Promising Measures for Indian Shipping Industry
The government of India has taken a proactive step to bolster the country’s shipping industry. Our sources reveal that it is considering amplifying the scope of the existing policy to extend the infrastructure status to the entire shipping sector. This is expected to enhance ship procurement and production within the country, which so far only applied to coastal shipping. The principal goal is to help shipping companies access financial aid from commercial banks with greater ease and convenience with potential benefits like long-term loans with lower interest rates, similar to the perks kick-started for shipyards in 2016.
Spearheading the Change
The Indian National Shipowners’ Association (INSA) is leading the campaign for this infrastructural modification. It forecasts that this substantial step would encourage the procurement of ships, barges, and offshore drilling rigs, thereby strengthening India’s marine presence. The proposal also incorporates plans to prolong the duration of the Shipbuilding Financial Assistance Policy (SFAP) by ten more years. This policy has been instrumental in assisting Indian shipyards by offering financial aid for shipbuilding contracts.
Understanding the Current Shipping Scenario in India
According to reports from the end of 2022, India’s fleet comprised a total of 1,520 vessels, representing only a minor increase in gross tonnage as compared to the preceding year. However, a considerable segment of this fleet is aged, indicating an imminent requirement for ship replacement. Currently, India’s stake in the world shipbuilding market falls under 1%, trailing behind dominating countries such as China, South Korea, and Japan.
Projected Consequences of Infrastructure Recognition
The impending infrastructure status is foreseen as a growth accelerator for the Indian shipping market. This could potentially make the industry more internationally competitive, possibly resulting in a boost in global shipbuilding market share. Such a move aligns with the governmental vision of promoting technological advancements in the shipping sector, as expounded in Finance Minister Smt Nirmala Sitharaman’s interim budget speech for 2024-25. The government’s recent endorsement of the continuation of an export stimulus scheme and the execution & affirmation of a Bilateral Investment Treaty further reiterates its dedication to the advancement of the shipping industry.
