Shreyas Shipping and Logistics Ltd has acquired two container ships as part of a plan to expand its Indian-registered fleet and tap potential to move cargo on local routes. The purchase comes in the context of the government offering incentives and fiscal benefits to raise the share of coastal shipping to 10% of the transport mix by 2020.
The acquisition will increase the Indian-registered container ships of Shreyas Shipping to eight, with two more expected to join the fleet over the next 12 months, chairman and managing director Ramesh Ramakrishnan said. Shreyas did not disclose the cost of the ships.
It also boosts the combined number of Indian-registered container ships operating along the country’s coast to 18.
“Shreyas plans to operate both newly acquired vessels on the Indian coast, thereby plying all its eight container vessels, with a total capacity of 11,954 twenty-foot equivalent units (TEUs), for coastal shipping, thus helping to raise container service across the Indian coast to a new level and service the needs of domestic as well as export-import (Exim) trans-shipment trade on the Indian coast," Ramakrishnan said.
To raise the share of coastal shipping in the overall modal transport mix to 10% by 2020 from the current 7%, the cargo-carrying capacity of coastal ships/inland water transport has to be increased to 600 million tonnes (mt) from about 172 mt now. This requires the coastal fleet to grow to about 950 vessels from about 125 vessels now, according to a document prepared by the shipping ministry.
In November 2014, the government exempted bunker (ship fuel) used by Indian-registered ships carrying containerized Exim cargo and empty containers between Indian ports from excise duty.
In March, the shipping ministry flagged off a scheme offering incentives to cargo owners when they transport some identified commodities, containerized cargo or automobiles through Indian flag vessels, on trips having either a major port (owned by the Union government), a designated non-major port (owned by the state governments) or an Inland Waterway Authority of India terminal or jetty as the point of loading or discharge.
Transportation of any commodity in containers will be eligible for an incentive of ₹ 3,000 per TEU, according to a scheme aimed at diverting cargo from road and rail to coastal shipping and inland water transport.
The shipping ministry is looking to relax a so-called cabotage law to allow foreign ships to carry cargo on local routes, given the lack of Indian ships.
Cabotage means reserving coastal trade for national flag vessels. Cabotage restrictions are applicable in most countries to protect the domestic shipping industry from foreign competition, as well as for national security purposes.
Easing the cabotage restriction would affect the viability of Indian shipping companies that are carrying Exim containerized cargo and empty containers. This would have harm the growth of Indian tonnage (shipping capacity), according to the Indian National Ship-Owners Association, an industry lobby.