The Centre has urged the public sector units to use Indian shipping lines for transportation of their cargo. The move is aimed at increasing the share of Indian tonnage in the overall export-import trade. Currently, only around 8% of total EXIM trade is done by Indian flagged vessels.
In a recent meeting with major government companies, Coal India (CIL), Steel Authority of India (SAIL), Indian Oil (IOC), NTPC Ltd among others, the shipping ministry asked them to give preference to Indian shipping companies for cargo movement.
Industry experts point out that since most of these companies know of their cargo movement almost eight to 10 years in advance, the shipping lines if contracted can buy tonnage against that requirement.
With economic slowdown and lower freight rate situation have kept the shipping sector, globally under stress. This coupled with the oversupply of vessels in the market has created a demand-supply imbalance. Shipping companies are not hoping for a respite in this situation before 2014.
Shipping companies, therefore, are banking on long-term contracts to secure fleet operations.
“Countries like Korea, Japan and China have supported their domestic shipping lines with long term cargo commitments. We are also trying to do the same,” said Anil Devli, chief executive officer, Indian National Shipowners Association.
Senior government official said that the companies have agreed to support the Indian flags provided that ‘there is an open system for price discovery.’
“There is no compulsion for public sector units to employ Indian ships. Our effort always is to promote Indian tonnage,” he said.
Currently, Indian shipping companies have the first right of refusal for coastal trade only.
There is no such provision for the movement of Exim cargo. Shipping ministry is hopeful that the move will also promote the inland waterways, which have not taken off in a big way because of lack of long term cargo commitment from companies.
For the first time in March 2011, NTPC, country’s largest power producer had tied up with Inland Waterways Authority of India for transportation of around 3 million tonnes of imported coal. The coal had to be transported to NTPC’s power plant at Farakka, West Bengal, for a period of seven years.