Steering through the choppy waters over the last few years, Indian shipping companies are pinning hopes on the new government in New Delhi to act on a two-point agenda that they think will facilitate a smooth sailing.

"We want the government to do just two things: first, permit Indian lines to own and operate foreign flag- vessels, and second, ensure 100 per cent reservation of coastal cargo to local ships," said Atul Agarwal, President of the Indian National Shipowners Association (INSA).

These measures, which can be implemented without any change in the existing laws, will not only help Indian lines to grow both locally and globally but will also contribute to the Indian economy, he said in a conversation with Business Line.

INSA has already made a proposal to the government-to allow its members to own and operate foreign flag vessels. Shipowners believe that this will give them more operational freedom and flexibility to tap overseas opportunities.

Under study

An official with the maritime administration confirmed receipt of the proposal, which he said, is being examined by the Ministry of Shipping.

Indian shipping companies are allowed to charter foreign flag vessels for a specific period or voyages but not allowed to own them.

Currently, Indian lines mainly operate services abroad through foreign subsidiaries. This is because Indian flag vessels are not allowed to employ foreign crew, while some countries insist on employment of their nationals as a condition to operate services on their waters.

The disadvantage of the subsidiary route is that Indian companies will not be able to repatriate their entire profit. They also have to follow local regulations.

Raising funds

If Indian lines are allowed to operate foreign flag vessels, their earnings will come directly to India. These vessels will be part of Indian tonnage (though not eligible for coastal cargo). This will also help Indian shipowners to raise funds overseas at lower rates.

Agarwal said allowing Indian lines to operate foreign flag vessels will not violate any provisions under the Indian Merchant Shipping Act. This also does not require change in laws and the Director General of Shipping is empowered to accord permission to shipowners.

Coastal cargo reservation

Domestic shipping lines have been opposing relaxation in cabotage. Last year, the government relaxed cabotage for the Vallarpadam container terminal in Kerala.

In India, though cabotage is applicable for coastal cargo, it is not fully implemented. Hence, foreign ships are allowed to carry local cargo. The usual excuse is that Indian shipowners do not have the required type of ships to meet the demand. This is just an argument. When there is demand, capacity can be acquired in no time, Agarwal said.

However, relaxation in cabotage has not led to growth of traffic at any port. Since 100 per cent FDI is allowed in shipping, there is no restriction for foreign shipping companies to come to India. In other segments of the transport industry such as airlines and road, foreign companies are not allowed to operate local services, said Agarwal.