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The Union Government is planning a mechanism to make low-cost funds available to domestic shipping companies to buy ships.
The idea is to raise foreign currency loans against long-term shipping contracts between Indian shipping lines and leading public sector companies, a Shipping Ministry official said.
This would enable shipping lines to get dollar funds at 3-4 per cent as against rupee loans, which cost more than 10 per cent.
Competitive basis The three-five-year contracts can be finalised on a competitive bidding basis, with adequate flexibility to ensure that both the shippers and the shipping lines are not affected by freight market fluctuations, the official said.
Several public sector undertakings, including oil companies, are large exporters and importers. These companies often charter foreign ships as Indian shipping lines do not have the type of ships they require. The Shipping Ministry is now trying to find a solution to this problem by enabling shipping lines to sign long-term contracts, so that they can acquire the type of vessels required by the Indian shippers.
The Ministry may appoint IDFC, a leading lender to the infrastructure sector, as the nodal agency for raising funds overseas. Nitin Gadkari, Minister for Roads, Highways and Shipping, said in Mumbai that the Shipping Ministry would discuss the proposal with IDFC. The Minister said the share of domestic shipping lines in the national cargo is currently less than 10 per cent. This only shows how the shipping sector was neglected over the past 10 years. The situation has to change and the country’s shipping tonnage needs to be expanded, he said. He was speaking at the silver jubilee function of the Jawaharlal Nehru Port.
Forex savings India imports nearly 90 per cent of its crude requirements, over 85 per cent of which is carried by foreign ships. If oil importers can tie up long-term arrangements with Indian shipping lines, at least 50 per cent of the country’s oil cargo can be carried by national vessels, said a shipping company official.
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