India's shipping secretary favours opening sector to spur tonnage growth

INDIA's Shipping Secretary Gopal Krishna has come out in support of removing restrictive practices, saying that Indian shipping sector cannot be dominated by a few fleet owners.

In an interview with Chennai's Hindu daily, Mr Krishna was asked his opinion on a range of issues affecting the sector. The following are highlights of the discussion.

Asked to give his assessment of the cabotage relaxation order issued at the end of May, the minister said: "In June about 3,000 laden containers got transshipped from Indian ports. In July it was close to about 5,500 containers. Each month we are finding that the numbers are increasing. By the end of the year we estimate that practically 10 per cent of what was being transshipped outside the country, we will be able to pull them back to Indian ports."

Mr Krishna pointed out that the reverse modal shift from railways to road is a cause for concern. "Four years back about 37 per cent of this [domestic cargo] was being transported by railways. Last year it has come down to 32 per cent."

"Road is transforming itself phenomenally. Railways are badly stuck-up. There is very little investment in new lines. The problem is that railways' emphasis on passenger traffic is age old, and we can't change that emphasis because it is the transporter for the nation," said Mr Krishna.

"Shipping, unfortunately, has not changed. If you see the figure for shipping, in the 1980s of the total EXIM trade about 40 per cent of that was in the hands of Indian flag ships. Today, it has come down to six per cent.

"We were too regulated. There are some vested interests and lobby groups. We don't allow capacity to build in the country and everything has to be captured by a few. Let me make it very clear, all the policy interventions we have taken in the past have failed miserably," he said.

According to the minister if the government doesn't "bring change in policy, bring change in the shipping sector, everything will start moving through roads. It will be costly, trade will get badly hit. And, therefore, these changes will come."

Mr Krishna expressed optimism that change in government policy will come within the next month in the fertiliser sector to enable three million tons of fertilisers to move by coastal shipping and waterways by the end of the year, up from 500,000 tonnes at present.

He also said that "shipping has to re-invent itself. Shipping has to open up. Shipping cannot be the preserve of a very few. Shipping has to expand itself really widely and then entrepreneurship will come out and lead to a very vibrant sector," he said.

"Today, only about three per cent moves by coastal shipping and waterways. It's too little considering that we have a large coastline and a very big waterway system. Opportunity is big. If we open-up the sector, I'm pretty sure that the Indian tonnage will rise much faster than it has risen in the past because the kitty is very big.

"Some odd foreign line will come into the sector but largely it will be Indian-owned domestic sector.

"Look at the Indian shipbuilding industry. If you see, lot of restrictions have led to a back effect on the shipbuilding industry in India. Our shipbuilding industry is in a huge problem, most of the yards have closed.

"This is because we are giving too much importance to flagging and tonnage rather than building in India. The easy way out for the industry is to import ships and just flag in India. You have to again think very differently. You have to build and flag in India. That would be the right approach. Importing ships and flagging in India is not the right approach for India," he said.

"The whole intent behind removing the restrictions is to see that the shipping sector grows in a much more faster manner than it has been in the past. If I ease you out on chartering of ships, that's the way we start building more ships," Mr Krishna said.