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Leverage GIFT City for Shipping

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GANDHINAGAR : Considering India’s burgeoning import of transport services, which touched a whopping $109 billion in 2022, there is a proposal to form a new shipping company having a fleet of 1,000 vessels. It is aimed at fulfilling the country’s ever-growing need for shipping services due expanding foreign trade, supply-chain uncertainty, promotion of self-reliance amid growing international standing as the fifth largest economy and, most importantly, the need to reduce the ever-escalating import bill on transport services which is becoming unsustainable.

There’s cer­tainly the need for a ‘self-reli­ant ini­ti­at­ive’ to ensure the coun­try’s external engage­ments remain free from over-depend­ence, ensur­ing geo­stra­tegic autonomy in the unfold­ing brittle, anxious, non-lin­ear and incom­pre­hens­ible (BANI) envir­on­ment. The pro­posal can be imple­men­ted along with asso­ci­ated reforms to make India an attract­ive centre for ship­ping fleet services.

A new ship­ping entity is pro­posed to be col­lab­or­at­ively formed at GIFT City. It will involve stakes from energy, min­eral and fer­til­izer pub­lic sec­tor under­tak­ings which import in large quant­it­ies. For such bulk and stand­ard cargo, these PSUs will have long term charter party con­tracts, thus enabling the new ship­ping entity attract pro­spect­ive investors from developed coun­tries. Cata­lyt­ic­ally, the ship­ping com­pany will lease ves­sels on oper­at­ing, fin­an­cial/cap­ital and sale and lease­back basis, thus cut­ting the oper­a­tional costs of these ships to India’s state-owned enter­prises engaged in bulk cargo trade. These PSUs in turn will take ves­sels on 15-year lease instead of voy­age.

It is per­tin­ent to have sov­er­eignty over our ship­ping fleet amidst mount­ing chal­lenges, short­ages in oil tankers, pro­longed gest­a­tion peri­ods due to block­ages of trade routes, eco­nomic sanc­tions, and the weapon­iz­a­tion of inter­na­tional pay­ment and insur­ance ser­vices. Hence, col­lab­or­a­tion among vari­ous pub­lic and private stake­hold­ers is a must to address these chal­lenges, fos­ter­ing resi­li­ence and sta­bil­ity in India’s mari­time oper­a­tions.

GIFT City has geo­stra­tegic advant­ages with prox­im­ity to major ship­ping lanes and access to advanced ports and shipyards. This makes it a pro­spect­ive logist­ical power­house, enabling efficient oper­a­tions for ship char­ter­ing and ship­build­ing com­pan­ies. Also, its stream­lined reg­u­lat­ory pro­cesses and attract­ive tax bene­fits provide a one-stop solu­tions for fin­an­cial ser­vices. Being a tax-free zone away from clutches of reg­u­lat­ory red-tape, it is an ideal place for such an entity. Moreover, ship­ping ser­vices being a cap­ital intens­ive busi­ness, such entity can eas­ily get fund­ing, insur­ance, and risk man­age­ment solu­tions tailored to its needs.

For liner oper­a­tions, this ship­ping com­pany may have to foster an eco­sys­tem of ship­build­ing as ships engaged in con­tainer trans­port are diŸfferent. Con­sid­er­ing the ease in inter­modal trans­ship­ment and evolving con­tainer traffi’c from IMEC (India-Middle East-Europe Eco­nomic Cor­ridor) route, it makes sense for India to own more con­tainer ves­sels to oŸer seam­less con­nectiv­ity from Indian ports to Jebel Ali port, Dubai, an import­ant inter­node. Poli­cy­makers must envi­sion India’s liner ship­ping com­pany to cater to our ever-expand­ing external engage­ments, pro­spect­ively as a third largest eco­nomy of the world in the near future.


In addi­tion to an enabling eco­sys­tem for ship­ping ser­vices, there is a need to amend and adapt the national laws with regard to Con­ven­tion on Lim­it­a­tion of Liab­il­ity for Mari­time Claims (LLMC), Inter­na­tional Con­ven­tion on Mari­time Liens and Mort­gages (MLM) and Inter­na­tional Con­ven­tion on Arrest of Ships (Arrest Con­ven­tion) to nur­ture a busi­ness-friendly envir­on­ment for ship­ping oper­a­tions. Like­wise, arbit­ra­tion as a medium of dis­pute res­ol­u­tion must be encour­aged and, cor­res­pond­ingly, meas­ure must be taken to strengthen it in the light of pur­sued reforms.

Secondly, sig­ni­fic­ant invest­ment is needed for mod­ern­ising the port infra­struc­ture, such as deep­en­ing har­bours, upgrad­ing con­tainer-hand­ling capa­city, strength­en­ing inter­modal con­nectiv­ity to hin­ter­land and inter­na­tional ports, and devel­op­ing soft infra­struc­ture through IT and trained man­power.

Thirdly, as trade does not oper­ate in silos, it is import­ant to develop an eco­sys­tem of mari­time fin­an­cial ser­vices such as insur­ance, fin­an­cing and advis­ory bey­ond GIFT City as well.

Fourth, attract­ive policies that oŸffer com­pet­it­ive regis­tra­tion fees and stream­lined pro­cesses must be rolled out, to attract for­eign-owned ships for mari­time oper­a­tions from India.

Fifthly, there must be a focus on qual­ity of ship safety, ease of oper­a­tions, com­pli­ance of labour and envir­on­mental stand­ards to attract not only the respons­ible ship-own­ers but also the hedge and sov­er­eign wealth funds look­ing to invest in ship­ping sec­tor. We should be open to part­ner­ing with other coun­tries, for instance the UAE, Rus­sia, and Saudi Ara­bia, for invest­ments.

Finally, a seg­mental approach, ini­tially of own­ing and leas­ing a vast fleet of for­eign ves­sels to ful­fil require­ments in the bulk ship­ping sec­tor, must be lever­aged. In the long run, policy sup­port and focus must be on nur­tur­ing an eco­sys­tem for ship man­u­fac­tur­ing so as to emerge as low-cost des­tin­a­tion sim­ilar to China and South Korea. A strong liner ship­ping fleet spe­cific to India’s cargo pro­file, con­tainer mix, ser­vices oper­a­tion and geo­graphic require­ments is needed.

India’s dream of a 1,000-ship fleet and reduced reli­ance on for­eign ves­sels can be pro­pelled by GIFT City’s unique advant­ages. Sov­er­eignty of ship­ping fleet not only pro­tects our eco­nomic interests but also enhances geo­pol­it­ical influ­ence and ensures national secur­ity in an increas­ingly com­plex global land­scape.

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