Ship owners fear easing of norms for foreign companies

      07/26/2018

Domestic ship owners and seafarer unions are demanding a level playing field fearing the government may relax norms for foreign vessel operators transporting domestic bulk cargo on India’s coastline.

In separate petitions to the nodal ministry that regulates shipping activities in India, the Indian National Shipowners Association (INSA) and bodies representing seafarers have requested the government not to waive licencing requirements for foreign vessel owners as this would impact the local industry.

“We have written to our minister Mr Nitin Gadkari stating that a relaxation allowing foreign vessel owners to carry domestic cargo without any licensing requirements would give an unfair advantage to them as their cost of doing business would be lower,” INSA’s chief executive officer, Anil Devli, said.

The shipping ministry recently allowed foreign vessel operators to transport containerized cargo meant for import or export within ports located in Indian territory to ensure the cargo doesn’t land up in foreign ports such as Singapore and Colombo.

Non-containerized trade, where Indian vessel owners have a near monopoly, accounts for four-fifths of total cargo handled at Indian ports.

“For now we are not doing away with any licencing requirements or (considering) cabotage relaxation for non-containerized cargo,” Gopal Krishna, secretary for shipping, said. “We first need to see how the relaxation for containerized cargo works. The objective is to promote the Indian port eco-system and bring down logistics costs at the same time,” he said.

Domestic ship owners that ply their vessels on the Indian coastline currently have to employ Indian seafarers, pay taxes on import of vessels purchased by them and also pay other associated taxes including tonnage tax.

They are also entitled to a right of first refusal, a type of reservation that gives them the first right to carry domestic cargo if local vessels are available provided they can match the price a foreign operator is offering to carry the same cargo.

“The foreign vessel owners don’t employ Indian seafarers and can hire staff at lower costs. Our submission is that to ensure a level playing field, they should be asked to flag in India requiring them to meet local regulations”, said G Shivakumar, executive director, Great Eastern Shipping.

Global shipping giants such as Maersk have welcomed the government’s move to relax norms for the container trade but cautioned that this should not be done at the cost of the domestic industry.