Tip-top shape. To encourage more Indian flag tonnage ships, govt to ban vessels over 25 years

At a time when India is hugely dependent on foreign ships for carrying EXIM cargo, the Centre wants to encourage building more Indian flag tonnnage ships, and  achive sustainability in ocean governance. It plans to achieve this by banning ships (tankers, bulk carriers/general cargo) that are 25 years old from calling Indian ports. A draft order was issued by maritime regulator Directorate General of Shipping in this regard on January 13.

The trade welcomed the initiative stating it is important that India creates its own capacity to save the huge forex outgo to foreign ship owners. However, some experts feel the cap at 25 years is low as globally ships of over 35 years are maintained well.

In 2011, after the collision between MSC Chitra and MV Khalijia off the Mumbai coast, the Centre decided to impose such restrictions. In 2008, the DGS banned foreign cargo vessels over 25 years and gas carriers over 30 years from sailing on Indian waters because of a rise in “casualties” during the monsoon season. However, both could not be implemented following resistance from various stakeholders, said industry sources.

The DGS says there is a need for review and to specify certain requirements to enable registration/operation of quality tonnage under the Indian flag. There is also a need to create a level playing field for Indian ships by applying the requirements for quality tonnage over foreign flagged vessels calling into Indian ports or Indian offshore facilities, for carrying Indian cargo or for providing services in Indian EEZ/Offshore area.

Earlier initiative was aimed at foreign flag ships calling Indian ports. However, the latest circular is for acquisition, ownership and registration of ships in India and then removal from registry after 30 years.

The age and other qualitative parameters will apply to all foreign flag vessels of similar kind calling Indian Ports for carrying Indian EXIM/coastal cargo or providing services within the Exclusive Economic Zones of India/offshore area, whether chartered by an Indian entity or otherwise. In such cases, the maximum age of the vessel shall be calculated on the date of commencement of service or carriage of cargo, as the case may be.

An Indian entity acquiring a second-hand ship cannot register the ship after turning 20 years. Further, if a foreign entity is allowed to compete for an Indian cargo, such a ship under that entity must not be older than 20 years of age. Tankers, gas carriers, bulker/general cargo vessels of 20 years and above can’t be acquired, the order said.

Existing guidelines

The existing guidelines stipulate that no prior technical clearance is required for acquisition of vessels below 25 years and would be required above 25 years. There is a need for review and to specify certain requirements to enable registration/operation of quality tonnage under the Indian flag, the order said.

“It’s a big policy decision,” said Sanjay Prashar, former National Shipping Board member on the DGS order. All developed countries have such restrictions, he added.

LK Panda, former Nautical Adviser to the Government of India, said the proposal is good in spirit and resonates well with the concept of arresting climate change.

“We lose billions in forex to outsiders by way of freight. The need of the hour is to increase our own tonnage and build up tonnage to avoid the crisis that we faced in carrying Russian oil recently,” he said.

The circular proposes to ban ships of 30 years though allowing acquisition of certain classes up to 20 years of age. This implies the intensive capital and cyclic industry, and the new owner has only 10 years to pay back, he said.

Amarnath Singh, a master mariner, in response to a tweet by Prashar commented, “Do not agree with this generalisation of quality of ships by age. In the recent past I have been sailing on bulkers of around 20 years of age. All of these were in tip-top shape (Nil deficiency - USCG & Paris MoU). This disincentives the shipowners who maintain their ships well.”

Anil Devli, CEO of Indian National Shipowners Association, says while all eyes are fixed on the age parameters being proposed in the DGS notification, what is being missed are the qualitative norms that are intended to be set. It is expected that coupled with funding assistance, these will greatly assist Indian tonnage in the decarbonisation efforts.

A calibrated age and quality norms would encourage entry of quality tonnage into the Indian waters. This will also give a much-required boost to ship building and ship repair industries in India, he said.

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