India’s Maritime Development Fund likely by year end
India’s proposed Maritime Development Fund – that looks at providing longterm, lowcost financial support and push towards indigenous shipbuilding – is likely to be ready by the end of this year, multiple officials of the Ministry of Ports, Shipping and Waterways told businessline.
Contours of the fund, and guidelines towards spending the same are currently under discussion and it will have participation from industry stakeholders, financial institutions and Ministries.
Sources said two options under discussion include setting up a dedicated maritime vertical under a proposed development finance institution, while the second one involves having a standalone company with multiagency equity.
Leasing ships
Currently, India spends about $75 billion annually on leasing ships from outside. India owns about 2% of the world’s total tonnage and has some 1,500odd ships under its flag.
“We want to ensure we have a shipbuilding industry, that is local. So we want to do the entire value chain here – that include shipbuilding, flagging, ownership financing, leasing, among others. If not the entire, we want to have up to 5% of the world’s tonnage soon. That is what the Maritime Development Fund will work towards,” T.K. Ramachandran, Secretary, Ministry of Ports, Shipping and Waterways (MoPSW) told businessline, on the sidelines of a FICCI event here in the city.
Another official said the Maritime Development Fund would also promote cruise tourism and activities like mechanisation and capacity expansion of existing ports via PPP, etc.
Funding mechanisms
Documents show the fund is proposed to start with a corpus of ₹25,000 crore over a sevenyearperiod. “Multiple funding mechanisms — debt, equity, VGF and buyer credit support will be part of the fund mandate,” the official said.
The official maintained internal review of the Ministry has shown Indian shipping companies struggle to grow tonnage “due to difficulties in accessing required finance”, as there is a mismatch in tenure of loan offered (5 to 10 years) versus life of vessel ( generally 30odd or more years).
“Lack of infrastructure status limit potential for longterm lowcost funds for shipping, making it a less attractive sector. And, we are working with the Finance Ministry for that. We have proposed to provide ‘infrastructure’ status to enable vessel operators shipping companies to raise long termlow cost finance,” the official said.
(The writer is with The Hindu businessline)