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India's Shipping Industry is Very Vibrant Interview with S Hajara, CMD, Shipping Corporation of India

What is your assessment of the current situation in the shipping industry in India?
Shipping industry of India, or of any country for that matter, basically caters to the country’s merchandise trade and contributes to the national economy in direct and indirect ways. India’s shipping industry is very vibrant and is quite prompt in adapting to the changing nature of the market situation. However, growth of the Indian tonnage over the years – although quite remarkable – has not been sufficient to maintain its share in carriage of the country’s cargo.  Indian shipping lacks a level playing field as against its foreign competitors.  However, the Government of India is introducing facilitative measures for the shipping industry. The Government has recently introduced a low tax regime for the Indian shipping industry in the form of tonnage tax.  Over the past year and a half Indian shipping companies have rapidly acquired ships to benefit from the prevailing buoyancy in the shipping markets and Indian tonnage crossed the mark of 8 million gross tonnage for the first time.

What are the challenges facing Indian shipping industry today?
Operating in an industry that is highly globalised and liberalized, the Indian shipping companies face global competition even for local business.  At the same time, the Indian shipping companies can also participate in the international cross trades. Indian shipping is facing many challenges such as lack of level playing field against the foreign competition, acquisition of ships, attracting and retaining the seafaring talent, enhancing its share in the Indian trade. Country’s container trade has grown very rapidly and will continue to see exponential growth.  Unfortunately, Indian shipping companies have a very marginal presence in this sector. Apart from SCI, there is hardly any Indian shipping company that operates in the mainline trade.  Indian shipping companies should seriously consider this sector. Furthermore, transportation of LNG for India is emerging as a sunrise sector for the Indian shipping companies. However, this is highly capital intensive and a relatively new are for the Indian shipping.

Could you mention some measures that are required to remove the difficulties faced by Indian shipping industry?
The only requirement of Indian shipping industry is for creation of a level playing field vis-à-vis its foreign counterparts.  Additionally, the Indian shipping industry requires Government’s assistance in establishing itself in the field of LNG transportation, which is a new area as far as Indian shipping is concerned. The Government is quite seized of the challenges being faced by the industry and is introducing facilitative measures for Indian shipping.

How do you look at the potential for growth for the Shipping Corporation in the changing economic environment?
As I said earlier, shipping companies operate in a global environment. SCI has also been competing in the liberalized industry and has done so quite successfully. With the withdrawal of the Administered Price Mechanism for the oil industry with effect from 1st April 1998, the freight rates are market driven. SCI has adapted to the changing economic environment very efficiently. I believe that SCI has tremendous growth potential and will successfully operate in the ever-changing business environment.

How do you look at the future of the Indian shipping industry?
The future of the Indian shipping is certainly very bright. What I particularly wish to mention is that change in the mindset of the Indian shipping companies were earlier very India centric and now are becoming more and more global centric.

What is your vision for 2010?
We have to work on both strategic and operations fronts. We would like to expand and grow by acquiring more tonnage, through joint ventures in LNG and also look for related diversifications in the maritime field. Simultaneously, we would focus on further increasing our productivity and streamline our operating processes – both onboard and shore-based. This will be done through implementation of a corporate quality management system, integrated management system, implementation of IT, etc.

Any comments on government policy?
Government is sympathetic towards the problems being faced by the industry and taking steps in a very responsive manner to resolve the problems faced by the industry.

Do you have any observation on any other issues?
Well, none.

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