Indian Shipbuilding - Industrial Products

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ShipbuildingA r t i c l eMajor Ports:§ West CoastKandla (Gujarat)Mumbai (Maharashtra)Jawaharlal Nehru(Maharashtra)Marmugao (Goa)New Mangalore (Karnataka)Cochin (Kerala)East CoastTuticorin (Tamil Nadu)Chennai (Tamil Nadu)Ennore (Tamil Nadu)Visakhapatnam (Andhra Pradesh)Paradip (Orissa)Kolkata, Haldia (West Bengal)Minor Ports:187States/Union Territories No of MinorPortsGujarat 40Maharashtra 53Goa 5Karnataka 10Kerala 13Diu & Daman 2Lakshadweep Islands 10Pondicherry 1Tamil Nadu 15Andhra Pradesh 12Orissa 2West Bengal 1Andaman & Nicobar 23Islandsthen to 3,000 million tonnes by 2020, to reachthe unfavourable global demand-supplydynamics. These are "driven by relatively lowglobal trading levels and fleet additions acrosssegments, will be a significant drag on therevival of charter rates in 2012”, says Fitch.There is the brighter side though.Assocham projects that the current cargotraffic at major ports in India of about 600million tonnes should more than double1,230 million tonnes by 2015 andgrowing at aCAGR of 20 per cent. This means that Indiahas to create ambient conditions for theindustry to grow. The two main needs of theindustry are land for new ports or shipyards inmaritime states and a governmentcommittment to the industry in terms of apublic-private partnership model. There isequal need for foreign direct investment inthis space.July 2012PURCHASE 133
A r t i c l eShipbuilding• The National Maritime Development Plan seeks to improvefacilities at India's 12 major ports and plans an expenditureof around $12.4 billion plus another $9.07 billion for 111shipping sector projects by 2015.• Hundred per cent foreign direct investment under theautomatic route is permitted for port development projects.• Hundred per cent income tax exemption is provided for aperiod of 10 years for port developmental projects.• Government has opened up all the areas of port operationfor private sector participation.Revive subsidyThere is a felt need for a revival of thesubsidy scheme, ease tax related regulationsand for shipbuilding to be declared a'strategic industry'. According to CARE Rating,the Indian shipbuilding industry has beenaffected by the Union budget 2012-13withdrawal of the 'Shipbuilding subsidyscheme' with no announcement of anyrenewal. The Indian shipyards are renderedcost ineffective, compared to their globalpeers. Further, the absence of 'infrastructureindustry' status to the industry places it at adisadvantage, compared to the major globalshipbuilding nations such as South Korea,China…” says CARE (See chart on impact ofBudget 2012-13 on shipbuilding). The shippingministry itself has been arguing for a revivalof the subsidy scheme for shipbuilders toovercome the declining market share in globalshipbuilding that currently stands at a meagre0.01 per cent. The ministry has argued thatever since the subsidy scheme has expired,India's share is declining and has come downto 0.01 per cent from 1.24 per cent.There are other issues too. Reuters,reporting in Firstpost.com, also points outthat Indian shipping firms will find it difficultto obtain replacement insurance coverage tocontinue importing Iranian crude oil after newEuropean Union sanctions come into effect.The “state-run Shipping Corporationof India, the largest tanker owner in India,will lose its E.U. insurance coverage for its oiltankers operating in Iran from July 1, whenEuropean insurers will be prohibited fromindemnifying ships carrying Iranian oil”. Thismeans that Indian maritime firms may bebadly affected by the sanctions as the othertwo major Asian buyers, China and Japan, donot rely on European insurers but are coveredby domestic providers. India, China and Japanare Iran's three biggest crude oil buyers.While these problems are beingaddressed by government and industry, theMinistry of Shipping has working on a MaritimeAgenda 2010-20 that provides a road map forcomprehensive development of the maritimesector and to navigate and steer itrealistically into the premier maritime nationsof the world. It also envisages an increaseIndia's share in global ship building to five percent, to secure 10 per cent share in worldship repair and generate 2.5 millionadditional jobs. The plan is ready; it is actiontime now.Data on major ports for 2009-10; %age growth over 2008-09 (Source – Indian Ports Association):NameKolkata (Kolkata DockSystem & Haldia DockComplex)Cargohandled2010:'000 tns%riseover2009Vesseltraffic2009-10% riseover2008-09ContainerTraffic2009-10:'000 Teus% rise2008-0946,295 -14.61% 3,462 07.50% 502 17.01%Paradip 57,011 22.84% 1,531 -0.32% 4 100.00%Visakhapatnam 65,501 2.49% 2,406 2.51% 98 13.65%Chennai 61,057 6.20% 2,131 2.5% 1,216 6.38%Tuticorin 23,787 8.07% 1,414 -7.21% 440 0.22%Cochin 17,429 14.45% 872 15.19% 290 11.11%New Mangalore Port 35,528 -3.17% 1,186 0.16% 31 6.89%Mormugao 48,847 17.19% 465 6.89% 17 21.42%Mumbai 54,543 5.14% 1,639 1.67% 58 -36.95%J.N.P.T. 60,746 6.03% 3,096 4.13% 4,062 2.78%Ennore (corporate) 10,703 -6.93% 273 9.2% -- --Kandla 79,521 10.10% 2,776 10.29% 147 6.52%All Indian Ports 560,968 5.74% 21,251 02.82% 6,8654.25%134 PURCHASEJuly 2012
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