Time to float more Indian ships

(Source – The Hindu, International Edition – Page No. – 13)

Urgency for India to Strengthen Its Shipping Industry

• The ongoing Red Sea crisis and the US decision to impose tariffs on Chinese ships highlight the need for India to build a strong domestic shipping fleet.
• A self-sufficient fleet will reduce dependence on foreign shipping companies and help India manage global maritime crises more effectively.
• The government’s plan to launch Bharat Container Line (BCL) is a step in this direction.

Impact of the Red Sea Crisis and US Tariffs

• The Israel-Palestine conflict and attacks by Yemen’s Houthi rebels in the Red Sea have forced ships to take a longer and more expensive route via the Cape of Good Hope.
• These disruptions have increased delays and costs in global trade.
• The US plans to charge Chinese-owned and China-built cargo ships over $1 million per port call, further straining global shipping costs.

India’s Heavy Dependence on Foreign Ships

• India relies on foreign ships for transporting its cargo, including trade with the US.
• Nearly 30% of the world’s major shipping fleets are Chinese-owned.
• Maritime transport handles 95% of India’s trade volume, but India has only about 1,500 ships, with fewer than 50 container vessels mainly operating along the coast.

High Shipping Costs for India

• India’s shipping expenses amount to $90 billion annually, making it the second-largest import cost after crude oil.
• The country also depends on leased containers, particularly from China.

Challenges for Bharat Container Line (BCL)

• Even with 100 vessels, BCL will remain a small player in global shipping.
• The competition in the Asia-Pacific region is intense, and market consolidation through mergers and acquisitions is expected.
• The initiative is seen as India’s attempt to create an alternative to China’s Belt and Road Initiative.

Steps to Boost India’s Shipbuilding Industry

• The government has announced a ₹25,000 crore maritime development fund and an ₹18,090 crore shipbuilding financial assistance policy.
• Removing the Goods and Services Tax (GST) on shipping operations can encourage investment in vessels.
• Shipbuilding can generate employment since it has a high direct-to-indirect job creation ratio of 1:5.

Conclusion

• Strengthening India’s shipping industry is crucial for economic security and reducing dependency on foreign fleets.
• Government policies and investments in shipbuilding can improve competitiveness and lower costs.
• Addressing structural issues in the shipbuilding sector will be key to making India a major player in global shipping.