Ship owners seek financial help from government

February 10th, 2009 - 7:36 pm ICT by IANS  

Kolkata, Feb 10 (IANS) Domestic shipping companies Tuesday urged the government to set up a fund to help the cash-strapped industry buy new vessels.

“Some fund should be built up for the shipping industry specifically as ECBs (external commercial borrowings) have dried up. We are talking of a minimum amount of Rs.10,000 crore (Rs.100 billion/$2 billion) to start with. It should be much more. May be to the tune of $3-4 billion,” S. Hajara, chairman and managing director of Shipping Corp of India (SCI) told reporters here.

The financing should be done either through Indian banks or by having a direct fund to tide over the current financial crisis, he said, adding: “The financial market for shipping industry in India is extremely dry.”

The government-controlled SCI is a member of the Indian National Shipowners’ Association (INSA), a representative body of the domestic shipping companies.

Talking about the decline in trade through water route, Hajara said: “Indian trade through shipping has come down from 40 percent during mid-1980s to 12 percent at present. It hasn’t grown with the overall Indian growth. But for the growth of Indian tonnage we need shipping finance.”

Apart from the revival of financing for acquisition, he also talked about providing incentives to the shipyards, which are considered to be core sector infrastructure. “There could be special incentives given to the Indian ship owners for placing orders on Indian shipyards. That will further boost the economy,” he said.

At present, SCI is procuring 29 ships totalling 20 million deadweight, which will be delivered between 2009 and 2012 beginning. “This is an order of little over $2 billion. In shipping, largest chunks of payment are done during the delivery, which is almost 60 percent of the total payment,” Hajara said.

“We would like to place orders for another 40 ships, which will cost $3 billion. All the orders will be placed by 2011 latest,” he added.

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