PHENOMENAL GROWTH OF SHIPPING SECTOR IN FIVE YEARS

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Shipping being a major sector, a new Ministry of Shipping was created in November, 2001 for rapid overall development of Shipping and Ports. The NDA Government in the last five years has brought out requisite amendments to the existing Acts to extend fiscal support and has sanctioned a number of projects in the Shipping segments, which have benefited the country for its overall growth and to sail in progressive path. Shipping sector activities cover various segments viz. Shipping Lines, Ship Building, Inland Water Transportation, Port Sector etc. In all these areas it has impressed successful strides namely acquiring of new vessels, entering into new joint ventures and new joint container services, building up of a oil tankers and passenger vessels against inland and export orders, formulation of six new waterways to transport inland cargo and so on.

As for major ports, due to enhanced capacity of handling cargo, now berths wait for ships and not the ships wait for berths. It is also on card to commence Sethu Samudram Canal Project early next year to provide better connectivity between eastern and western coasts without going around Sri Lanka. An Inter-Government Agreement on International North-South Transport Corridor Agreement amongst India, Russia and Iran signed in May, 2002 will heap huge financial gains to India. Recently Maritime Shipping Agreement was also signed between India and Ukrain to increase cooperation between the two countries in the field of Shipping.

Shipping Corporation of India (SCI) The Government has decided to bring down its equity in SCI through the strategic sale of 51 per cent from the present level of 80 per cent and this will be completed this year.

Acquisition of New Vessels

Approval has been accorded to Shipping Corporation of India on December 14, 2001, to acquire two LR size crude oil tankers of 1,40,000 DWT each at a price of US $ 48.70 million per vessel. These will be engaged in transport of import of crude oil, in place of foreign vessels and save substantial foreign exchange.

New Joint Ventures

Approval was also accorded to SCI to invest equity in joint venture for the construction of two LNG vessels.

Joint Container Services

In January, 2002, SCI merged with other lines forming a new consortium and offering to trade a weekly container service in the Indian sub-continent/UK continent sector. SCI also launched another joint container service viz. India Far East Express Two Services (INDFEX-2) at Chennai on June 16, 2002 linking the east coast of India to the Northern Ports of China.

Outstanding Performance

SCI has been rated as an excellent performer under MoU rating for the 10^th Year in row and its profit after tax for the year 2001-02 is Rs. 242 crores and it is declared as a "Mini Ratna" Company.

Ship Building

Cochin Shipyard Limited (CSL) has delivered 5 tugs to port trusts and two passenger-cum-cargo vessels to Lakshadweep apart from repairing 63 crafts and ships. CSL has received a letter of intent for construction of two Aframax tankers from Shipping Corporation of India on November 7, 2001. CSL has delivered 93,000 DWT oil tankers Maharishi Parshuram to SCI on October 8, 2002. CSL also secured an export order for construction of a pilot launch vessel from National Petroleum Construction Corporation (NPCC) UAE at US $ 8.2 million. It also secured an order to build an Air Defence Ship. It is a profit making shipyard and has made a good profit in 2002-2003.

Hindustan Shipyard Limited, Visakhapatnam

HSL built a 1,200 passenger cum 1,500 million tonnes cargo vessel for Andaman and Nicobar Islands and delivered the same in December, 1999. HSL also delivered two 100 passenger capacity vessels to Andaman and Nicobar Administration and a 50 tonne Bollard Pull Tug to the New Mangalore Port Trust. HSL also delivered one product carrier to SCI and secured order for 11 passenger vessels including one 700 passenger vessel and 3 dredgers/tugs. HSL has been nominated as the Yard for repair of EKM submarine by Ministry of Defence. Such indigenous repairs of submarine will be carried out in the country for the first time.

Hooghly Dock & Port Engineers Ltd. delivered 2 Hydraulic Surface Dredgers to IWAI.

Fiscal Support for Indian Shipping

Section 33AC of the Income Tax Act has been restored to the shipping business in order to allow appropriation of profits for creation of reserves. This will allow shipping companies to build up reserves for acquisition of new ships. The procedure for import of ships has been liberalised in the new EXIM Policy with effect from June 15, 2001. The depreciation rates for ships have been enhanced from 20 to 25 per cent with effect from April 1, 2001.

