Hyderabad: India’s National Shipping Board will focus on the development of ports through the so-called public-private partnership (PPP) model and also work with state governments to set up maritime boards in an effort to accelerate this process (not all states have such boards), according to P.V.K. Mohan, the new chairman of the board. In an interview, Mohan also spoke on other important issues such as the shortage of officers in India and the dredging that is urgently required in several major ports. Edited excerpts:
Level-playing field: National Shipping Board’s P.V.K. Mohan is pushing for tax relief to Indian seafarers and removal of tax on bunkers.
What are the key challenges for Indian shipping now?
Several port projects are coming up across the country; non-major ports under the state governments and major ports under the Central government.
The Central government, through the shipping ministry, is facilitating road and rail connectivity to the ports, a key element of port infrastructure. Gujarat is among the leading states in the country in maritime development, followed by Andhra Pradesh, though the gap between them is quite a lot, (in terms of) earmarking port projects for development under the PPP model.
The ports being taken up by states such as Gujarat and Andhra Pradesh have the strength (advantage) of captive cargo (or cargo that will necessarily be shipped in, or out of these ports), which will determine the viability of port projects. Around this base cargo, the ports can develop hinterland cargo and ancillary cargo and market for other cargos from the landlocked states.
What is required for our country is a major shift of cargo from road to sea. Heavy cargo such as steel, cement, granite and iron ore should shift to sea. What then remains with the roads sector will be light cargo such as white goods and perishables.
This will indirectly benefit the roads, where the condition of the roads will improve in the absence of heavy cargo.
In any case, sea route is the cheaper mode of transport compared with road and rail. There will not be any pollution, accidents, loss of life, and there will be no disturbances such as relocation of people for taking up major road projects, a major issue now in the country.
What percentage of our domestic cargo currently moves through the sea route?
At present, only around 7% of country’s domestic cargo goes by the sea route. The biggest challenge is to develop coastal shipping. For this, we require a number of ports around the coast.
Our country has a coastline of some 7,519km east to west. We require ports at intermediate levels that will serve as way ports, which will form the foundation for the success of coastal shipping. Connectivity from ports to national highways is another key issue.
What are the other issues facing the industry?
Tax relief to seafarers. Today, an Indian seafarer working in a foreign flagship (a ship that sails under a foreign flag) does not pay any tax. The Indian officers working in Indian flagship have to pay taxes. As a result, they are going to foreign companies. This has meant an acute shortage of officers on our ships.
We have already written to the finance ministry. We will now escalate this further and push this case for tax reliefs to Indian seafarers.
We will also push for removing the tax on Indian bunkers (oil) and spare parts, which is something that benefits foreign flagships.
When a foreign flagship coming to India picks up bunkers in Colombo, or Singapore at cheaper rates, it straightaway puts Indian flagships at a disadvantage. The bunker in Colombo, or Singapore costs some $700 (Rs31,780), while they cost around $1,000 in India.
If you take an Indian ship on charter, your daily cost of bunker is more than the charter rate of the ship in many cases. It has become so expensive. You can charter a medium-sized container ship today for, say, $15,000 a day and then you will have to spend some $20,000 on oil that you require to run that ship a day. If you load that with 50% taxes again, it becomes more burdensome for Indian shipping.
To make the Indian coastal shipping succeed, the infrastructure and taxation issues must be addressed that provide a level playing field.
How does our coastal shipping compare with that in developed economies?
Europe carries nearly 70% of its domestic cargo through inland waterways and coastal shipping, followed by Japan (with) around 60% and China between 45% and 50%.
For India to go upwards of the current 7% provides our industry a huge opportunity.
Are you getting the required support from the state governments, which control non-major ports, in the development of coastal shipping?
In the east coast, we have ports, either ready, or in the process of getting ready, such as Dhamra, Gopalpur, Paradeep, Visakhapatnam, Gangavaram, Kakinada, Krishnapatnam, Cuddalore, Puducherry and Chennai.
Same is the case with the west coast that includes ports in Gujarat, Revas in Maharashtra, which is looking at three-four other ports, Karnataka and Kerala with Vizhinjam and Vallarpadam.
Already, nearly 60% of the ports have come up and others will come up quickly. The beauty of the private ports in the PPP model is that not only do they build ports, but they will also bring captive industry for the viability of their base cargo.
The NMDP (National Maritime Development Programme) is a success and we are regularly chasing the state governments to develop way ports.
As of now, except Gujarat, Maharashtra and Tamil Nadu, other states don’t have maritime boards.
There has been criticism on indiscriminate allocation of thousands of acres of land to port projects...
It is for the individual state governments to decide on the quantum of land allocation. We currently don’t have a mechanism to decide on the land requirement, or an in-depth study on the requirements of the port project.
I am of the view that a planned approach is required for port development in the country. Issues such as navigational hazards, traffic separation schemes, fishing zones and light houses are some of the key issues that will require a planned approach through structures like maritime boards.
How are you going to deal the dredging issue? Most Indian ports need to be dredged (have their channels deepened and cleaned)...
We have a shortage of Indian flag dredgers and every port in the country has a backlog of dredging. The state-owned Dredging Corp. of India Ltd is not adequately prepared to deal with the growing needs of the country.
As a result of this, the foreign dredging companies are actually gaining from the situation to the extent that there is a certain amount of cartelization. To get around this problem, it is very essential that the Indian companies very quickly get into the activity of dredging.
The Indian shipping ministry has already taken a decision to allow the ports to have their own dredging contracts without having to refer it to the ministry for approvals.