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Age no bar for importing ships

N. K. Kurup

THERE is no bar for buying a second-hand ship of any type and size, so long as it is below 25 years old. Also there is no need for any technical clearance and certificate on price reasonableness from the government departments. The guidelines on age norm s issued by the Ministry of Shipping last week removed all such conditions for the import of second-hand ships. Normally, such relaxations in policies are received with enthusiasm. However, most shipowners are not pleased with it. Some of the major ones are hurt and are understood to be seeking a review of the guidelines.

Earlier, the Government would stipulate the economic life of different types of vessels (for example, 25 years for bulk carriers and liner vessels, 20 years for crude tankers and 30 years for coastal service vessels). The import of second-hand ships with out a minimum of five years of economic life was not allowed. The importer had to obtain a technical clearance and price reasonableness certificate in advance. This was aimed at ensuring the operational safety of ships.

The Government's decision to lift the age norms is in line with its free-market policy of removing the administrative controls hurting the industry. Why then is the industry not happy with this new development? This unhappiness can be better understood b y analysing their views.

Age norms, they feel, help in maintaining the age profile of the national fleet comparable with that of the world fleet. A younger fleet is considered operationally safer, easily mortgageable and attracts lower insurance premia. The detention rate of suc h a fleet at foreign ports, by state port control authorities, would be lower, enhancing the fleet's national image. Above all, a younger fleet provides the domestic industry a competitive edge.

But there are counter views too. Age is not the only determining factor of safety. A younger vessel does not necessarily imply higher standards of safety. The maintenance of the vessel is more important. A well maintained older vessels may be in a better condition than a younger one. At present, foreign ships of any age are allowed to call at Indian ports. They are not bound by any age restriction. So the age norms on national carriers may only inhibit their competitiveness, it is argued.

Some of the major Indian shipowners believe that scrapping age norms will lead to the dumping of substandard ships in Indian waters. Old vessels are available at scrap rates. Though they are unsafe, there are unscrupulous and greedy operators, unmindful of the safety of men and cargo, prepared to ply such vessels for short-term gains. Such vessels can easily find their way to India as the port control machinery is weak here.

That apart, foreign operators will exploit the BBCD (bare-boat-cum-demise-charter) route to bring in old tonnage. This, they fear, will lead to the unrestrained entry of foreign interests into Indian shipping, creating unhealthy competition. This will fu rther weaken the already deteriorating age profile of Indian tonnage.

Age is not the only factor determining the safety of a ship. Safety, as pointed out by an industry source, is essentially, a natural consequence of well-defined and implemented management policy and standards. It greatly depends on the owners attitudes. Statutory controls cannot substitute the role of a responsible and diligent shipowner. Forcing the owner to buy a younger vessel is no assurance that he will meet the safety standards throughout the operating life of the ship. Therefore, the Government's decision to remove age norms is not a measure to dilute importance of safety.

But it could lead to the import of older vessels, which in turn may create competition in the market. This may not be in the interests of all shipowners.

This is not to argue that the safety is not important. The point raised by some shipowners is extremely relevant given the state of our port state control machinery. The Government while relaxing the restrictions on acquisition of older ships should stre ngthen its machinery to inspect ships calling at Indian ports. Simultaneously, the Government should also ensure statutory survey and inspection of ships by classification societies are done as per the regulations.