Mumbai: The shipping industry, which requires $20 billion (Rs 80,000 crore) worth investment by 2010-11, has demanded infrastructure status for themselves. This they feel will allow them to have easy access to funds for modernization and upgradation as they compete in a highly challenging global market.
According to Indian National Shipowners’ Association President, Yudhisthir Khatau,“Financial institutions have apportioned funds exclusively for infrastructure projects and we can avail them only if we have that status, especially since these funds are available at lesser interest rates”.
By 2010, all single-hull tankers would have to be converted or replaced with double-hull and ships over 25 years will have to be scrapped, as per the latest figures released by the International Maritime Organisation, to which India is a signatory.
Further, about 40% of Indian ships would reach 25 years by 2010, Khatau said. Unless the industry modernize its resources fast and equips itself with requisite skill sets, Indian shipping will continue to be plunged in a crisis-like situation.
Issues of concern
* If India fails to modernize its fleet by 2010, its share of 13% of 400 million tonnes of cargo would drop to 5%.
* By 2010-11, cargo handling is projected to touch one billion tonnes.
* The present gross tonnage of Indian carriers is 8.5 million, of which 3.5 million gross tonnage would be scrapped by 2010.
* Indian shipowners would have to increase the gross tonnage to 20 million to maintain their 13% share in one billion tonnes cargo by 2010-11, which means an investment of $20 billion.
* 12 taxes are levied on the industry making them increasingly uncompetitive. They are lobbying for removal with the government.
* About 75% of foreign vessels are registered in Panama, Gibraltar, Bahamas and Liberia because of zero taxes.
* Many Indian companies are preferring to set up subsidiaries in Singapore because of its competitive tax regime vis-a-vis India.
* Just recently, Garware Offshore has set up a subsidiary in Singapore. Varun Shipping, Great Eastern and even public sector unit Shipping Corporation of India have formed a JV outside India to escape taxes.
Even as the government has allowed 100% FDI in the sector, it has not been able to attract FDI so far.
“There are no incentives to own vessels under the Indian flag. We need to incentivise shipowners for owning ships under the Indian flag,” Khatau, who is also the managing director of Varun Shipping, said.
Indian National Shipowners’ Association also wants the government to set up an apex body consisting of members from shipping, finance and commerce ministries and to develop a policy to offer cargo support and a level-playing field on taxes, he added.