India To Establish New Shipping Company For Expanding Fleet By 1000 Ships In Next Decade

India plans to establish a new shipping firm and expand its fleet by at least 1,000 vessels over the next decade.

The project is part of the country’s overall strategy to capitalize on rising trade income while reducing reliance on foreign shipping services.

The initiative aligns with Prime Minister Narendra Modi’s vision of developing India into a developed nation by 2047.

The new shipping company, which is yet to be named, will be a joint venture between state-run enterprises in the oil, gas, and fertilizer industries and the state-owned- Shipping Corporation of India and foreign partners.

According to anonymous government sources, this strategic alliance intends to lower India’s freight expenses to foreign carriers by one-third by 2047.

According to current forecasts, freight costs could reach $400 billion by 2047 as exports and imports expand.

In the fiscal year 2019/20, Indian companies spent $85 billion on freight, with $75 billion paid for using foreign vessels.

The heavy reliance on foreign carriers is due to India’s slow expansion of its shipping fleet compared to its trade surge, particularly in energy imports and refined oil product exports.

India’s current fleet comprises approximately 1,500 large vessels, including tankers, LNG carriers, cargo ships and dry bulk carriers.

To address this gap, India’s oil and shipping ministries have developed a strategy for state-run oil companies to collaborate with the new shipping firm, leveraging Shipping Corporation of India’s experience in tanker acquisition, ownership and operations.

In January, a collaborative working group of government and industry representatives was organized to provide a thorough plan for this effort.

The new company would be headquartered at GIFT IFSC, a financial centre in Gujarat that aims to compete with centres like Singapore through tax incentives and simplified regulations.

The firm will receive seed financing from a maritime development fund of approximately 300 billion rupees ($3.6 billion) in partnership with significant port authorities.

In addition, state-run firms are encouraged to sign 15-year charter agreements with the new corporation to promote low-cost, long-term loans for shipbuilding rather than scheduling single voyages or short-term charters.

This approach also allows state-run companies to become shareholders in the new shipping and leasing company.

The plan aims to consolidate government-side cargo demand, particularly from the energy and fertilizer industry.

Thus, India’s self-reliance in maritime trade will increase, and freight outgoings to foreign companies will be reduced.

Reference: Reuters

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Source: Maritime Shipping News