Home / Industry / Manufacturing /  PLI scheme for shipping containers in the works amid global shortage

NEW DELHI :

The government is working on a production-linked incentive (PLI) scheme for manufacturing shipping-grade containers, said an official in the know, seeking anonymity.

In view of the growing concern among Indian exporters and importers over a global shortage of containers amid the Russia-Ukraine war, the government has decided to play a decisive role in addressing the problem, he added.

Besides, the Centre has also been trying to lower its import dependence on China for containers. “A PLI scheme is under consideration. According to the requirement, the incentive amount will be considered to woo private players, and make India self-sufficient in manufacturing containers," he said.

A high-level committee has been formed to promote local container manufacturing and bring it under PLI and cluster-based manufacturing system. The scheme may be announced in the budget for FY24 as part of the government’s initiative to introduce PLI projects for several sectors, he said.

Queries emailed to the ministry of ports, shipping and waterways, and the department for promotion of industry and internal trade (DPIIT) did not elicit an answer till press time.

The need for a steady supply of containers is also key to the Centre’s efforts to boost domestic cargo transportation through inland waterways.

The sanctions imposed on Russia by the European Union and US following its invasion of Ukraine have led to an acute shortage of containers, which in turn increased freight rates and impacted global trade. In the past two years, covid, too, has disrupted manufacturing and supply of containers globally.

The Economic Survey for FY22 highlighted how the container shortage is impacting trade. It said covid-19-related restrictions on international trade in 2020 affected container movement.

The prolonged partial closure of ports across the world created a glut of containers in some ports and an acute shortage in others. At the same time, because of widespread manufacturing delays, enough containers were not made, said the Economic Survey released by the government.

“With the global economy starting to recover since early 2021, containers, which were stuck at various storage points are not being sent back to service fast enough, resulting in a skewed demand-supply situation for shipping containers, leading to very high shipping rates. During April-September 2021, India spent $14.8 billion on transport services imports, or 65% higher than last year." said the Survey.

The Centre has taken a few steps to ease the supply shortage, such as increasing import of empty containers, releasing abandoned, detained or seized containers, and rasing duty-free ‘stay’ of containers.

To increase domestic container manufacturing, the government has identified Bhavnagar in Gujarat as a hub, and a few companies have already started operations. According to the Centre, India requires 350,000 containers every year, and the demand will only increase, with the government having set an ambitious export target of $2 trillion by 2030.

rituraj.baruah@livemint.com

ABOUT THE AUTHOR

Rituraj Baruah

Rituraj Baruah is a senior correspondent at Mint, reporting on housing, urban affairs, small businesses and energy. He has reported on diverse sectors over the last six years including, commodities and stocks market, insolvency and real estate. He has previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.
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