Fiscal relief, low-cost funds vital for shipping: Economic Survey
Sunday, 18 March 2012 | 00:00
In the current market scenario, fiscal relief and financial supports are crucial for shipping companies to augment their fleet, the Economic Survey has said.
Underlining the urgent need to increase the Indian merchant fleet in view of the sharp fall in their share in the country's own cargo, the survey said “strengthening the fleet with adequate and cheap finance is important given the fact that ship prices which had peaked in the middle of 2007-8 are nearer to the lows seen in December 2009. Rationalizing the multiple levies in the shipping sector could also help”.
The country's freight bill for 2011-12 is estimated at $57 billion, based on 7.5 per cent of the value of the seaborne trade. A 5 per cent increase in the shipping tonnage could lead to annual saving of $6.3 billion in foreign exchange, the survey said.
From 40 per cent in the 80s, the share of Indian ships in the country's own cargo fell below 9 per cent in the last fiscal. Share of crude oil import dropped to 18 per cent. Besides, the average age of Indian fleet rose to over 18 years from 15 years.
“Several countries provide direct and indirect supports to boost their maritime sector. Chinese Government is, reportedly, assisting its shipyards to tide over the difficulties they are facing due to cancellation of orders in the wake of weak freight market. Shipping companies get cargo and financial supports. Such a policy is absent in India,” said Mr S. Hajara, Chairman and Managing Director, Shipping Corporation of India.
“We have asked for reservation of 33 per cent of the export cargo for Indian fleet. The Government is yet to take a decision. In the current situation, fiscal and financial supports are crucial for the industry to replace its aging fleet.”
As on January 1, India's fleet strength stood at 1,122 ships of 11.06 million gross tonnage. Public-sector Shipping Corporation of India has the largest share of 36.17 per cent. Of this, 372 ships with 10.01 million gross tonnage cater to India's overseas trade and the rest to coastal trade.
Source: The Hindu Business Line
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