Southern States
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Kerala
Growing demand on ports and shipping lines
By C.V. Gopalakrishnan
THIRUVANANTHAPURAM, JAN. 24. Though the `coming of age' of the Cochin Shipyard now enables it to compete with international ship-builders, as announced by its Chairman and Managing Director, M. K. Murthy, it still seems to go a long way along with the other Indian ship-builders from being able to meet the growing requirements of the Indian shipping lines even to a small extent, according to studies carried out recently.
It has been estimated that the creation of 350 million tonnes of additional cargo capacity by 2005-06 would require about Rs. 2,500 crores, according to the Indian Infrastructure Report written by the Rakesh Mohan Committee.
The internal revenues of the ports were estimated at around Rs. 1,000 crores between 1996-01 and an additional Rs. 1,500 crores during 2001-06.
The most critical approach, according to the committee report pertaining to the financing of the massive expansion in the capacity of the ports, is the mobilisation of resources to meet the rising demand for cargo handling. There should be a four-pronged approach envisaging liberalisation, commercialisation, modernisation and privatisation of ports.
Modernisation requires adequate provision of funds and privatisation would bring about induction of fresh resources into the port sector.
Though the participation of the Indian shipping lines in the country's foreign trade has gone up from 38.86 million tonnes during 1990-91 to an estimated 62.61 million tonnes during 1999-2000, the much bigger increase in the country's total cargo from 109.35 million tonnes to 203.67 million tonnes during the same period has brought about a drop in their share from 35.5 to 30.8 per cent.
The dependence of Indian exporters and importers on foreign ship-builders as well as shipping lines still remains very high.
The resources-short Indian shipping industry is now not in a position even to meet the costs of replacement of its overaged ships.
The scene has become much worse because of the steep increase in the price of a container vessel from around $ 25 million in 1989 to around $ 55 million at present. The price of a crude oil tanker has gone up from $ 28 million to around $ 70 million.
According to estimates made by the Planning Commission, the addition of ships of two million tonnes and a replacement of 1.7 million tonnes would cost about Rs. 15,000 crores.
This implies that over a five-year period, shipping companies will have to raise Rs. 900 crores by way of equity annually and Rs, 2,100 crores from borrowing.
This implies that the shipping industry would have to raise 30 per cent of the capital required by equity and 70 per cent as borrowing even for second-hand ships with 20 per cent down payment and the remaining 80 per cent as deferred credit.
The Planning Commission has recommended that the Government should apportion around $ 700 million of external commercial borrowing for the shipping industry.
It has also recommended that the shipping industry be allowed access to the funds of the recently created Infrastructure Development Corporation for meeting the requirements of India's integrated shipping infrastructure including coastal as well as international shipping, ports and access roads to harbours and shipyards.
The shipping industry has also demanded that shipping be recognised as a service export industry and that it be given financial and fiscal incentives to which other exporters are eligible.
Its other demands include the enhancement of the rate of depreciation on ships from the existing 20 to 40 per cent on written down value-basis of 40 per cent on a par with other transport vehicles like aircraft, buses and lorries.
The sick shipping companies should be treated on a par with other sick companies as far as non-applicability of the minimum alternative tax is concerned.
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