Ship Repairs Industry Needs Govt Boost
Suresh Babu N V, Chief General Manager, Ship Repair Division, Cochin Shipyard Ltd

India aims to attain self-sufficiency in ship repair and emerge as a dominant ship repair center in Asia by raising the share of Indian shipbuilding in the global shipbuilding market to 5 per cent share by 2020. The vision document of the Union Shipping Ministry, Maritime Agenda 2010-2020 aims to have a well developed shipbuilding and ship repair industry of international standard in India. The author highlights challenges and opportunities faced by ship repairs industry in this article. He says that massive policy initiative from the government for developing ancillaries to ship building and ship repair industry is needed for upliftment of the sector.

Every ship after construction requires periodic maintenance to maintain its fitness to trade. This keeps the ship repair industry afloat with lots of opportunities. A ship is built using various types of materials, equipment and machinery integrated by different trades of engineering. Any defect of its components or the engineering results in ship-repair.

According to an analysis conducted by the Associated Chambers of Commerce and Industry of India (Assocham), ships older than 20 years require frequent and extensive repair and maintenance. This creates an opportunity for ` 7,300 crore worth shipbuilding industry in the country.

India has a fleet of total 1,122 ships and 41 per cent of these, or 466 vessels, have crossed 20 years of their operational life. Considering that the average life of a shipping vessel is about 26 years, most of the existing vessels need to be replaced. An average cost of constructing a large vessel is about USD 100 million. Therefore, the size of this opportunity would be USD 3.3 billion.

Majority of Indian ships are less competitive as mostly vessels less than 15 years old are preferred in international trade. Although India has one of the largest merchant shipping fleet, it contributes just over one per cent to the world deadweight tonnage.

Overview
There are around 35 ship repair units (SRU) registered with Directorate General of Shipping. Major SRUs consist of Cochin Shipyard Limited, Hindustan Shipyard Limited, Garden Reach Shipbuilders and Engineers Limited, Mazagon Dock Limited and Goa Shipyard Limited. These are all public sector units and ABG Shipyard, L&T Shipyard and Pipavav Shipyard are private sector shipyards. Largest dry docking facility in public sector belongs to Cochin Shipyard with a capacity of 125000 DWT having dock size of length 270 meters and width of 45 meters.

The advantages and disadvantages while considering India as a ship repair destination can be broadly classified as follows:

Advantages
  • Strategically located in the Indian ocean with a long coastal line of 7517 kms
  • Proximity of the Indian sub-continent to international trading route at south, east or west
  • Political stability in the country leading to peaceful atmosphere
  • Availability of trained and good-quality manpower.
  • Cheaper manpower cost compared to costs in Europe and America
Disadvantages
  • Lack of infrastructural support services needed for ship-repair. An Indian ship-repair company has to depend heavily on foreign countries for spares and components
  • Excessive procedural delays for clearances of imported spare items from the Customs department
  • Ship owners need not bear huge cost in terms of Service Taxes (14 per cent) and VAT around 12 per cent when the vessels are repaired at other leading ship repair destinations like UAE, China, Colombo and Singapore
  • Higher cost for arranging service engineers of international brand equipment or machinery at any port other than Mumbai as most of them are operating from Mumbai
Problems Faced by Indian Shipyards
  • Lack of adequate government support to the ship repair industry. Even ships owned by the government agencies choose foreign countries to carry out repairs instead of supporting Indian shipyards even if the ships regularly call Indian ports due to the reasons that Indian shipyards are not competitive. Indian shipyards would certainly have a price disadvantage of up to 25 per cent due to the government taxation only
  • In adequate quantity of shipbuilding grade steel plates produced within India. The cost of such Indian steel plates are very high compared to the ones produced in China
  • Various navigational and communication equipment used on board ships complying with required standards are not produced in India. India has to depend on foreign countries for these items leading to higher costs and makes such repairs in India un-viable
  • The case is no different as far as the other major marine equipment are concerned
  • Attrition of trained human resources to Middle East countries for higher wages affects the productivity in Indian shipyards
  • Downturn in the global economy and over supply of vessels put ship owner to spend bare minimum for repair and maintenance. This is largely affecting shipyard’s income and possibility for growth
Problems Faced by Ships at Indian Ports
  • Port congestion is one of the major drawbacks at many Indian ports. Vessel has to wait for many days at anchorage waiting for a berth for cargo operations
  • High terminal charges compared to our nearby countries
  • Poor infrastructure to facilitate shipping – insufficient and improper storage facility at many Indian ports. This leads to the damage and loss of cargoes due to rain, wind etc. Inadequate facility for the storage of petroleum products, chemicals etc from larger cargo vessels leads to long waiting of vessels at ports
  • Non-friendly attitude of authorities to ships against our rich culture
  • Lack of recreation facilities
Way Forward
  • The development of marine and port sector is now becoming a priority for the government
  • Growth of coastal shipping is expected to increase the facilities at port. More coastal vessels can be expected which in turn will be more business opportunities for ship repair yards
  • Increase in offshore activities at Indian coast is also a hope for the ship repair industry. More oil rigs and ships are expected to be operated in the Indian waters
  • Rise in number of industries especially in Gujarat and Maharashtra is expected to attract more vessels to Indian coast
  • As a part of the Indian Navy expanding their fleet, more vessels are expected to be constructed which will boost Indian shipyards
  • The industry expects a massive policy initiative from the government for developing ancillaries to ship building and ship repair industry so that it could trigger a high growth in the Indian industrial sector.