The Union Budget 2023-24 proposes to promote coastal shipping as an energy efficient and lower cost mode of transport both for passengers and freight, through public-private partnership (PPP) mode with viability gap funding. Today, coastal and inland waterways contribute only about 6 per cent of the country’s freight modal mix, which has scope for improvement. However, apart from coastal shipping which would contribute to economic growth, policymakers also need to focus on the shipbuilding industry to build a shipping line of international repute.
India is endowed with a 7,500 km coastline and an infrastructure of 14 major ports and 200 minor/intermediate ports has not utilised its geography to develop its national economy. Despite 75 years of nationhood, the country has not evolved as a maritime nation with a policy focus on shipbuilding. The government has only partially paid attention to building warships for its fighting navy and not so much on commercial ships to improve the economy.
Globally, India has proved to be a failure in shipbuilding, while China, Japan and South Korea, besides some Southeast Asian nations, have taken the lead in this industry. Unlike India, these industrial nations thrive on export orders that foster shipbuilding. India’s contribution to commercial shipbuilding globally is less than 1 per cent today, which is far lower than the 3.5 per cent achieved in 2007-12.
Today, Indian private shipyards are not competitive to win global orders for those classes of ships that match in size to their infrastructure, despite the government’s financial subsidy of nearly 16 per cent. Further, the Indian state-owned shipyards are content to execute available defence orders, even though they have spare capacity to produce more. Therefore, Indian ship-owners are compelled to buy foreign-built commercial ships for their fleets.
Considering 90 per cent of international trade is transported across the oceans, shipping companies exercise control over trade. Whenever shipping companies hike prices, manufacturers and traders have to comply which only increases their costs of exports or imports. Therefore, Indian companies which aim to become manufacturers/exporters cannot price their products competitively. It would impact economic initiatives like “Make in India, Make for the World”. Also, a strong Indian shipping line can transport cargo for other countries and earn revenue for the country.
Today over 50,000 ships sail the oceans which over two million seasoned seafarers operate. But Indians own less than 1.5 per cent of the world’s shipping tonnage. Clearly successive governments in New Delhi post-Independence have not understood the significance of the shipbuilding industry and provided enough incentives to its business communities to become shipowners? Whereas, few countries, much smaller than India, have understood the importance of ship owning and their business leaders own a major chunk of the world tonnage.
Ajay Sahai, DG and CEO of FIEO, is of the view that policymakers should perhaps tweak the tax structure along with some fiscal support.
India’s critical contribution to the international maritime industry are its seafarers who rank among the top four nationalities, whom shipowners employ globally, thanks to the efforts of the Directorate General of Shipping, which regulates their training and education. Clearly, foreign shipowners recognise this education and experience and employ Indians to operate and manage their ships. Therefore, one thing that has really changed is the number of ship management companies which operate out of India.
It is time that New Delhi corrects its ‘sea-blindness’ and promotes the Indian shipping industry, and starts with serious support to the shipbuilding industry.
The writer is Master Mariner and coordinator of the Maritime Awareness Program, Mumbai