06-07-2018

Govt to relax curbs on Indian firms chartering foreign ships

The Ministry of Shipping is clearly in reform mode. On the heels of the recent relaxation of the cabotage law, which allows foreign flag vessels to operate in Indian waters, it is now set to allow Indian players to charter foreign flag carriers without any pre-conditions.

At present, a foreign ship is allowed to be chartered only — among other conditions — if a suitable Indian ship is unavailable for that purpose at reasonable charter rates.

In fact, the entire chartering rule book is set to see a significant simplification. These measures will increase the shipping capacity in the country, bring down the cost of transportation along the coast and eventually encourage coastal shipping. At present, only 100 million tonnes of cargo is moved along the coast in India, and 80 per cent of it comprises petroleum products, coal and iron ore.

“While we were relaxing cabotage rules, we found restrictive practices in the chartering of foreign vessels. We need to correct this quickly,” Shipping Secretary Gopal Krishna told BusinessLine.

At present, the number of ships available at the right price to carry cargo (both domestic and export-import) along the coast is inadequate, thanks to which people take either the road or rail route. “Once we have ships available at cheaper rates, we will encourage coastal shipping and the overall logistics cost will reduce significantly,” Gopal Krishna said.

An ‘Uber’ for ships

The overall easing of chartering rules, he felt, would give a fillip to entrepreneurship in the sector.

“By opening up, we give chance to our entrepreneurs who do not have enough funds to buy ships to come into the business by chartering a vessel,” he said.

The idea is similar to cab aggregation, which does not require an entrepreneur to own vehicles. “Our attempt is to increase shipping capacity, and a lot of cargo will move on our coast,” he said.

Source: The Hindu Business Line

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