It is not the best of times for the shipping sector, with plummeting freight rates and oversupply of vessels. Anil Devli, chief executive officer, Indian National Shipowners’ Association, tells Ruchika Chitravanshi the government needs to do a lot more for the sector. Edited excerpts:
Has the tonnage tax regime helped the sector? Tonnage tax only helped in putting the Indian shipping industry on par with others. In the early days, we were paying tax on the basis of our profits but beyond that, is there anything that has happened?
What is the biggest worry for shipping companies? Oversupply of ships and consequent erosion of freight. Even larger is the need for the government to realise the importance of a national flag. There has to be a strategic need for shipping.
The government needs to realise the importance from a holistic point of view, in terms of what needs to be done when we talk of food security, energy security and national security. Take sugar. By next year, we will become a net importer, though Uttar Pradesh and Maharashtra produce huge amounts. In the case of crude oil, we import about 90 per cent of our requirement.
How do we ensure that coal, fuel, food, fertiliser comes in seamlessly? It is all going to come on foreign-flagged ships. If that is what we want to do, then as Indian shipping companies we will become businessmen. We can go out of India and form companies outside India and compete there. And, on the day, when the need arises for food security, you are going to be dependent on foreign ships.
If that is the strategy, then it’s okay. But no state in the world has done it. India will be the first country to decide, I don’t need a shipping industry. That is where the Indian government is lacking the depth to have a long-term strategy.
Look at China. It has invested in Africa, Central Asia. The South China Sea is theirs. They have said that 50 per cent of its cargo must be moved in Chinese-flagged vessels. Why are they doing that? They have to bring cargo all the way from Africa, passing through the Indian Ocean and then passing through the Palk Strait and then through the North China Sea and then China. There are hundreds of location where they could get blockaded or they have to depend upon vessels controlled by Western nations
Are you referring to the issue of cabotage relaxation? Cabotage is just one part, like a limb.
If you don’t have your right hand, it is not like you cannot function. But you would rather have your right hand. This is about the fact that Indian shipping does not seem to figure anywhere in the long-term strategy of the government of India. That is fearsome and worrying.
How is the sector dealing with oversupply? Indian companies have been able to keep their head above water because they have been far more conservative as compared to our European brothers. Most Indian companies have been sensible about their own supplies and most of them have been able to fix vessels long on businesses.
How much of idle capacity exists today? Shipping companies do have more than idle capacity. There are 158 vessels idle in container trade. A similar number in the bulk trade is getting mothballed. Worldwide, every day, one ship is getting added and this number is only going to increase.
What is INSA doing to promote the shipbuilding sector in India? Wherever we can, we would like to work with Indian shipbuilding. But our laws are strange. If I build a ship today outside India, I don’t get charged for tax. If I build the same ship in India, I get charged to tax. But if you are a foreigner and you build in India, you don’t have to pay tax. So, only foreigners build here. We go and build somewhere else, which is so silly.
How do you view the issue of piracy? We are in touch with the Indian Navy. They have taken a pro-active stance, which has been very helpful to the industry. We are a part of the UN Security Council. It is necessary for India to moot a proposal suggest a United Nations Naval Force to control piracy.
What is your stance on the Shipping Trade Practices Bill? Definitely, we need a mechanism which assists shippers at large. What we have proposed is some sort of council, which can have representatives of shippers, freight forwarders and even foreign vessels. More laws lead to more corruption. My fear is that at the end of it, the shippers won’t get any benefit.