PSUs to ink pact with domestic ships for 50% of imports1 min read . Updated: 14 Oct 2015, 09:48 PM IST
The proposal, likely to be sent to cabinet in a few weeks time is in lines with nations like China, Japan and Korea to protect the domestic shipping industry
New Delhi: In a step to boost domestic firms like Shipping Corporation, the government is considering a proposal to make it mandatory that public sector undertaken (PSUs) engaged in import of commodities, including oil and coal, sign a 5 year contract with them for the inbound cargo.
The proposal, likely to be sent to cabinet “in a few weeks" time is in lines with nations like China, Japan and Korea to protect the domestic shipping industry. “An inter-ministerial group is at present considering the proposal that government PSUs, based on some international benchmarks, could give domestic shipliners contracts for cargo imports for five years," an official source said.
The proposal involves giving 50% or more of the total cargo imports by oil, coal and steel etc PSUs to domestic shipliners, the source added. “The Indian shipping companies in turn, confident of the contracts at hand, could buy ships and increase the Indian tonnage. Five year contracts with PSUs would also provide confidence to the lenders to provide assistance to Indian companies," according to the source.
In fact, some of the laws dated back to 1958 have provisions to boost Indian shipliners, he said. “The proposal will be sent to Cabinet for considerations in a few weeks time," the source said. This, once implemented, would shift freight worth billions of dollars to domestic shipliners like Shipping Corporation of India (SCI), Great Eastern Shipping and Mercator Lines, among others.
“There is a need to protect our shipping industry. India will remain an energy consuming country seeing the deficit of oil, coal etc and will continue to import these commodities. This would be a welcome step," Chief Executive Officer of the Indian National Shipowners’ Association (INSA), Anil Devli told PTI. He said India pays an annual $57 billion as freight charges and if it is able to save even 10% of this, it would be a spin off in the economy.
Such a move, apart from domestic shipliners, would also encourage Indian seafarers and boost the domestic industry, he added. At present, Indian vessels barely account of 12% of EXIM trade, he said.
Such steps by government may result in India occupying an important place in the list of maritime nations, Devli added. Shipping Corporation shares closed 4.48% up at Rs82.75 apiece on the BSE.