The Expert Committee (headed by Rakesh Mohan) recommendations of January, 2002, viz. tonnage tax for shipping companies and rationalisation of taxation regime for Indian seafarers sailing on Indian ships vis-à-vis foreign ships have been taken up with the Ministry of Finance. Shipbuilding subsidy policy has been modified to include private sector shipyards and to increase the number of vessels covered. Procedure for import of ships including second hand ships has been liberalized. Ministry has also taken steps for the participation of Indian Shipping Companies in the transportation of LNG. Approval has been given for the construction of one 400 and one 700 passenger vessel to cater to passenger service in Andaman and Lakshadweep Islands. A lage number of amendments to the Merchant Shipping Act have been carried out to bring it at par with the Global Maritime Law. To counter the ongoing menace of terrorism and stress on global security system, a new Act namely, Suppression of unlawful Acts Against Safety of Maritime Navigation and Fixed Platforms on continental Shelf Act enacted. Multimodal Transportation of Goods Act, 1993 has been amended thereby simplifying and rationalizing procedures. Continuous Discharge Certificate(CDC) cum Seafarer Identity Documents Rules have been liberalised and age limit enhanced to give more opportunity to candidates from rural areas to join Merchant Navy.

Adoption of International Rules

India adopted nine international rules relating to maritime shipping under the aegis of the International Maritime Organisation (IMO). These are (1) convention for the suppression of unlawful acts against the safety of maritime navigation (SUA 1988) (2) International Convention relating to intervention of the highseas in cases of oil pollution casualties 1969 (intervention 1969) (3) protocol for suppression of unlawful acts against the safety of a fixed platforms located on the continental shelf (4) protocol of 1992 to amend convention of civil liability of oil pollution damage 1969. (5) Protocol of 1992 to amend the international convention on the establishment of an international fund for compensation of oil pollution damage. (6) Protocol of 1988 relating to International convention of the safety of life at sea 1974 (7) Protocol of 1988 relating to international convention on load lines. (8) And the International convention on research and rescue 1979 convention came into force in India with effect from July 17, 2001. Subsequently National Research and Rescue Board were constituted under the Director General coast guard on January 28, 2002. (9) Accession of International convention on limitation of liability for maritime claims 1976.

An inter-Government agreement on International North-South Transport Corridor Agreement amongst India, Russia and Iran was signed and in its first coordination Council meeting held on May 21, 2002 at St. Petersburg in Russia, the modality for transport of goods through new land and sea route between India and St. Petersburg via Iran has been worked out. India will reap huge financial gains by becoming signatory to the NSCA as it is open to other countries also. The new corridor could compete well with the Suez Canal route since it is expected to cut the travel time by 10-12 days against 35 days as also operational costs by about 20 per cent.

Navigation

Work on the coastal Vessel Traffic Management Services (VTMS) with 9 radar stations along the coastline of the Gulf of Kutch at an estimated cost of Rs. 165 crore has begun.

A scheme of remote control monitoring of lighthouses at an estimated cost of Rs. 6.5 crore is under implementation. Two remote control stations have been established at Okha and Vodarevu in Gujarat. At present, it is under trial run.

A new light house station at Pir Sinai creak is proposed while a new light house at Roser Point in Andamon Nicobar Island to be commissioned shortly.

Maritime Training

Indian Institute of Maritime Studies (IIMS) at Mumbai on the pattern of the IITs is established to give a qualitative boost to maritime training in India..

Inland Water Transport

The Government has announced a comprehensive new Inland Water Transport Policy to accelerate growth of Inland Water Transport Sector and encourage private sector investment and participation. Accordingly, necessary amendments were made in the Inland Waterways Authority of India (IWAI) Act- 1985 in 2001 to authorize it to raise bonds in the open market. With effect from April 1, 2002 Inland Vessel Building Subsidy Scheme has been introduced that provides 30 per cent subsidy. Enhancing dredging capacity and the construction of permanent terminals on National Waterways 1 and 2 are in progress. National Inland Transport Development Council was set up to work jointly with the States for promotion of IWT. The Ministry has taken decision to reorganize Central Inland Water Transportation Corporation Ltd. to operate more efficiently. Centrally sponsored scheme for State Governments has been revised to provide 100% grant assistance to North-Eastern States including Sikkim and 90% grant to other States for development of their waterways.

IWAI have convinced industrial houses and PSUs to transport Inland cargo through national waterways. Over dimensional cargo of M/s Power Grid Corporation Ltd. was transported from Kolkata to Buxar in record time in June, 2002. Six new waterways have been formulated. The Asian Development Bank has agreed for a technical assistance grant of US $1 million for updating studies of various waterways proposed by IWAI for external funding. The Planning Commission has made a provision of Rs. 668 crore for the 10^th Plan for the development of this sector as against Rs. 308 crore in the 9th Plan.

