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What shipping will look like in 2016

Prime Minister Narendra Modi's work experience in Gujarat, India's top maritime state, has given a strong impetus and direction to the sector

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A government with a much better understanding of the maritime industry partly due to Narendra Modi’s work experience in Gujarat, India’s top maritime state, has given a strong impetus and direction to the sector.

TRENDS TO WATCH

The year of coastal shipping

2016 could well be the year for India’s coastal shipping sector to come of age. This hitherto neglected sector, is now being propped up for its features such as environment-friendliness, fuel efficiency and much cheaper mode of transport for moving cargo along the country’s vast coastline stretching 7,500 km. The government and the state-owned ports have offered many incentives to promote the sector by easing archaic rules, granting rate discounts and even relaxing a local shipping law that prohibits foreign registered ships from operating on local routes to carry cargo.

Revival of shipbuilders

After a long, dry spell, India’s shipbuilders will likely see new orders trickling in during 2016 on the back of a 10-year policy package announced by the government in December. Local shipyards would be able to quote competitive prices while negotiating new orders with fleet owners as the policy has removed the cost disadvantages they faced compared to global rivals. Besides, local yards will get a financial incentive from the government on each ship they build. The revival of the shipbuilding sector is a key part of the government’s ‘Make in India’ initiative.

Port sector shake-up on the cards

India’s ports sector will see a shake-up in 2016 with the union government drafting a new legislation to run the 12 ports it own. These 12 ports are currently run as trusts which restrict their expansion and growth. The planned new law will be a prelude to their eventual conversion into corporate entities and bring them on par with the ports owned by the state governments but are given to private ports for development and operations.

Farewell to TAMP

The Tariff Authority for Major Ports (TAMP), the agency that regulates the rates at the 12 ports owned by the union government, may be scrapped in 2016, capping years of protest by private firms running cargo terminals at these ports and the ports themselves. The winding down of TAMP will level the playing field between major ports (those owned by the union government) and the non-major ports (those owned by the state governments). The latter’s freedom to set rates has been attributed to their phenomenal success in recent years.

Solarization of ports

The shipping ministry has launched an initiative to implement utility-scale solar photovoltaic power plant projects at major ports. The Solar Energy Corporation of India (SECI) has been appointed as the overall project management consultant. The plan includes installing grid connected solar power plants and rooftop solar power projects at various ports with the twin objective of making them ‘green ports’ and to reduce the dependence on more costly sources of power.

COMPANIES TO WATCH

Shreyas Shipping and Logistics Ltd: India’s biggest container ship operator will look for fleet expansion aided by the government’s recent decision to grant tax and other fiscal incentives for the coastal shipping sector.

To broad-base its business, Shreyas Shipping has recently signed an agreement with Japan’s Suzue Corp. to form a joint venture to explore business opportunities in the logistics space within Indian subcontinent and Japan.

Elektrans Shipping Pvt. Ltd: The new entrant into India’s shipping industry has bought three oil tankers in the past year investing close to $40 million despite a prolonged downturn in the shipping industry, taking even the established fleet owners by surprise. The company has said it is also interested in the dry bulk segment.

Cochin Shipyard Ltd: The company is firmly on course to build sophisticated liquefied natural gas (LNG) carriers for use by GAIL (India) Ltd as a part of the government’s ‘Make in India’ initiative. It has finalized technical collaboration pact with South Korea’s Samsung Heavy Industries Co. Ltd and secured licence from French firm Gaztransport and Technigaz (GTT) to use its patented technology to build these tankers. The yard will go public this year, making it the first state-owned shipbuilder to be listed.

Shipping Corp. of India Ltd: The state-owned ocean carrier is set to have its first chief executive officer if shipping minister Nitin Gadkari has his way. The shipping ministry has already set aside a recommendation made by the Public Enterprises Selection Board (PESB), the government’s head hunter, selecting B.B. Sinha for the top job in the firm from 1 January 2016. Sinha is currently a director of the company. Shipping Corp. has also mandated Boston Consulting Group to prepare a corporate strategy named Vision 2030 for the company.

Kamarajar Port Ltd: The entity that controls India’s only Union government-owned port that is run as a company will open its first container terminal at the port located at Ennore near Chennai in 2016. The project is being developed by Adani Ports and Special Economic Zone Ltd (APSEZ), India’s biggest private port operating firm. The container terminal will mark a milestone in the port’s journey that began in 2001.

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Published: 04 Jan 2016, 01:07 AM IST
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