BackGovt moves to give guaranteed business to local ship owners
The government has scrapped a key restrictive tender policy requirement to ensure guaranteed business to local shipowners
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Bengaluru: The government has scrapped a key restrictive tender policy requirement to ensure guaranteed business to local shipowners, in a bid to strengthen and promote the Indian shipping industry.
In a public tender, an Indian ship has the so-called right of first refusal to match the lowest rate quoted by a foreign-flag ship and take the contract, according to rules set by the director general of shipping, India’s maritime regulator, in 2004 to develop the local shipping industry through cargo support.
This is subject to the condition that the difference in the bid price between the Indian flag vessel exercising the right of first refusal and lowest rate quoted by the foreign-flag vessel shall be limited to 10%. The right of first refusal is not available to Indian registered ships if the difference in bid price is more than 10%.
This requirement has now been scrapped for tenders to finalize a so-called contract of affreightment (CoA) and channel deepening works at ports.
A CoA is a long-term contract under which a ship owner agrees to transport a specified quantity of cargo at a specified rate per tonne between designated loading and discharge ports during a specified period.
“The amendment was carried out keeping in view the government’s policy of strengthening and promoting Indian shipping in a competitive framework," said Ash Mohomad, assistant director general of shipping.
Mint has reviewed a copy of the amendment.
“In the earlier requirement, local fleet owners were at risk of losing business, if their price quotation did not come in the 10% range of the lowest foreign bid," said a Mumbai-based independent shipping consultant.
“Now, they can quote any price and still be considered for the right of first refusal. This will ensure guaranteed business for local ship owners," he said.
It is not clear whether the amendment covers the CoA for shipping cargo between two routes in India or for finalizing contracts for drilling rigs and support vessels used in offshore oil exploration activities.
“All ship chartering (hiring) guidelines will be reviewed very soon," Mohomad said.
The Indian National Shipowners Association (INSA), the local ship owners lobby, has been seeking changes to the chartering guidelines.
The rule relaxation would provide more opportunity for Indian ship owners and dredger owners to participate in CoA and dredging contracts, said an official with state-owned Dredging Corporation of India Ltd.
The share of India’s external trade shipped on Indian registered ships have fallen from about 40% in the late 1980s to less than 10%.
Similarly, India’s dredging market is dominated by Dutch and Belgium firms.
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