Concern Over Transchart Report

The pro- and anti-Transchart elements inside and outside the government are watching with concern the outcome of the Planning Commission's study on the efficacy of the system under which shipment of government cargo is arranged through Transchart, the government chartering agency.

On March 7 last, the decision on the study was taken by the committee of secretaries under the chairmanship of cabinet secretary T S R Subramanian and the centre had given the Planning Commission three months to complete it.

The outcome of the study is still not known and some sources said it is yet to be completed.

Whatever be the outcome, the stakes are very high for both the Indian as well as the foreign vessel owners.

The key issue is whether government bodies going for import or export should give preference to vessels chartered via Transchart, or charter their own vessels going strictly by commercial considerations.

If Transchart is to be retained, the gainers obviously are the Indian vessel owners since the canalising agency has to allow shipment by foreign vessels only in a situation where either the Indian vessels are not cost competitive or are unable to undertake the shipment for any other reason.

The supporter of the policy is the surface transport ministry -- which is the administrative ministry for Transchart, and whose moral responsibility is to protect the interest of the Indian shipowners.

The obvious argument is that it is the well-established principle that unless the home country gives cargo support to its vessels, the native industry simply cannot survive. Further, it is pointed out that such cargo support is already given by major maritime countries such as the US and Japan.

Proponents of this line also point out that country also gains a lot by way of not only saving foreign exchange but also earning it.

However, despite the government's policy of continuing with Transchart, the Indian Oil Corporation (IOC) continues to contract a substantial portion of the oil import not on the mandatory free-on-board (FOB) basis but on the cost and freight (C&F) basis.

As a result, Indian Oil Corporation , which is the lone canalising agency for oil imports, contracted a paltry 6.1 million tonne on FOB terms, while the rest of its imports was contracted on C&F terms.

In the process, the Indian tankers got a very limited portion of the oil import business.

This, sources say, is a deterrent to the expansion of tanker capacity in the country.