Indian Shipping Industry Mulls Major Makeover
Captains of the shipping industry in India are pinning hopes on solid policy support in 2015 as promised by the Shipping Minister Nitin Gadkari that would transform the industry and would increase buoyancy and investment opportunities.
With strong policy support by the government on the anvil, Indian shipping is pinning high hopes on buoyancy and investment opportunities in the sector. The industry observers believe that the direction and pace at which the government was moving to transform the sector could ease its life in the current challenging global market environment.
India has 13 major ports and about 200 non-major ports. Cargo traffic, which was 911.5 million metric tonnes (MMT) in 2012 is expected to reach 1,758 MMT by 2017. The Indian ports and shipping industry plays a vital role in sustaining growth in the country’s trade and commerce. India currently ranks 16th among maritime countries, with a coastline of about 7,517 km. Around 95 per cent of India's trade by volume and 70 per cent by value takes place through maritime transport, according to the Ministry of Shipping.
India desperately needs solid policy support to the shipping and port sector in 2015. Income Tax exemption to seafarers, cargo support to Indian flag-carriers, duty free-bunker to coastal shipping, incentives to shipyards and de-regulation of port tariff are among a host of promises made from the new Shipping Minister.
It is important to put a policy in place to stimulate growth.We can see the government making efforts in this direction. Cutting unnecessary procedures is one of the important steps the government has taken," says industry observers.
Analysts expects that some of these measures may be announced during the upcoming Budget session of Indian Parliament
The industry observers, however, feel that government’s efforts would take a while to bring about a material change in the earnings of shipping firms.
According to a statement from AK Gupta, CMD, Shipping Corporation of India, there will be growth, but it is going to be very gradual and there's nothing dramatic. "Demand is expected to grow, but there are concerns on the supply side." he stated.
The prospects of a significant sudden pick up in ocean freight seem to be dim. Countries like Russia, Japan and China are facing economic slowdown. Rates for hauling dry bulk cargo such as iron ore, coal and grains have been under tremendous pressure for the past couple of months. The Baltic Index, the barometer of commodity freight, has also plunged.
But fall in crude price may be a positive factor. The bunker cost, which accounts for about 40 per cent of shipping lines’ operating expenses, fell sharply in recent months.
The Ministry of Shipping is targeting huge investments between 2010 and 2020 and has taken several new initiatives last year to help Ports grow.
