roll Off (RO-RO) commuter services.Challenges: The biggest challenge is that we are working with banks who do not necessarily understand the shipping sector. The challenge is to take them through this learning curve to make familiarise them with the issues. India needs a shipping-specific finance institution with expertise to evaluate and validate the front-loading of capital, the longer gestation period and securitisation issues specific to the industry.The other big challenges we are faced with are operational. Some of the mandates that are given to organisations under the government are not completely fulfilled. Available depth and air draft restrictions continue to be significant impediments on our waterways.Perhaps one day, we will see traffic separation schemes-water navigation's traffic signalling systems-in India too.The author is Managing Director of Kochi-based LOTS Shipping, which is now positioned as a River Sea company.