Thursday, 7 February 2013

Government asks Public Sector to use Indian tonnage

The Government of India is pushing domestic Public Sector Undertakings like Coal India, Steel Authority of India, Indian Oil and NTPC Ltd to give preference to Indian shipping companies for carrying their cargoes. The Ministry of Shipping is believed to have asked the PSUs to support Indian shipping at a meeting held recently; the aim seems to be to bolster Indian tonnage amidst the present economic downturn, and to grow India’s market share in her export and import trade (EXIM). 

The PSU’s have, in turn, told the government that they would prefer Indian bottoms provided that ‘there is an open system for price discovery.’ With a piffling 8% of total EXIM trade being carried by Indian bottoms at present, there is tremendous scope for improvement.

Analysts say that many of the PSUs are massive undertakings that can predict their cargo requirements almost a decade in advance and can therefore provide for sustainable growth of the Indian fleet, provided that Indian shipping’s freight rates remain competitive. An ideal situation, they say, would be if domestic tonnage could grow on the back of assured business -in the form of long term contracts- with some of the PSU behemoths.

Indian shipowners have long pushed for greater cargo support from the government along the lines seen in some other countries. As CEO of the Indian National Shipowners Association Anil Devli says, “Countries like Korea, Japan and China have supported their domestic shipping lines with long term cargo commitments”.
The Business Standard reports that the shipping ministry is “hopeful” that the move will also promote inland waterways, an area where domestic shipping does have clear preference- and an area that badly needs the support that long term contracts with PSUs could bring. 


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