New Delhi: India has unveiled plans to launch a new shipping company to bolster its fleet by a minimum of 1,000 ships over the next decade, reports said. This initiative is part of the nation's strategy to capture a larger share of revenue from burgeoning trade.
The country, under the leadership of Prime Minister Narendra Modi, who secured a third term recently, is investing significantly in infrastructure upgrades with aspirations to emerge as a premier manufacturing hub. Modi envisions India as a developed nation by 2047.
The proposed shipping entity, which remains unnamed at this stage, will be jointly owned by state-run enterprises in the oil, gas, and fertilizer sectors, alongside the state-run Shipping Corporation of India and foreign companies.
The objective is to slash freight expenses to foreign entities by at least one-third by 2047. Current projections anticipate freight costs to soar to $400 billion by 2047, with Indian firms shelling out $75 billion for foreign vessel usage out of the $85 billion spent on freight in the fiscal year 2019/20.
India's shipping fleet, comprising around 1,500 large vessels encompassing tankers, gas carriers, container ships, and dry bulk carriers, has struggled to keep pace with the nation's expanding trade, including surging energy imports and refined oil exports.
In January, India's oil and shipping ministries reached an accord for all state-run oil firms and the prospective company to collaborate, as per a government document seen by Reuters. They intend to leverage the expertise of the Shipping Corporation of India in tanker acquisition, ownership, operations, and other shipping domains.
A joint working group comprising government and industry representatives was formed by the two ministries on May 16 to devise a strategic roadmap, the document further reveals.
The new company is slated to be headquartered at GIFT IFSC, a financial hub Gujarat, designed to rival global counterparts like Singapore by offering fiscal incentives and a streamlined regulatory framework.
Initial capital for the venture is anticipated to be drawn from a maritime development fund of approximately 300 billion rupees ($3.6 billion) through a collaboration with major port authorities, discloses the first source.
To facilitate low-cost, long-term financing for shipbuilding, the ministries propose that state-run entities enter into 15-year charter agreements with the new company, diverging from the prevalent practice of booking individual voyages or short-term charters.
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