India's exim trade is set for huge savings on account of reduced insurance premium and consequent freight costs, post exclusion of its west coast from piracy high-risk area (HRA) by a European Union body, Road Transport, Highways and Shipping Minister Nitin Gadkari today said.
The European Union Chair of the Contact Group of Piracy off the Coast of Somalia (CGPCS) has excluded country's west coast from piracy HRA.
"This will result in huge savings for India's exim (export-import) trade and consumers on account of reduced insurance premium and consequently, freight costs. It will improve safety of fishermen and fishing boats, and will also improve the security along India's coastline," Gadkari told PTI.
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The extended HRA came almost near the Indian coastline up to as close as about 35 nautical miles from the baseline, he said, adding that this was an unwarranted encroachment into India's exclusive economic zone (EEZ).
He said that in the wake of piracy off the coast of Somalia surging significantly 2008 onwards with numerous attacks and hijackings of merchant vessels and their crew, industry body Round Table, headquartered in London, has extended the HRA in the Indian Ocean to east of 78 degrees east longitude, which came up to the west coast of India.
"This stretching of HRA resulted in serious implications like additional war risk premium (AWRP) on movement of merchant ships in piracy-prone areas imposed by insurance providers on vessels carrying Indian exim cargo, escalated by about approximately Rs 3,600 crore per year at the peak of piracy in 2008 to 2012," the minister said.
He said some 22,000 vessels call on Indian ports every year and the shipping industry loads this extra AWRP on freight and transmits it to consumers as a pass-through charge, which resulted in a huge financial burden for Indian exim trade and Indian consumers.
He added that international maritime traffic density came close to the Indian coastline to avoid the said HRA-related AWRP and this in turn, led to maritime congestion.
In fact, this resulted in three reported instances of maritime collisions between merchant ships and fishing vessels, leading to fatalities of 5 Indian fishermen, Gadkari said, adding that this has also led to proliferation of positioning of armed security guards on merchant vessels.
"The Indian Navy and the Coast Guard have provided escorting facilities to ships in the Arabian Sea and round the clock security to foil any potential piracy attack," the minister said. "As a result, no such attack happened in 3 years."
The exclusion of the west coast has come as "a triumph for India" which has been consistently taking up the issue over the past three years in several global fora such as the International Maritime Organisation and CGPCS, which will boost exim trade.
