India’s Maritime Mission: 200 Ships to Be Built at ₹1.30 Lakh Crores for Naval Supremacy
New Delhi (The Uttam Hindu): India, which is on its way to becoming the world's largest importer and exporter, has now prepared a mega-plan to increase its strength in the sea. The government has started the process of purchasing 200 new cargo ships at a cost of Rs 1.30 lakh crore. The aim of this step is to reduce the country's dependence on foreign ships and emerge as a major player in maritime trade.
Why is there a need for new ships?
This major initiative is being taken because the current scheme to promote Indian ships has failed to meet its targets. Currently, only 8% of India's total maritime trade is carried by Indian-flagged ships. Due to this, the country has to pay a huge amount of foreign currency worth about $70 billion (about Rs 5.8 lakh crore) to foreign shipping companies every year.
The Ministry of Ports, Shipping and Waterways has prepared this new plan in collaboration with the Ministries of Petroleum, Steel and Fertilizers. These ministries have placed a demand for about 200 new ships for their needs.
What is the government's new mega plan?
According to a report, 200 new ships with a total capacity of 8.6 million gross tonnes will be acquired at an estimated cost of around Rs 1.30 lakh crore under an ambitious plan. This initiative is particularly significant as these ships will be jointly owned by public sector undertakings (PSUs). Additionally, it will provide a significant boost to the 'Make in India' campaign, as all these ships are proposed to be built in Indian shipyards within India in the coming years.
Why did the old scheme fail?
In July 2021, the central government approved a subsidy scheme of Rs 1,624 crore to promote Indian ships. The scheme was aimed at providing financial assistance to Indian companies participating in global tenders for carrying government cargo. However, the scheme proved unsuccessful and so far only Rs 330 crore has been disbursed from it, while the share of Indian ships remains the same.
What are the challenges faced by Indian ships?
Indian ships face several challenges, due to which their operating costs are about 20% higher than foreign ships. According to experts, the main reason for this is high costs, including high interest rates on debt and short-term loans. In addition, the tax levied on the salaries of Indian sailors working on Indian ships is also a big burden. One of the most important challenges is the discriminatory GST policy, under which GST is applicable on Indian ships carrying cargo between two Indian ports, while foreign ships doing the same work are exempted from it, affecting the competitiveness of Indian ships.
The Indian National Shipowners Association (INSA) has been demanding reduction of these duties and taxes for a long time. This new and ambitious plan of the government can be successful only if these basic challenges are addressed.