New Delhi, December 18: India’s apex industry body, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has said in a recent analysis viz., ‘Indian Shipping Fleet: Size, capacity and Age Composition’ that, the country’s Rs 7,300 crore shipbuilding industry holds great growth potential. However, the domestic players need to invest extensively in their capacities to take advantage of the opportunities.
“Majority of Indian ships are less competitive as mostly younger vessels that are less than 15 years old are preferred in international trade,” said D.S. Rawat, secretary general of ASSOCHAM while releasing the chamber’s analysis. “The government needs to act as a facilitator and create opportunities for a healthy business climate to attract fresh investments in the shipping sector.”
India has a total of 1,122 shipping vessels in its shipping fleet of which about 466 vessels are more than 20 years old. Considering that average life of a shipping vessel is about 26 years, most of the existing Indian vessels need to be replaced. Pointing out the average cost of constructing a large vessel to be about $100 million, Rawat said, the Indian shipbuilders need to enhance their capacity to reap advantage from this opportunity. “Otherwise, foreign players may cash in on this opportunity,” he added.
The analysis further highlighted that, despite total volume of cargo moving in India’s trade expanding progressively, the share of Indian ships in carriage of country’s overseas trade declined from about 36 per cent in 1990-91 to just over eight per cent in 2009-10. “Bulk of our essential supplies like oil are carried on foreign flag vessels leaving our energy supplies at the risk of an abrupt stoppage in case of any eventuality. Besides, it is also causing significant drain on precious foreign exchange in terms of payment of freight charges, which could otherwise be used for other high priority imports or for building up indigenous infrastructure,” said the analysis.
India accounts for just about one per cent of the global shipbuilding industry. However, favourable factors like lower costs of labour, availability of skilled workforce, robust demand and a growing steel industry can perk up the sector phenomenally.
As per ASSOCHAM recommendation, India needs to revamp its whole shipping infrastructure and set up a new port or shipyard in each of the maritime states. Additionally, the government needs to provide subsidy scheme, ease tax related regulations and declare shipbuilding to be a strategic industry to increase India’s share in the global maritime business.