Maritime regulator for trust-based system

Of late, some officers at the Directorate-General of Shipping seem to be restless. The reason: their boss — the country's maritime regulator — wants them to change the way they have been functioning for many years.

Heading the maritime administration for two years, Dr Satish Balaram Agnihotri, has initiated a set of reforms to bring in transparency and efficiency in its working. Unlike the officers, Dr Agnihotri believes that “a trade regulator should be more like a channel than a barrier.” But the elite officers in the Directorate fear that these changes could dilute their (discretionary) powers.

Like several other government departments, the Directorate has immense scope for corrupt individuals to thrive. The age-old practices, opaque procedures and rigid rules and regulations provide enough fodder for manipulation. The MMD, a major department under the Directorate, is known for over-regulation, micro-control and unfair practices.

The system allowed the officers to use their discretionary powers at will and the unscrupulous elements in the trade took advantage of it. Both together, over the years, brought the department the bad name — what Dr Agnihotri is now trying to change. Resistance is quite natural!

Generally, government officers become heads of major departments or large organisations at the fag end of their careers. This often deters them from venturing to make any major changes in the existing systems and procedures. All the more so if such an exercise is likely to invite the wrath of their colleagues. But Dr Agnihotri, a 1980 batch IAS officer from the Orissa cadre, appears to be of a different breed altogether.

He says: “The regulatory apparatus should loosen its control without losing its control.”

To begin with, he replaced the age-old, time-consuming way of granting licences for chartering foreign ships with a fast and transparent on-line system.

Licences online

To charter a foreign flag vessel, the shipper has to first obtain a certificate from the Indian National Shipowners' Association (INSA) stating that the required type of ship is not available within the country. This certificate (known as NOC) has to be submitted to the Directorate along with the application. The entire procedure of getting the NOC and the licence used to take weeks or more and there were allegations of manipulation and corruption.

Now everything, from seeking NOC and filing the application to even issuing of the licence has been made on-line. The beauty of the system is that the officer in charge has to clear the application in 48 hours and only rejected applications will go up to the higher level for verification. The system, which has brought in transparency, has completely eliminated the scope for manipulation.

“My feedback is that the industry is very happy with the new system which is working smoothly”, said Dr Angihotri. He wants to introduce a similar ‘green-channel' approach in other areas too. The objective is to avoid, as far as possible, the need for anyone to visit the Directorate for any kind of approval. The Directorate also proposes to change the system of granting dispensations or exemptions to a category-by-category basis rather than on a case-by-case basis.

For example, shipping lines seek relaxation in manning norms in the case of certain ships. Currently, this is given on a case-by-case basis, sometimes at the discretion of the officer in charge. Such relaxations will now be granted on a category basis. This will reduce arbitrariness. On the basis of the prescribed criteria, a category of cases will get equal treatment, said Dr Angihotri.

Focus on Self-regulation

Equally important is the move to introduce self-regulation. Dr Agnihotri wants to do away with the requirement of obtaining prior approvals from the Directorate for various things. For instance, maritime training institutes have to get prior approval for appointing faculty. This delays their selections and appointment.

Dr Agnihotri wants his office to prescribe the mandatory criteria for selection of the faculty and leave the rest to the institute to follow. “Why should the institute wait for the administration's approval when it is complying with prescribed norms?”, he asks.

Similarly, in the case of statutory survey of ships, a shipping company will be given the freedom to get the survey done by an approved ship classification society. The Directorate will only do a random inspection. This will help both parties. The Directorate can save on manpower and the shipowner benefits from the flexibility.

But the trouble with the self-regulation is that unless monitored effectively, unscrupulous elements take advantage of it. To avoid this, Dr Agnihotri suggests a system of disincentives for defaulters. In the case of shipping companies or any other entities, there should be a designated compliance officer to ensure accuracy of self-certification. At the same time, there should be provision for accommodating bonafide mistakes. “For this, I suggest the yellow card, red card and punishment sequence” Dr Agnihotri pointed out.

Interestingly, there are also those in the industry who fear the proposed reforms could weaken the regulatory system and eventually the Indian flag carriers will be treated like FOCs. This could affect the image of Indian shipping and could result in higher P& I premium for national flag carriers.

But the reality is that these are the same people who take advantage of the discretionary powers of government officers. They know that a transparent system reduces the scope for manipulation.

Both the officers and their patrons should know that if they do not adapt to the changing situation, the change itself will unsettle them. Then, there is no point in blaming the boss or anyone else. The reforms are essential in a developing economy. They should see the winds of change blowing across the sectors.

As Dr Agnihotri points out “we should move away from the system of mistrust and a hundred percent verification by the regulator to a trust-based system of sample inspection by the regulator, backed by self-regulation and third party certification'”.

No surprise, then, that Dr Agnihotri was selected for the Maritime Leader of the Year award at the recently held India Shipping Summit in Mumbai.

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