Lok Sabha Question No. 1825 (UNSTARRED), answered on 2022-02-11
Subject: India’s share in International Shipping Sector
Ministry: PORTS, SHIPPING AND WATERWAYS
Asked by: P. C. Mohan

## GOVERNI\,1ENT OF INDIA IVINISTRY OF PORTS, SHIPPING AND WATERWAYS

## LOK SABHA

## UNSTARRED  QUESTION NO. 1825

ANSWERED ON 1110212022

## INDIA'S SHARE IN INTERNATIONAL SHIPPING SECTOR

1825- SHRI P.C, NTOHAN:

Willthe Minister  of PORTS,  SHIPPING AND WATERWAYS be pleased to state: qf,{,  +dqft-frfi  sfuilm{Ff  t'ff

- a) whether despite  having a large coastline, growing domestic  market and international seaborne  trade, deep-rooted maritime traditions and skilled seafarers,  lndia continues to have a smaller share in the international  shipping sector;
2. (b) if so, the details thereof and the reasons  therefor alongwith the steps being  taken to increase this share:
3. (c) whether lndia is a net importer  of shipping services  especially  ship finance;
4. (d) if so, the magnitude of these imports  and the steps being taken to reduce these impo(s; and
5. (e) the steps being taken  to build lndia as a ship building  and repairing  hub?

## ANSWER

## MINISTER  OF PORTS, SHIPPING AND WATERWAYS (SHRI  SARBANANDA  SONOWAL)

- (a to e) (i) lndia has an increasing merchant marine fleet of 1493 vessels, both on foreign going  and coastal operations,  with a combined Gross Tonnage  of 13 million (approx.). Nearly 95% of lndia's overseas trade by volume is carried through maritime transport  and approximalely 92% of these goods are carried through foreign flagged vessels.
- (iiD The reason for smaller share of lndian shipping inter-alia appears to be, higher cost of finance in lndia and higher  tax regime/duties  levied on lndian ships as compared to other maritime  nations.
- (iD As per Review of Maritime  transport,  202'l by United Nations Conference  on Trade And Development (UNCTAD),  lndia ranks 1gth globally  by dead weight tonnage and accounts for aboul 1.25o/o of the total  global dead weight  tonnage.
- (iv) The other reason which may affect the competitiveness of lndian shipping appears to be the age profile  of the lndian flag merchant  shipping  vessels.  The majority  of vessels  are around 20 years vintage. This reduces the competitiveness of lndian vessels in international  market  as compared  to their foreign  counlerparts. The increasing  size and sophistication  of merchant ships and port facilities require  heavy capital investment, which is one of the major  problems  faced by lndian shipping  industry.
- (v) The following  are the steps taken to make lndian ships more competitive  and enhance the share of lndian shipping  in the lnternational  shipping  market;

## Ship Buildinq Financial Assistance Policv  (2016-2026):

Government  of lndia has approved  the Financial Assistance Policy for Indian Shipyards  on  gth  December  2015, for grant of financial  assistance  to lndian Shipyards.

Only those vessels shallbe eligible for grant  of financial assistance, for which the construction  commences subsequent  to the signing of valid contracts.  Vessels which are constructed  and delivered  within a period  of three years from the date of contract are eligible  for availing  financial assistance under the  policy. For specialized  vessels,  the delivery  period  can be extended till six years.  Financial  assistance  shall be  @  20% of the contract  price,  actual receipts, fair  price (whichever is least) to Indian shipyards. Under the policy, the financial  assistance  extended  would be reduced  by 3% every three  years.

## Revision of the criteria for Rioht of First refusal(ROFR):

The criteria for granting  the Right of First Refusal  in chartering  of vessels  through tender process has been revised,  for promoting  tonnage under lndian flag and shipbuilding in lndia,  so as to make lndia a Atma-nirbhar/self-reliant  Bharat, in terms of tonnage  and ship-building  in lndia. The following  is the revised  hierarchy  of RoFR;

- . Foreign built, lndian flagged (lndian owned);
- . lndian  built, lndian flagged (lndian owned);
- . lndian  built, foreign  flagged (foreign  owned).

This is to promote  demand of lndian built and lndian flag vessels  as the lndian built and lndian flag vessels will have the priority in chartering and will also provide additional  market access and business  suppo( to ships built in lndia.

## Subsidv support to lndian shippinq companies:

A scheme for the promotion of flagging of merchant ships in lndia by providing Rs.1624 crore over a period of five years  as subsidy support to lndian shipping companies in global tenders floated by Ministries  and CPSES has been approved by the Cabinet. The rate of subsidy  support will be based on age of the vessel.  The scheme  is to encourage  entrepreneur  to register  ships under lndian flag.

ln addition,  the Government  has taken various initiatives  for promotion of shipbuilding in lndia.

- (vii) For acquisition of any type of vessel/ repair of vessel by covernment Departmenu Agencies including Public Sector Undertakings (PSUS) through global tendering process, Ministry of Ports, Shipping  and Waterways  existing  policy  of RoFR would continue  to be implemented.  This again is a major  policy to create  demand.

(vi) The Shipbuilding Financial  Assistance is provided  to lndian Shipyards in order to promote  the lndian Shipbuiiding lndustry and to enable them to acquire  global Shipbuilding Contracts while competing  in lnternational  Markets.  Shipbuilding  Financial Assistance  Policy  for lndian Shipyards has been approved for 10 years for shipbuilding contracts  secured between  01.04.2016  and 31.03.2026  (including  these dates). Financial assistance  is granted  to lndian Shipyards  equal to 20% of the lower of "Contract  Price" or the "Fair Price" or "actual payments  received", whichever is least, for a period of at least 10 years commencing  2016-17.  This rate of 20% will be reduced by 3% every three years.  Budget of Rs.4,000 crore has been approved  by the Government  of lndia.

,

- (viii) Similarly,  the Ministry  has promulgated  a SoP for procuremenUcharter  of Tugs by Major Ports in lndia as per which Tugs required  for services of all Major Ports shall be built in lndian  Shipyards  as per standardized  designs published  by the lPA.
- . lnternational Ship Repair  Facility  (ISRF) at Cochin  Port Trust Premises
- (ix) As part of infrastructure  augmentation  dry-dock ship repairs, Cochin Shipyard Limited (CSL), a PSU under the administrative control of this Ministry, is embarking  on substantial  infrastructure  expansions as given below:
- . CSL-Mumbai  Ship Repair Unit (CMSRU)
- . CSl-Andaman & Nicobar  Ship Repair Unit (CANSRU)
- . CSL-Kolkata  Ship Repair Unit (CKSRU)

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