IN­DIAN TONNAGE NEEDS A LEVEL PLAY­ING FIELD

Of late, there has been a lot of push for re­lax­ing cab­o­tage. Ran­jit Singh, Ex­ec­u­tive Direc­tor & CEO, Essar Ship­ping Ltd, points at the dis­crep­an­cies in poli­cies which make the go­ing tough for In­dian tonnage.

Maritime Gateway - - Contents - Sisir Prad­han

RAN­JIT SINGH, EX­EC­U­TIVE DIREC­TOR & CEO, ESSAR SHIP­PING LTD

Qships?

How a level play­ing field could be cre­ated for In­dian flagged A The ship­ping in­dus­try is leapfrog­ging in de­vel­oped coun­tries, while In­dia still lags be­hind. China en­sures that 600 mil­lion tonnes of coastal cargo is car­ried by Chi­nese flagged ves­sels. Ja­panese im­ports are car­ried only on Ja­panese-owned ves­sels. In the US, at least 30 per cent of the gas ex­ports are fer­ried on their na­tional fleet.

Ab­so­lute cab­o­tage is prac­ticed in each of these coun­tries, while the con­cept of cab­o­tage is con­spic­u­ous by its ab­sence in In­dia. In­dia of­fers Right of First Re­fusal (ROFR). But tra­di­tion­there­fore, ally the low­est bids for car­ry­ing In­dian cargo have been quoted by for­eign ves­sels. An In­dian ship-owner is at a dis­ad­van­tage be­cause of higher op­er­at­ing costs, costly bunker and taxes when com­pared to his for­eign coun­ter­part. If In­dia re­laxes ROFR norms then In­dian ship-own­ers may have to re­visit their de­ci­sion to flag ves­sels in In­dia.

Q What is your view on Cab­o­tage and ex­er­cise of ROFR?

A For­eign ves­sels are not taxed when op­er­at­ing in In­dian waters, while In­dian ship-own­ers are bur­dened with In­come Tax for their sea­far­ers. In ad­di­tion, there is the ex­tra cost of bunkers that are bought on the In­dian coast. the pur­pose of hav­ing a ROFR pol­icy is com­pletely de­feated.

The Gov­ern­ment of In­dia re­cently in­tro­duced the In­dian Con­trolled Tonnage scheme wherein In­dian ship-own­ers can flag their ships out­side In­dia, as long as they are manned by 50 per cent In­dian sea­far­ers. This is de­signed to help se­cure easy fi­nances. How­ever, with­drawal of the ROFR will make this scheme re­dun­dant.

Q Why are In­dian ship own­ers de­mand­ing for a na­tional fleet?

A This is in line with other ma­jor mar­itime pow­ers that sup­port their own ship­ping firms for re­tain­ing con­trol and se­cur­ing the trans­porta­tion of crit­i­cal cargo. A na­tional fleet pol­icy man­dates that ships en­gaged in trade must be flagged, or reg­is­tered, in In­dia ir­re­spec­tive of whether they are owned by In­dian or for­eign ship­ping lines. For­eign ship­ping lines cur­rently con­trol over 90 per cent of In­dia’s cargo. They should there­fore be asked to flag some of their ves­sels in In­dia and pay taxes. That would cre­ate a level play­ing field.

Q What are the rea­sons for lack of for­eign in­vest­ment in the In­dian ship­ping in­dus­try?

A Lack of a proper pol­icy frame­work, in­cen­tives, con­nec­tiv­ity in­fra­struc­ture, in­ef­fec­tive­ness of the ROFR pol­icy, higher op­er­at­ing and fi­nanc­ing costs, neg­li­gi­ble bud­getary sup­port, and even­tu­ally un­cer­tainty over the ROI.

Q What needs to be done to en­cour­age ship build­ing in In­dia? How In­dia could im­prove bunker­ing?

A The ship build­ing in­dus­try in In­dia is at its worst be­cause of the cost of im­ports and du­ties on machin­ery & the dwin­dling steel in­dus­try in the coun­try. With the im­po­si­tion of the anti-dump­ing duty in the steel seg­ment the in­dus­try has now turned and will fur­ther im­prove with the in­crease in do­mes­tic de­mand. How­ever, it has been cheaper to build ships in China.

At ma­jor ports, the fleet avail­able for bunker­ing is neg­li­gi­ble. Adding to this is the 30 per cent ex­tra duty paid on bunker com­pared to Sri Lanka or Sin­ga­pore. Berthing is­sues, lack of in­fra­struc­ture, cost of bunker, ad­min­is­tra­tive is­sues at ports, ad­di­tional cost for bunker­ing, all lead to un­avail­abil­ity.

Q Are you look­ing at mar­kets other than In­dia?

A We are look­ing at serv­ing steel com­pa­nies over­seas as well. Our fo­cus is on Qatar, UAE and Bahrain.

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