Budget grief: shipping industry laments on modernisation fund
The country’s shipping industry is apparently unhappy with the Budget, as it has failed to address the long standing demand of creating a shipping modernisation fund similar to a technology upgradation fund for the textile industry.business Updated: Mar 22, 2012 22:51 IST
The country’s shipping industry is apparently unhappy with the Budget, as it has failed to address the long standing demand of creating a shipping modernisation fund similar to a technology upgradation fund for the textile industry.
Concerned over the diminishing share in carriage of India’s overseas cargo, which has fallen from 40.7% in 1987-88 to 8.3% in 2009-10, the shipping industry has been demanding for the fund.
Shipping, being capital intensive, requires huge funds for financing ship acquisitions. Usually funds are mobilised largely through external commercial borrowings and internal generations. “In the current scenario, it is uncertain as to how the shipping companies will be able to source the equity and debt requirement for acquisition of ships,” an industry source said.
Currently, foreign-owned vessels carry more than 91.7% of India’s overseas cargo including crude oil and petro-products.
“A shipping fund at this juncture would have shown the way forward from the current morass given that Indian shipping is essentially perceived to be an old economy business and hence plagued by several legacy issues — like old tonnage, discriminatory policies, neglect and distrust by policy makers,” Anil Devli, CEO, Indian Ship Owners Association, told HT.
According to the industry sources, out of total Indian fleet of 10.75 million GT (gross tonnage), about 37% (4.01 million GT) is more than 20 years old, which needs to be replaced in the next five years. Gross tonnage is an index related to a ship’s internal volume. India’s overseas tonnage needs to be increased from 8.61 million GT to 34.4 million GT for EXIM trade.
“This involves substantial investments for acquisition of vessels,” said Devli.