In International Shipping News 09/06/2015
In an effort to garner a favorable share of India’s burgeoning freight market, the country’s shipowners are lobbying hard with the government to make it mandatory for state-owned companies to allocate 50% of its cargo volumes for Indian-flagged ships, a top shipping company official told a freight forum Friday.
The Indian National Shipowners’ Association, the body representing the interest of Indian shipping companies, has put up a proposal to the Indian government on this matter, said Sunil Thapar, Shipping Corporation of India’s director for bulk and container division, at the India Dry Bulk Cargo Summit 2015.
A cabinet note is now being moved by India’s shipping ministry to get support from the Indian public sector undertakings to allocate 50% of their seaborne exports and imports to India-flagged vessels, he said.
With only 10% of India’s inbound and outbound cargoes being handled by the Indian-flagged vessels, Thapar said the Indian shipping sector is still in its nascent stages and needed support from the government.
In 2004, the Indian government introduced a “tonnage tax” of between 2% and 3% by cutting down the then-existing tax liability of around 35% to help the bottom lines of Indian shipping companies.
“It is currently a non-level playing field for Indian owners versus foreign owners. When tonnage tax was introduced, expectation was that about 2%-3% tax will be paid, but with a lot of other taxes, it comes up to about 12%-14% of a shipowner’s earnings,” Thapar said.
Meanwhile, there is skepticism whether this proposal will pay any dividends given that the Indian shipowners control only about 1% of the global shipping tonnage, of which SCI’s share is 37%, according to a shipping executive.
“I think it might not be feasible at the moment [for Indian shipowners to get 50% of the country’s cargoes]. Even most of the Indian coastal cargoes are carried by foreign vessels. India is stronger on the cargo side and not on the tonnage,” an Indian dry bulk shipbroker said, adding that 60% to 70% of the coastal trade is concluded on foreign vessels.
According to one official close to the matter, the cabinet note is still only being discussed and not seen much progress.
“There is a lot of chance that it [the cabinet note] might not go through. Other ministries might oppose this,” the official said.
In the meantime, Indian shipowners like SCI are doing their bit to support Indian companies on the commercial business side by giving Indian shipbrokers a lead time of two hours on vessels that are opening for new employment.
SCI usually circulates its vessel opening positions Tuesday.
It has 17 India-based shipbrokers, who get to know of the vessels’ opening positions at 12.30 pm India time (0700 GMT) while brokers based outside of India are made aware of the positions only at about 2.30 pm India time.
