Shipping industry gets a boost as ministry pushes for longterm cargo support from other sectors.

NEW DELHI: After GAIL India agreed to use India-made vessels to carry part of the liquefied natural gas it imports, the shipping ministry is pushing for longterm cargo support from sectors like petroleum, steel and fertiliser for local shipping companies.

Last week, the ministry held a meeting with state-run companies such as Oil & Natural Gas Corp, Indian Oil Corp, Steel Authority of India and Fertilizer Corporation of India, urging them to give transportation contracts to Shipping Corporation of India or other Indian firms for five to 10 years.

The move is ultimately directed towards encouraging domestic shipbuilding, in line with the Narendra Modi government's aim of supporting the local manufacturing sector.

"We are suggesting the PSUs to devise a long-term cost formula based on global freight indices for signing up the contracts with the Indian shipping lines so that no one is at loss," a senior government official said.

He said banks would easily agree to extend financing to the shipyards for manufacturing of the required vessels if there is cargo commitment. Most of the carriers required to transport liquid and dry bulk cargo, such as very large crude carriers ( VLCC), capsize bulkers or Aframax tankers aren't manufactured in India and technological expertise will have to be imported.

"Japan, Korea and China have promoted domestic shipbuilding by ensuring that the cargo is transported only on their national carriers. We need to support our industry in a similar way," said Anil Devli, chief operation officer at the Indian Register of Shipping.

The shipbuilding sector has been reeling due to oversupply of vessels and falling demand for cargo due to the global economic crisis. Most companies had either cancelled their new orders or put them on hold.

But things are looking to change now. Indian shipyards haven't found many takers due to inordinate delays in delivery of vessels, lack of technical expertise and finances.

"Shipyards like Cochin, Pipavav and L&T have the ability to manufacture these ships but an initial support is required so we can become a shipbuilding nation," a senior executive of a shipping company said.

Source : economictimes.indiatimes.com