The Indian Maritime Center has urged the Finance Ministry to amend the ship infrastructure eligibility criteria, warning that half of coastal ships may lose benefits.Mumbai: The Indian Maritime Center (IMC), a top lobby group for the maritime industry, has sought amendment to the eligibility criteria for granting infrastructure status to ships announced by the Finance Ministry last month, becoming the latest to join the protest against the decision, which they say will disqualify half of the country’s coastal vessels from availing the benefits.
According to the notification issued by the Finance Ministry on September 19, Indian owned and flagged commercial ships of ten thousand gross tonnage (GT) and above or Indian built, owned and flagged commercial ships of one thousand five hundred gross tonnage (GT) or above will be given infrastructure status.
Limiting eligibility to only certain sizes of ships cannot do justice to the government’s ‘self-reliant policy’ and cannot match the objective of making Indian shipbuilding the 10th largest within the next 10 years, the IMC wrote in a letter dated October 17 to economist and Prime Minister’s Economic Advisory Council member Sanjeev Sanyal, who played a key role in the government’s decision to grant infrastructure status to ships.
This could impact the government’s initiatives to promote coastal shipping and shipbuilding, as outlined in the Maritime India Vision 2030 and Maritime Amrit Kal Vision 2047, IMC Chairman Devaki Nandan wrote in the letter.
Of the total approximately 1,550 registered ships in India, more than 1,000 are coastal ships, including service and cargo ships.
“It would be safe to say that at least 50 per cent of these coastal ships will not be eligible for infrastructure benefits. The criteria set by the Finance Ministry deviates from the consensus reached by industry stakeholders and the Indian National Shipowners’ Association, which had proposed infrastructure conditions for ships of 24 meters or more in length and 500 GT and above as a benchmark and it has to be fully implemented by the Directorate General of Shipping. Was supported/recommended. and Ministry of Ports, Shipping and Waterways,” Nandan wrote in the letter.
The Indian Coastal Ship Owners Association (ICCSA) was the first to oppose the notification, saying that excluding small coastal vessels from the scope of infrastructure status “defies logic”. ET Infra Reported on 22 September.
Local shipbuilders under the banner of Shipyard Association of India (SAI) also joined the chorus to criticize the notification issued by the Finance Ministry.
Outlining the impact of the eligibility criteria on the shipbuilding industry, the IMC said micro, small and medium enterprises (MSME) shipyards “may receive fewer orders from coastal shipping stakeholders as those smaller than 1,500 GT do not have supporting infrastructure conditions, this may hinder their growth and development”. It said excluding small vessels is likely to harm the growth of MSME shipyards, which are critical to achieving Make in India goals.
The norms notified by the Finance Ministry will impact the coastal shipping sector due to limited funding options. The IMC said coastal shipping companies may struggle to access long-term, low-cost funding due to being locked out of the benefits of infrastructure.
This norm will increase shipbuilding costs as shipbuilding in India is already 24-26 per cent costlier than China, South Korea and Japan. “Without adequate support, Indian shipyards may struggle to compete globally,” Nandan said.
Lack of support for domestic shipbuilding may increase dependence on foreign ships, affecting the country’s economy and strategic interests. The replacement of coastal ships at the end of their expected life span as well as additional requirements for new ships, which is expected to boost shipbuilding and allied marine industries and MSME shipyards in India, “will take a major hit due to this decision”, it said.
“If the notification is not amended, it is likely to hamper the achievement of the goals outlined in the Maritime Amrit Kaal Vision 2047. Because the requirement of ships will have to be met by purchasing 15-20 year old ships built in China and other countries and Indian shipyards and Indian shipbuilding will not grow as envisioned and modernize the Indian fleet,” Nandan said, urging the Finance Ministry to “revise the notification and implement the proposed To adopt” criteria for granting infrastructure status to vessels 24 meters or more in length, initially for a period of five years and reviewed thereafter.