Port Sector

India has 12 major ports administered by the Central Government and 148 minor ports administrated by State governments. The 12^th major port at Ennore, north of Chennai, for handling thermal coals was dedicated to the Nation by the Prime Minister in April, 2001, became operational with unloading facilities of 16 million tonnes of coal and the harbour is capable of accommodating facility for 60 million tonnes of implorts and exports. As a result of the ongoing thrust on development of additional capacity of these 12 major ports, the traffic handled during the last five years has succeded a growth rate of 6 per cent. The ports of Mumbai, Marmugao, New Mangalore and Cochin have also attracted record number of tourists on cruise ships.

JNPT became the first port in India to join the Million club and is ranked as the 3^rd fastest growing container port in the world. Container traffic at Jawaharlal Nehru Port would exceed 1.8 million TEUs during 2002-2003. Operational improvements and opening of private container terminal has facilitated direct sailing of vessles carrying 3000-4000 containers from Jawaharlal Nehru Port. Action has been initiated for widening and deepening of shipping channel to accommodate larger vessels. Container volumes increased by over 50%. In 2000-2001 for the first time cargo handling capacity at major ports exceeded the actual traffic, resulting in de-congestion and reduction in demurrage etc. Average pre-berthing detention of vessels at major ports during 2001-02 was reduced to 12 hours from the earlier figure of 29 hours in 1997-98. Cargo traffic at major port at the end of 2002-2003 is likely to exceed a record level of 300 million tonnes per annum. Mechanised facilities for loading 20 million tonnes of coal became operational at Paradip Port. Overall addition of 122 million tonnes of port handling capacity was created during the last five years. Due to effective handling of port operations pre-berthing detention is almost negligible at the ports and now berths wait for ships.

The total capacity in the Major Ports exceeded the cargo handled and the capacity created in the ports as on March, 2002 was around 344 million tonnes against the traffic of 288 million tonnes.

Consequent to interactive sessions taken by the Minister of Shipping with the Port users, the Bongirwar Committee was constituted. Implementation of its recommendations have resulted in quick dispersal of duty drawbacks after loading of containers, removal of Bond and Bank guarantee from Coastal trans-shipment operators at Kandla and round the clock working regime at entry gate by customs at other ports.

A new depth based dredging control system has been introduced in Cochin port for reduction in maintenance dredging costs over the years, which will be introduced in other ports shortly.

A trans-shipment hub is proposed to be set up at Vallarpadam near Cochin Port to enable mainline vessels to come in, for avoiding trans-shipment. This would reduce transaction costs of containerized cargo substantially.

For improving efficiency and removing procedural bottlenecks electronic data interchange has been made operative at the ports of JNPT, Mumbai, Cochin and Chennai and would be operational at Kolkata and Tuticorin shortly.

As a part of private participation in infrastructure initiated by the Shipping Ministry, container terminals have been handed over to Port of Singapore Authority (PSA) at Tuticorin and P&O Ports at Chennai , and a consortium consisting Dubai Ports Authority at Visakhapatnam. Further twenty nine projects amounting to Rs. 6,554 crore for adding to port capacity of 94.05 million tonnes have been identified, of which 17 projects have already been approved by the Government. Road connectivity has improved dramatically with financial participation of ports like Kandla, JNPT, Mormugao, Chennai and Vizag in the road building exercise.

The work on Sethu Samudram Canal Project would commence soon and would be completed in a time bound manner. The project would provide better connectivity between our eastern and western coasts without going around Sri Lanka, thereby reducing the travel distance by about 400 nautical miles and 36 hours of shiptime. The Ministry has also given approval for the first port based Special Economic Zone at Cochin.

There is a considerable improvement in the labour related issues at Ports. Industrial relations have been cordial and the mandays lost has been almost negligible. For the first time, a national tribunal was set up by Ministry of Labour to adjudicate on certain issues relating to rationalization and reduction in manning scales in cargo handling and manning of crafts.

With the lowering of retirement age to 58 and VRS scheme, the manpower at major ports and dock labour board has come down to 79,950 from 1,02,055. Merger of Chennai DLB (Dock Labour Board) with the Chennai port resulted in reduction in handling cost by approximately Rs. 25 crore annually. The DLBs of Mumbai, Cochin, Goa had earlier merged with respective port trust.