July 31, 2014

Acche Din coming for Indian shipping?

A couple of months ago, Prime Minister Narendra Modi rode in to a historic electoral win in India with the slogan ‘acche din aane wale hain’ (the good days are coming). A flurry of recent announcements on coastal shipping, inland waterways, domestic tonnage licencing- and even amphibious buses- have made many believe that the good days for shipping may be already here. My optimism is tempered a bit, though, because, for one, the devil will be in the details that will follow. Also because I believe much more needs to be done, and I trust Modi- coming from a maritime State like Gujarat- knows this better than most. I will reserve judgement for now, though; it is early days for the new government yet.

Nonetheless, the signs don’t look too bad. More importantly, somebody in the government seems to be listening to at least part of the industry, for once. The period of terrible neglect that Indian shipping and the country’s waterways have suffered over the last few decades may be finally coming to an end, and that can only be a good thing.

Here I will only mention a couple of the bigger announcements amongst the many smaller ones made so far:

A new category of ships- “Indian controlled tonnage”-will get preference in carrying coastal cargo over ships owned by foreign lines (but after preference is given to Indian flagged tonnage) - they will have right of first refusal. This new regime seeks also to allow Indian shipowners to register new tonnage abroad, and to therefore seek cheaper credit outside India to do so.  An additional caveat that is actually a good thing- at least half the crew must be Indian, and the ship should undertake training of cadets as per the tonnage tax regime.

What this means is that Indian shipping companies- who can only charter or operate foreign flag ships today- will soon be able to own and operate foreign flag vessels instead of buying them through a subsidiary as they currently do- a needless circuitous  exercise that puts them at disadvantage. Another plus- these ships will not be subject to more restrictive Indian flag rules. Even though no existing Indian tonnage can be flagged out to take advantage of this new provision, domestic shipowners will now be able to register their vessels in tax friendly countries and operate them from India. This should boost the numbers for Indian controlled tonnage somewhat, and end up with more Indian cargo carried on Indian bottoms.

Another welcome change: Lifetime licences will be issued to domestic shipping instead of the ridiculous annual renewals that are required today. This licence will be co-terminus with the Certificate of Registry of the Ship. All this should stop the perpetual run around of shipowners to the MMD and beyond. The process has been decentralised and liberalised. Good.

For me, however, the most exciting announcement has to do with the promotion of Indian waterways. A new, Rs 2000 crore two-phase project is slated to commence soon, and will develop more than 300 km of waterways. The "Inland Waterways Authority of India (IWAI) has signed a pact with the government of Odisha, Paradip and Dhamra Ports for the development and maintenance of viable stretches of National Waterways-5," an official is quoted as saying in a business newspaper. This would be completed by 2017. The proposed waterway will help the Kalinganagar and Vyas Nagar Industrial hub and be a boost for coal, iron ore and other movement.  

The Shipping Ministry is rumoured to have also proposed to Mr Modi the creation of a major waterway project to develop a staggering 16,000 km of inland waterways. This includes, I think, the plan to develop the Allahabad-Haldia waterway, something that can give a huge boost to the economy in general and to domestic shipping in particular. 

Other proposed projects involving seaplane services and amphibious buses in Mumbai seem to be more feel-good than long-term beneficial. On the other hand, this is the first time in many years that I have heard any government talking seriously about passenger ships on river-ways, or passenger terminals ‘like airports’. 

Meanwhile, while all this is going on, the Maritime Association of Shipowners, Shipmanagers and Agents has urged the government to ratify the MLC 2006 that comes into force next month (The thing has been lying in the Parliament since last year). MASSA claims that it is doing so because jobs of a hundred thousand Indian seafarers, that it says contribute $2 billion annually to the national exchequer, would be at stake. In reality, MASSA is probably more worried about the impact of non-ratification on Indian registered tonnage or Indian manning agencies, and is using the seafarers human face (recognised, for once) to try to push things along.

Anyway, I don’t think we need to be overly concerned about the MLC; India can’t stay away from ratifying it; not for long, anyway. Besides, it is here to stay, ratified in India or not. Although I doubt very much that the MLC will bring the much touted (by the MLC brigade, not Modi) ‘achhe din’ for any seafarer, Indian or not.


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