Lok Sabha Question No. 229 (STARRED), answered on 2018-08-02
Subject: Shipping Industry
Ministry: SHIPPING
Asked by: DHANANJAY BHIMRAO MAHADIK, RAJEEV SHANKARRAO SATAV

## GOVERNMENT OF INDIA MINISTRY OF SHIPPING

## LOK SABHA

## STARRED QUESTION NO.  -229 TO BE ANSWERED ON 2ND AUGUST, 2O1B

## SHIPPING INDUSTRY

## -229.  SHRI DHANANJAY MAHADIK: SHRI SATAV RAJEEV:

Will the Minister of SHIPPING be pleased to state:

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- (a) the present status  of the domestic shipping industry in the country;
- (b)  whether there is a negative  growth in the domestic  shipping industry and if so, the details thereof along with the reasons therefor;
- (c) whether  it is a fact that many lndian shipping companies are heavily in debt and if so, the details thereof along with the remedial measures being taken by the Government in this regard;
- (d)  whether  the Government  has received any representation  from the shipping industry for relaxation of rules so as to  provide  level playing field to them vis-d-vis Government-owned  ports  and if so, the details thereof along with the reaction of the Government thereto; and
- (e)  the other steps taken/being taken by the Government to revive and develop the shipping industry in the country?

## ANSWER

MINISTER OF SHIPPING (SHRI NITIN GADKARI)

- (a)  to (e) A statement is laid on the Table of the House.

STATEMENT  REFERRED  TO lN REPLY TO PARTS (a) TO (e) OF LOK SABHA STARRED QUESTION NO.  -229  TO BE ANSWERED ON 2ND AUGUST,  2018 RAISED BY SHRI DHANANJAY MAHADIK AND SHRI SATAV RAJEEV, MPs REGARDING ..SHIPPING  INDUSTRY".

- (a) At present the lndian shipping industry carries around  6.5% of lndia's EXIM trade and about 66% of coastal cargo. lndia's fleel strength has increased  by 108 vessels, totalling 1.81 Million GT during the last two years.  As on 30.06.2018  the total lndian tonnage is 12.69 Million GT, consisting of 1389 vessels.
- (b) No Madam. With the proactive  and supportive  policies  adopted  by the Government rn promoting  National  tonnage, lndian  tonnage  grew steadily  and lndia has become a significant maritime  nation. The share of lndian ships in carriage of lndia's EXIM trade has, however, not kept pace with the growth  in lndia's EXIM trade. The share of lndian flagged vessels in lndia's EXIM trade has drastically declined from around 40% in 1987-BB to about 6 5% in 2016-17. Similarly,  the share of lndian flagged vessels in the coastal trade has declined from around 72% in 2009-10  to around  66% in 2016-17. The growth  of lndian fleet has been affected  primarily  due to lack of long term bankable cargo contracts,  higher cost of capital, relatively higher tax incidence and overall global  slowdown of shipping industry.
- (c) Shipping is a highly capital intensive industry. Many lndian shipping companies  are in debt and due to the long sustained recessionary  period spanning almost a decade, debt servicing has been a major burden for many lndian shipping companles.  The loan tenure is about 7-B years and does not cover the economic life of the ships. Shipowners  are now receiving returns  below  break-even levels for their vessels  and face prospects  of continued losses  unless the international  trade attarns a reasonable  level of normalcy. There have been instances of bankruptcies  of international ship owners and the lndian industry is also struggling  to cope with the worldwide downturn.  ln order to support the lndian shipping industry and to make it internationally competitive, the Government  has allowed  100% Foreign Direct lnvestment  (FDl) in the shipping sector, acquisition of all types of ships through rmport has been brought under the Open General Licence), lndian shipping industry has been provided  cargo support  in the form of right of first refusal, and policy  of Free On Board (FOB) import is being followed  for Government owned/controlled cargoes.
- (d) No Madam.
- (e) The Government is committed to the sustainable development of lndian shipping industry. ln order to make the shipping industry more attractive and competitrve, the Government has taken several measures  for the lndian  shipping sector such as:-
- Government  has reduced  GST from 18ok lo 5o/o on bunker fuel used in lndian flag vessels

- Government  has removed  licencing  requirement  for chartering  of foreign  registered ships by citizens  of lndia, companies  incorporated  in lndra and Registered societies to encourage coastal movement of Agriculture and other commodities
- Government  has removed  licencing  requirement  for chartering  of foreign  registered ships by citizens  of lndia, companies  incorporated  in lndia and Registered societies for coastal movement of (a) EXIM Transshipment  Containers and (b) Empty containers.
- Government has also removed licencing requirement for chartering of foreign registered  ships by citizens of lndia, companies incorporated  in lndia and Registered Societies for coastal movement of fertilizer.
- lndian  shipping industry  has been provided cargo support through Right of First Refusal (RoFR).
- Government  has taken a policy decision to allow shipping enterprises  based in lndia to acquire ships abroad and also flag them in the country of their convenience.
- Government has brought parity in the tax regime  of lndian seafarers  employed  on lndian  flag ships vis+vis those  on foreign flag ships.
- Government of lndia has notified inclusion  of stand-alone shipyards  undertaking activities  such as shipbuilding and ship-repair under the Harmonized List of lnfrastructure  sectors.
- Government is providing shipbuilding  Financial  Assistance  to Indian shipyards  for contracts signed during a ten year period, viz. 2016-2026.