India's troubled shipping sector has been passing through tumultuous waters in recent years with over 40 per cent of the country’s fleet older than 20 years and about 12 per cent of them being 12-15 years old, says the Economic Survey 2015-16 , tabled in Parliament by Finance Minister Arun Jaitley on Friday.
Expressing concern over the condition of India's fleet, it said it is aging and "42.42 per cent of the fleet is over 20 years old and 12.43 per cent in the 15-19 age group."
The decline in the Baltic Dry Index, a freight index that depicts the robustness of trade, from 10,720 in May 2008 to 386 in January 2016 “is a reflection of the slowdown in India’s and the world’s merchandise trade as well as of overseas shipping services,” according to the statement tabled in Parliament.
"The shipping sector has been passing through tumultuous waters in recent years... There is urgent need to increase India's shipping fleet. With asset prices currently being serendipitously low, the time is right to acquire new generation ships to replace ageing ones," it said.
“There is an urgent need to increase India’s shipping fleet. With asset prices currently being low, the time is right to acquire new generation ships to replace ageing ones,” according to the survey. There is a need for cheaper finance and longer fund tenure. “At least the issue of longer tenure for loans to the shipping sector could be urgently addressed.”
The significance of the sector can be understood from the fact that about 95 per cent of India's trade by volume and 68 per cent in terms of value is transported by sea.
As on 30 November 2015, India had a fleet strength of 1,246 ships with dead weight tonnage (DWT) of 15.37 million.
The survey said import of cheap Chinese steel billets into the major ship-breaking locations is resulting in falling demand for scrap ships.