Lok Sabha Question No. 4813 (UNSTARRED), answered on 2017-03-30
Subject: Impact of Baltic Dry Index
Ministry: SHIPPING
Asked by: FEROZE VARUN GANDHI

## GOVERNMENT OF INDIA MINISTRY OF SHIPPING

## LOK SABHA UNSTARRED QUESTION NO.4813 TO BE ANSWERED ON 30th MARCH, 2017 IMPACT OF BALTIC DRY INDEX

## 4813.   SHRI FEROZE VARUN GANDHI:

Will the Minister of SHIPPING be pleased to state

## पोतप�रवहनमंत्

- (a) whether the Government is aware of the Baltic Dry Index (BDI) issued globally as an economic indicator with regard to the shipping industry/sector;
- (b) if so, the details and impact thereof with reference to the Indian shipping sector;
- (c) whether the falling of BDI has put a considerable economic strain on the Indian Shipping Industry/Sector and if so, the details thereof along with the remedial measures taken/being taken by the Government in this regard;
- (d) the annual profit and loss statement of the Shipping Corporation of India (SCI) for the last three years and the current year; and
- (e) the steps taken/being taken by the Government to ensure that the shipping industry/sector including SCI does not fall into losses due to falling BDI?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF SHIPPING (SHRI PON. RADHAKRISHNAN)

- (a) Yes, Madam.
- (b) The Baltic Dry Index (BDI) has been prevailing at very low levels for the past few years and it indicates that the freight levels in the dry bulk market are prevailing at lower level having an adverse impact on financials of global shipping companies operating in the dry bulk segment, including Indian shipping companies.
- (c) The falling BDI indicates that the freight rates in the dry bulk segment are under pressure and profitability of the  dry  bulk  shipping  companies  will  be  adversely  affected.    The  freight  rates  are  driven  by  demand  and  supply scenario of dry bulk carriers (ships) worldwide.  However, in order to protect the Indian shipping companies from market fluctuations, the  Directorate  General  of  Shipping  has  announced  a  special  lay-up  package  for  Indian  bulk ships in June,  2016 that eased the process of lay-up for Indian registered ships.
- (d) The net profit of SCI for the last three years and for the none months ended 2016-17 is as under:
- (e) Government has taken number of steps to support Indian shipping industry, namely:-
- (i) Indian Shipping industry has been provided cargo support in the form of right of first refusal.
- (ii) Exempted  Customs  and  Central  Excise  duty  leviable  on  bunker  fuels  used  in  Indian  flag  vessels carrying a mix of EXIM, empty and domestic containers between two ports in India.
- (iii) Government has brought parity in the tax regime of Indian seafarers employed on Indian flag ships vis-à-vis those on foreign flag ships.
- (iv) Government has allowed shipping enterprises based in India to acquire ships abroad and also flag them in the country of their convenience.
- (v) Reduction of Central Excise duty on capital goods, raw materials and spares used for repair of ocean going vessels.
- (vi) Government has allowed 100% FDI in the shipping sector.
- (vii) Zero rating of services of transportation of export cargo by Indian ships.
- (viii) Reduction of service tax incidence on coastal shipping.
- (ix) Acquisition of all type of ships, through import has been brought under the Open General Licence (OGL).

| Financial Year             | 2013-14    |   2014-15 |   2015-16 |   2016-17 (9 months ended 31.12.2017) |
|----------------------------|------------|-----------|-----------|---------------------------------------|
| Net Profit (Rs. in crores) | (-) 275.00 |       201 |       377 |                                 43.16 |

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