July 28, 2014
India Eases Foreign Flag Restriction
The Indian
government has announced a new shipping category that will have priority
over foreign flag vessels in the country’s coastal shipping sector.
The new category “Indian controlled
tonnage” enables Indian shipowners to take advantage of low cost foreign
flags. After Indian flagged vessels, this new category will have the
right of first refusal of cargo over non-Indian ships. The policy change
is expected to help local lines increase their share of the coastal
trade market which is currently less than 10 percent.
At least 50 percent of the crew, both
officers and ratings, must be Indian, and the ship should also be used
for training cadets. Additionally, the tonnage acquired under the new
category cannot exceed a company’s Indian flag vessels. Shipowners must
maintain their Indian tonnage at the level it was at April 1, 2014.
“The most important aspect of this news is
that finally the government feels the shipping industry is important. It
also recognizes that they need to give some relief to shipowners,” says
Captain Rohit Bhatia, managing director of Wade Maritime Consultants in
India.
“It’s definitely good news for the Indian
shipowning fraternity who has been pleading for relief for the past few
years. I believe it is a step in the right direction to help Indian
shipowners and to have them carry more Indian cargo. They would have to
maintain their existing fleet under the Indian flag, but any new ships
can be flagged out.
“The requirement to maintain at least 50
percent Indian crew on these vessels means cost, union
rules/regulations, training of cadets etc. Most shipowners would have
preferred to employ foreign crews which are possibly cheaper and come
with lesser regulation,” says Bhatia.
“Remember, it’s never a free lunch, the
government will also benefit from additional revenues coming in to the
country (read “more tax dollars”) instead of just dividends from foreign
subsidiaries of Indian companies. It also means additional security for
Indian trade viz-a-viz a larger percentage of cargo being carried by
Indian ships.”
http://www.maritime-executive.com/article/India-Eases-Foreign-Flag-Restriction-2014-07-28
