‘Time to Replicate Success of Indian Shipping Industry’

Capt Sudhir Subhedar
President, ICC Shipping Association
Indian Shipping has the potential to replicate the success of Indian IT of twenty years ago. The Shipping Industry has high expectations from the newly elected Government and particularly from the Shipping Minister, said Capt Sudhir Subhedar, President, ICC Shipping Association, a veteran of Indian Shipping and an expert of coastal shipping in India.

For almost 6 decades now, ICC Shipping Association (ICCSA) continues to be the representative body for the Indian coastal shipping industry. With 72 member companies, ICCSA today represents the interests of the coastal shipping industry at various forums including the Ministry of Shipping, Directorate General of Shipping, the National Shipping Board, Tariff Authority for Major Ports, etc.

For the new Government, priority should be to enhance Indian Shipping generally and coastal shipping in particular. Indian Shipping has the potential to replicate the success of Indian IT of twenty years ago. Indian Shipping is an important aspect of national economy which requires requisite support from the Central Government with respect to deregulate some basic laws that date backs to colonial days which will make enabling provisions to modernise Indian shipping. Increase the size of Indian fleet, both foreign going and domestic shipping, so that India’s fuel bill can be substantially reduced. Indian trade could benefit from CIF (Cost, Insurance and Freight) and FOB (Free on Board) sales, thereby reducing logistics costs of India which are amongst the highest in the world.

To this end, there is an immediate need in the next budget (2015-16) to relook at Tonnage Tax, exempting shipping services from custom and excise duty, seafarers’ taxation, which has the potential to capture the global demand. There is also a need to substantially increase the allocation from the Central Government to the Ministry of Shipping and increase the resources of the Directorate General of Shipping so as to serve the targeted goal of quantum leap in the Indian shipping fleet. Readers will note that the word shipping has not featured in Finance Minister’s speech for several years. This is clearly because much larger share of resources has gone to other modes of transport to the detriment of Indian Shipping economy and the present poor status of logistics in India.

Furthermore we need to introspect why allowed 100 per cent FDI has not materialised in shipping in last 10 years; in Europe ordinary Doctors and Dentists invest in shipping especially in coastal / rivers transport to aid national policy. Review and arrest sliding status of Indian Maritime education and training including assessment of IMU because what world wants is competent Seamen from India, not marine graduates. IMU, if at all, should be tasked with establishing centre of excellence, R&D and enabling Seaman Officers to progress academic studies at their cost, time and initiative.

India’s shipbuilding capacity and marine equipment manufacturing needs to be put on the fast track, as mentioned recently by ex President Dr A P J Kalam in Bombay Chamber of Commerce in February 2014. The Ministry of Shipping should look for adopting the recommendations of KPMG report with respect to coastal shipping that was subjected to the then Shipping Minister in December 2013. This could begin with declaration of the Coastal Shipping Policy and a planned implementation of Maritime Agenda 2020. We look forward to run up to the next budget session significant departure from previous years in seeing shipping making headway and headlines.

All of us should make presentation to GoI well in time for next Budget 2015-16 and following years so that Indian shipping, Inland waterways, dredging, concept of Sagarmala gets desired mention and attention.

If nothing else, out of all those things which I mentioned, there should be mention in 2015-2016 budget speech, enhancement of Indian Shipping by way of detailed presentation to the Government well before finalising the budget. The recently announced budget saw several adjustments to shipping sector not seen before. The next budget therefore is expected to build on allocation made for Ports development and efficiency, connectivity, Ganga river cleaning and navigation, USD 1 billion funding, fiscal incentives, dredging and infrastructure, PSU Cargo reservations, etc.

As reported in industrial scan we see that coastal shipping by way of Vishakhapatnam Steel Plant and Concur Logistic Park and expansion of VPT, coastal shipping is poised for growth and its rightful contribution to Indian economy. Biggest hurdle of lack of Indian ships for domestic use may get partly solved by the announcement of India controlled tonnage policy and ship building incentive in the pipeline. ICCSA does not support relaxation in cabotage only for one party or Port and hopes that relaxation will be, if any, is supported by affirmative action so as not to undermine Indian Coastal Shipping. Indian Coastal Ships are at great disadvantage compared to foreign ships on the coast due to fuel pricing alone. Indian Coastal Shipping in terms of taxation, shipping finance, manning cost, compliance cost is placed in very difficult situation to take head on relaxation in cabotage. If these impediments are removed, Coastal shipowners / Operators will be able to compete on level playing field.

In December last year, ICCSA commissioned KPMG for a report that objectively determined over several cargoes and several routes that there is ` 500 per ton freight differential between road rail and water transport. This is surprising because water transport should have been cheapest. Therefore we are hoping that as an interim measure, Government will announce some incentive scheme rupees per ton per km similar to one announced by the Kerala State Government for movement of domestic cargo over its 500 km coastline. We also hope that the new Government will also look at and review all old laws which come in the way of modernization and Indian Mercantile marine affairs.