Mr. Anil Devli, CEO, Indian National Shipowners Association (INSA), has said that India’s coastal trade (shipping cargo between different local ports) is reserved for ships registered in India and foreign ships can be hired only when Indian ships are not available, according to Cabotage law. If the coast is open for anybody to operate, Indian shipping companies are not equipped to handle international competition and therefore, need to be made competitive.BIGGEST CONCERNS
Primarily, there are two concerns. One is the lack of a Government policy to nurture the Indian shipping. We need an over arching policy to recognise the importance of shipping and developing the industry. Shipping has two parameters – coastal and international. Last coastal shipping policy draft was made two years ago and it is still lying in the Ministry.
Second concern is the lack of funding. Indian shipping companies always maintained that they are an international business entity and their abilities are as good as those in the international market. But in the external markets, their cost of money and cost of operations are cheaper. This makes it difficult for Indian entrepreneurs to compete with international ship owners. In the past 10-15 years, not more than Rs. 250 crore was allocated for shipping. In China, Vietnam and Korea their shipping assets have grown largely because of the Government support.
GOVT STEP
A major step that the Government took in this direction was to introduce tonnage tax. As a result, in 2004-05 we saw tonnage growth. After that, the Government has not taken any measures to encourage the Indian shipping industry. But, now the Ministry is actively working on cargo support policy. We are also in talks with PSUs for getting long-term contracts and this could help Indian ship owners acquire assets. PSUs have responded encouragingly and we hope this will set in some momentum for our sector.
We oppose the Government move on Cabotage relaxation. If the Government wants to relax cabotage, Indian ships need to be made competitive internationally. The cost of operating an Indian ship is 30 per cent more than that of a ship under a foreign flag. If you release the Indian coast for anybody to operate, then take suitable measures to make us on par with international ships. Indian shipping companies are not equipped to handle international competition due to the high cost of operations.
To make Indian ship owners internationally competitive the most important step needs to be taken is to reduce the tax burden. The Government should remove tax on seafarers’ wages, on stores, spares and bunker. Counter Vailing Duty (CVD) on Indian ships is based on the value of the ship, where as it is based on the time charter value for foreign ships, which is not fair.
COASTAL TRADE
Coastal trade is stuck with 12-13 per cent share and has not grown over the years due to the lack of policy support. Rules in existence for coastal shipping will not allow it to compete with other modes of transportation. International legislation permits local administrations to frame rules to ensure the growth of coastal shipping. For instance, China has different set of rules for international and coastal shipping. We came out with River Sea Vessels (RSV) regulation. We do not know whether the RSVs were successful in capturing the ethos of bringing down the cost of operations. But we do know from small ship owners that this purpose is yet to achieve.
CURRENT SCENARIO
We are as good or as bad as everybody else. In a way, Indian companies were little more conservative and we have not acquired too many assets. As domestic companies acquired only assets in the offshore business, one has not seen great depreciation in asset values. SCI, Great Eastern and Mercator have made investments in offshore vessels and are able to sustain the business. We hope that by next year supply will fall and some kind of semblance will set in.
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