Lok Sabha Question No. 2062 (UNSTARRED), answered on 2024-08-02
Subject: Development of Indian Shipping
Ministry: PORTS, SHIPPING AND WATERWAYS
Asked by: Shri Vishnu Datt Sharma

## GOVERNMENT OF INDIA

## MINISTRY OF PORTS, SHIPPING AND WATERWAYS

## LOK SABHA

## UNSTARRED QUESTION NO- 2062 ANSWERED ON - 02/08/2024

## DEVELOPMENT OF INDIAN SHIPPING

## 2062.  SHRI VISHNU DATT SHARMA:

Will the Minister of PORTS, SHIPPING AND WATERWAYS be pleased to state: पȅन , पोत पįरवहन और जलमागŊ मंũी

- (a) whether the Government is cognisant of the need to develop Indian shipping line of global standards, as rising freight costs have highlighted domestic firms' dependence on global shipping companies;
- (b) if so, whether  the Government  is  cognisant  that rising freight cost and  high dependency  on  foreign  companies  has  exacerbated  the  supply  chain  crisis  in  the country as the Indian shipping lines have a minor share in global trade;
- (c) if  so,  whether  the  Government  has  taken  steps  to  address  this  issue  of  national importance; and
- (d) if so, the details thereof and if not, the reasons therefor?

## ANSWER

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

(a) to (d) Yes  Sir.  The  Government  has  undertaken  several  initiatives  to  enhance  the capacity and competitiveness of Indian shipping lines, thereby reducing reliance on foreign shipping companies and addressing the issue of escalating freight costs. The following steps have been taken by the Government to develop Indian Shipping lines:

- (i) Right of First Refusal (ROFR):

It  grants  Indian-flagged  vessels  for  the  priority  to  match  the  lowest  bid  offered  by foreign-flagged vessels thereby raising the demand for Indian flagged vessels. The criteria for granting the Right of First Refusal in chartering of vessels through tender process has been revised,  for  promoting  tonnage  under  Indian flag  and  ship-building  in  India,  so  as  to  make India a Atma-nirbhar/self-reliant Bharat, in terms of tonnage and ship-building in India. The following are the revised hierarchy of ROFR:

- a.  Indian built, Indian flagged  and Indian owned
- b.  Indian built, Indian flagged  and Indian IFSCA (International Financial Services Centre Authority) owned
- c. Foreign built, Indian flagged and Indian owned
- d.  Foreign built, Indian flagged and Indian IFSCA owned
- e.  Indian built, foreign flagged and foreign owned
6. (ii) Subsidy support to Indian shipping companies:

The  subsidy  scheme  for  the  promotion  of  flagging  of  merchant  ships  in  India  was initiated in 2021 with a budget of ₹1,624 crore to be disbursed over five years. This scheme aims to provide subsidies to Indian shipping companies participating in global tenders issued by Ministries and Central Public Sector Enterprises (CPSEs) for importing government cargo such as crude oil, LPG (Liquid Petroleum Gas), Coal, and Fertilizers.

- (iii) Ship Building Financial Assistance Policy (2016-2026):

Government  of  India  has  approved  the  Financial  Assistance  Policy  for  Indian Shipyards on 9th December 2015, for grant of financial assistance to Indian Shipyards. Only those  vessels  shall  be  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.

These initiatives have boosted the shipping sector's contribution to India's economic growth.  The  Indian  tonnage  over  the  last  decade  has  been  consistently  increasing.  As  of June,  2024,  485  Indian-flagged  vessels  with  11.95  Million  Gross  Tonnage  (GT)  operate  in Overseas  Trade.  Additionally,  1041  vessels  with  1.7  Million  GT  are  engaged  in  Coastal Trade.  Further,  4  vessels  of  45,604  GT  have  been  acquired  under  Indian  Controlled Tonnage.  Overall,  1,530  vessels  are  Indian-flagged  with  13.7  Million  GT.  With  the  rise  in Indian tonnage, there has been a shift in business preference towards Indian-flagged vessels over foreign-flagged ones.

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