Page 201 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes 9.1 History of Shipping Industry

The Indian shipping Industry plays a crucial role in Indian economy. As 90% of the Nations trade
by volume is done via sea. India has been the largest merchant shipping fleet among the
developing nations. The Indian Shipping Industry supports transportation of national and
international cargoes and also provides various other facilities such as ship building, ship
repairing, lighthouse facilities, freight forwarding, etc. Indian Shipping Industry with emergence
of globalisation and liberalisation is firmly ready to acquire new dimensions in terms of demand
and infrastructural development.

In order to sustain itself with the stiff competition posed by foreign companies, the Indian
industry is striving hard to bring about rapid transformation. Over the years the way cargo
traffic was handled has changed. Initially, it was by the protected environment by the tonnage
committee who decided as to what type and size of ships the companies should be given a
chance. Government subsidy vessels were only assured for the Cargo was assured. Recently
after a long period of decline, both tonnage and fleet size have grown, with the addition of
ships – tugs, survey vessels, towing vessels as well as pilot vessels belonging to ports and
maritime boards. During April 2002 and March 2003 these were added. There are as many as 55
shipping companies in the Industry, out of which 19 deal with coastal trade and 29 are engaged
in overseas trade. The rest operate in both types of trade.
The Indian Shipping industry is governed by 3 separate Acts such as The Merchant Shipping Act
in 1958, The Inland Vessels Act in 1917 and The Coasting Vessels Act in 1838. Most of the vessels
are registered under Merchant Shipping Act and are dealt within the sector, smaller barges and
coastal vessels are governed by the other two Acts.
Historically Shipping industry has catered to only domestic shipping requirements, while the
private sector companies like Great Eastern Shipping Company and Essar Shipping are
increasingly getting involved in international cross trade.

Terms and in value terms, it is much lower to a meager 12% of India’s total overseas shipping
bill of USD 5.0 billion. It is due to the negligible share of shipowners in the Indian trade of high
value goods like general cargo and containers. The focus is on Indian trade and shipowners’
share in the country’s overseas trade is hardly 30% in volume.
Shipping Industry is meaning not only just vessels and tonnage. Shipping capabilities of any
country are not solely measured in terms of the quantum of tonnage under control. While in
knowledge based economy, soft intangible parameters like human capital, information
technology and expertise are becoming increasingly important for increasing innumerable
opportunities. Today India has become the source of quality seafarers to global shipowners.
Indian shipping firms normally rely on the inherent IT skills of Indians to play a pivotal role in
IT activity involved in international shipping and the country can come up with a business
center for information processing requirements of the international ship owners.

Usage of sea transport for the bulk cargo transport is the natural advantage of a vast coastline of
India. Due to the policy of liberalization, the Indian shipping industry, major ports, as road
ways have been given to the private sector. The categories of ships are crude tanker, product
tanker, bulk carriers, etc. All these are brought under the Open General License (OGL) to facilitate
acquisition at competitive price.
For acquisition of such companies the Automatic approval is also available even for the categories
which are not covered under OGL, i.e. barges, tugs and boats, etc. Shipping companies have been
given liberty to retain sale proceeds of their ships abroad and utilize them for fresh acquisition.

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