India can save more than Rs. 76,000 crs. of forex by promoting up to 40% of cargo on Indian shipping tonnage

India has the potential to save over Rs. 76,000 crores by way of foreign exchange by promoting up to 40% of India’s cargo on Indian shipping tonnage, said Mr. S. Hajara, Chairman of Shipping Corporation of India, at a recent shipping conclave.

Currently, the Indian shipping market share constitutes 8% in the country’s international trade and India must reserve cargo for the national flag vessels, he said.

According to Mr. Hajara, the surprising fact here is that the oil sector was given a subsidy of Rs. 40,000 crores by way of budgetary allocation in 2010‐2011 as crude oil is a crucial source of energy. But no allocation has been made to ensure its shipment to India, given that 85% of India’s oil is imported. It needs to be borne in mind that the freight costs are minimal at $2 per barrel of oil, without additional war risk premium, he pointed out.

The neglect of shipping industry in India could be gauged from the fact that the outlay for the Ministry governing it was reduced in the recent Union Budget.

According to Mr. Kunal Kapoor, from International law firm – Ince & Co, Singapore LLP, the total outlay for the Ministry of Shipping was reduced by about Rs. 900 crores from Rs. 6700 crores in budget 2011-12 to Rs. 5800 crores in the current budget.

According to a research paper by Export Import Bank of India some time back, Japan has been topping the list of countries controlling fleet in terms of dead weight tonnage with 173.2 million DWT and 3,720 ships followed by Greece with 3,064 ships and 169.4 million DWT and Germany with 3,522 ships and 104.9 million DWT. India was ranked at the 15th position with 963 ships and 15.5 million DWT, a share of 1.4% in DWT terms.

India, the third largest economy in Asia, has been struggling with declining growth rates, inflation and currency depreciation amid the slowing global trade momentum and the cooling Asian economies, though not collapsing, remarked Mr. Nigel Anton, Managing Director and Head of Shipping Finance of Standard Chartered Bank at the conclave.

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