The Hindu Business Line : Foreign dredging cos eyeing bigger pie of Indian market

The Indian National Shipowners' Association has, however, rejected the proposal of the foreign dredging majors operating in India to becoming its members.

Mumbai , June 22

INTERNATIONAL dredging companies operating in India have revved up efforts to become part of the Indian National Shipowners' Association (INSA) in a move that clearly indicates their plans to have a bigger bite of the growing domestic dredging market.

Sources told Business Line that INSA, which has become the chief rallying force for all Indian shipping companies and the torchbearer of the shipping industry, has, however, rejected the proposal of the foreign dredging majors operating in India to becoming its members.

The recent Government clearance to the Rs 2,427-crore Sethusamudram sea canal project, which will require large amounts of dredging, has prompted the foreign dredging majors to explore ways to increase their presence in India. And as part of this, the companies have sought to become members of INSA, which has been promoting the overall development of the industry as well as increasing the profitability of its member companies.

"The reason for the foreign dredging companies trying to come into the INSA fold is to get the attention of the Government to focus on their pleas, including the one to bring down customs duty on dredging equipment," an industry observer said.

The sources said that although the dredging companies fit the bill to become members of INSA, especially as now dredgers have been bracketed under ships, the association is not too warm to the idea of bringing them into its fold. Although INSA has not given any reason for the rejection, sources feel that many in the industry are not too certain about the long-term plans of the overseas dredging companies.

According to the sources, representatives of the foreign dredging companies, including Van Ooord B.V. of Netherlands and International Sea Ports Ltd, have sought an audience with the INSA President, Mr P.K. Srivastava, who is also the Chairman and Managing Director of Shipping Corporation of India. If the meeting does not come through, the dredging companies may also take legal support, the sources said.

The foreign dredging houses that have set up shop in India include Royal Boskalis of the Netherlands, Dredging International of Belgium and Jan de Nul Group of Companies. Other global dredging majors, such as Great Lakes Dredge & Dock Co of the US and Penta-Ocean Construction Co of Japan, besides smaller companies in Asia, are also eyeing the Indian dredging market.

Industry sources say that the current dredging activity in the country is estimated to be over Rs 650 crore. However, most of the market is only from maintenance dredging at ports to maintain their drafts, with Dredging Corporation of India (DCI) having a nearly 90 per cent share in this market.

It is projects like Sethusamudram and other greenfield port projects that are expected to actually open up the capital dredging market, which the foreign dredging companies are interested in, as it involves higher margins. And moreover, DCI is not adequately placed in terms of technology and experience to handle capital dredging works.

Another factor that has spurred overseas dredging majors is the new dredging policy that came into effect from April 1, 2004, which sought to have a level-playing field. After the new policy, the major ports no longer had the option to award dredging works on nomination basis to DCI, which spelt the end of assured business to the state-owned company.

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