The Ministry of Ports, Shipping and Waterways led by Mansukh Mandaviya had opposed the privatisation of Shipping Corporation of India Ltd (SCI), its comments to the Cabinet note on the subject shows.

Though the Ministry’s stand was overruled by the Cabinet when it cleared the new public sector enterprises policy on January 27, this revelation shines light on the varying views within the government on the sale of state-run firms.

In its comments, the Shipping Ministry had reportedly sought a “review” of the earlier decision to go for a strategic sale of SCI with transfer of management control, arguing that “there is a dire need to treat Indian shipping as a strategic sector and to ensure adequate policy interventions to make it grow considering its strategic importance for economic development, energy security as well as national security”.

The merchant navy is considered as a second line of defence for the Indian Navy and thus Indian tonnage under government control shall be crucial from a national security perspective, the SCI had reportedly argued. The long coastline of 7,500 km and the worsening maritime security scenario in the oceans around Asia should also be considered, it had said.

“In terms of national security, it’s imperative that a certain amount of Indian tonnage of merchant ships is owned by the government, which is the model followed by most maritime nations.

State-owned shipping companies are prominent amongst neighbouring countries/developing countries like China, Bangladesh, Pakistan, Russia, Nigeria and Iran. Leaving shipping to be completely driven by the private sector has major risks for the economy,” it had further said, citing the collapse of a few local private fleet owners in recent times.

Shipping is considered the backbone of international trade, and hence, very strategic for the economy. It can help fulfil the vision of a $5-trillion economy as well as of ‘Atmanirbhar Bharat’. Privatisation of SCI also goes against the government’s focus on increasing the Indian tonnage.

“This (growing the Indian fleet) has become imperative because shipping being a global industry, Indian shipping companies find it difficult to compete with foreign flag vessels. This is amply borne out by the steady decrease of the share of Indian flag ships in India’s EXIM trade to barely 8 per cent. This has ramifications for the freight charges being paid by Indian traders and the forex outgo on this account is estimated to be around $53 billion per annum,” the Ministry had asserted.

‘National Oil on National Ships’ has been a motto followed by China which owns the world’s third largest merchant fleet. India, for its energy security requirements, should also follow suit and ensure adequate Indian tonnage for meeting the energy requirements of the nation, both “in times of peace and in times of any disturbance,” the Ministry had said.

Drain on forex

Given that energy alone contributes to a major portion of India’s import bill, inadequate tonnage was adding to the drain on foreign exchange in terms of high freight rates, it had added.

Being India’s only PSU engaged in ocean transportation, “it follows that SCI is a strategic asset for the government and the Indian nation and its ownership with the government [should] be continued and strengthened, if possible,” it had summed up.

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