New Opportunities Unveiled in Shipping Sector

New Opportunities Unveiled in Shipping Sector 
Year Ender-2015

The Ministry of Shipping has taken many proactive and progressive interventions in the areas of shipbuilding, port development, inland waterways and coastal shipping this year for the development of the maritime sector in the country. These initiatives can be summarized under the following heads:

1.             Sagarmala Project

            ‘Sagarmala- Concept and Implementation’ was approved by the Union  Cabinet on 25.03.2015.   The Project Development Consultants were appointed on 15.05.2015 to develop a National Perspective Plan (NPP) for the Sagarmala Programme. NPP is currently under preparation and would be finalized by 31.01.2016. As part of the NPP development-
a)     The draft report on Origin-Destination (OD) Study, for POL & LNG, Iron Ore & Steel, Coal, Container, Food Grains and Fertilizer is under review and the final report is being prepared based on the inputs received from the relevant stakeholders. On the Coal OD front, the Ministry of Shipping is currently monitoring key railway connectivity projects from Talcher-Paradip and discussing with Ministry of Railways to fast track the same.
b)    The draft Master Plan for Ennore has been submitted in November, 2015. The draft Master Plans for Paradip, JNPT, Kolkata, Vizag, Kandla, Haldia and Ennore will be submitted by 31.12.15. Draft Master Plan is currently under preparation for Tuticorin, Mumbai, Kochi, Mormugao and Mangalore.
c)     Finalized Techno Economic Feasibility Report (TEFR) for Sagar Port and the draft TEFR for Vadhavan Port submitted on 30.11.2015. TEFR for Paradip Outer Harbour is under preparation.
d)    Coastal Economic Zone (CEZ) Perspective Plans are also under development.
While the NPP is under development, 12 projects have been considered for part funding by Sagarmala Development Company (SDC) for implementation, DPR is under preparation for 10 projects, 55 road projects and 28 rail projects have been shared with MoRTH and Ministry of Railways respectively for their consideration.   The institutional mechanism to implement the initiative includes the National Sagarmala Apex Committee (NSAC), Sagarmala Coordination & Steering Committee (SCSC), State Sagarmala Committees (SSC) and the Project SPVs. The SCSC and NSAC have been constituted and their first meetings were held on 01.10.2015 and 05.10.2015 respectively. West Bengal, Odisha and Puducherry have constituted their SSCs and other Maritime States have been requested to do the same. The Ministry of Shipping has also taken up development of 31 island lighthouses.
2.             Special Purpose Vehicle to provide efficient last mile rail connectivity to Major Ports
          Based on the Cabinet decision dated 25.03.2015, an SPV, to provide efficient last mile rail connectivity to Major Ports, with equity from 11 Major Ports and Rail Vikas Nigam Ltd.  was incorporated under the Companies Act. This SPV ‘The Indian Port Rail Corporation Limited’ started functioning from July 2015 and since then has taken up 23 projects which are critical for last mile rail connectivity to the Major Ports. The registered office of the company is at New Delhi and corporate office is at Mumbai. The SPV would undertake the following Projects:- 
·                Last mile connectivity to Major Ports; 
·                 Modernization of evacuation infrastructure in Ports; 
·                 To operate and manage internal Port Railway system; 
·                 To raise financial resources for funding Port related Railway Projects 
3.        Incentive for Shipbuilding and ship-repair Industry 

Government has recently approved incentives to promote domestic shipbuilding industry.  These include (i) financial assistance to domestic shipyards for any vessel built by them subsequent to its delivery and (ii) relaxation of eligibility criteria for procurements or repair of vessels done by Government departments or agencies including PSUs for government purpose or for their own purpose to grant Right of First Refusal to domestic shipyards.

The Government has addressed the problem of inverted duty structure in ship manufacturing.  Inputs used in ship manufacturing and repair have been exempted from Customs and Central Excise Duties with effect from the 24th of November, 2015. Prior to this exemption, while ships could be imported at almost negligible rates of Basic Customs Duty (BCD) and nil rates of Countervailing Duty (CVD), the inputs used in ship manufacturing and repair attracted normal rates of BCD and CVD. This put the Indian shipyards, who build ships for the domestic market, at a cost disadvantage. Correction of this inverted duty structure was therefore necessary.

4.       Jal Marg Vikas Project

          In the Budget Speech for 2014-15, it was announced that a project on the river Ganga called ‘Jal Marg Vikas’ (National Waterways-I) would be developed between Allahabad and Haldia to cover a distance of 1,620 kms, which would enable commercial navigation of at least 1,500 tonne vessels and that the project would be completed over a period of six years at an estimated cost of Rs.4,200 crore. The Project’s objective is to provide an environment friendly, fuel efficient and cost-effective alternative mode of transportation, especially for bulk goods, hazardous goods, captive cargo and over dimensional cargo. 

          Government has commissioned three expert studies to assess the interventions required to achieve greater clarity on the entire project and its impacts. These studies are (i) Detailed Feasibility Study on NW-1 and Detailed Engineering for its Ancillary Works; (ii) Environmental and Social Impact Assessment (ESIA), Environmental Mitigation Plan (EMP) and Resettlement Action Plan (RAP); and (iii) IWT Sector Development Strategy and Market Development Study. In addition, Inland Waterways Authority of India, which is the implementing agency of the project, has conducted comprehensive stakeholder meetings at Kolkata, Varanasi, Patna, Delhi and Farakka, wherein valuable feedback of environmentalists, industry, academics and the wider society was obtained. The projects include construction of terminals, jetties, river training and conservancy works, modern automated information system, navigation aids, etc. The construction of the projects is expected to commence from March, 2016 and the last projects to be taken up may extend up to five years.

5.         Customs and Excise Duty Exempted on the Use of Bunker Fuels for coastal transportation of EXIM and empty container and for domestic containers transported alongwith EXIM and empty containers.

This tax incentive for transportation along the coast will go a long way in enhancing Indian tonnage as well as in promoting development of transportation hubs in India. 

6.         Cabotage Relaxed for Special Vessels

The Government has relaxed cabotage for special vessels such as Roll-On Roll-Off (Ro-Ro), Hybrid Roll-On Roll-Off (Hybrid Ro-Ro), Roll-On Roll-Off cum Passenger (Ro-Pax), Pure Car Carriers, Pure Car and Truck Carriers, LNG vessels and Over-Dimensional cargo or Project Cargo Carriers for a period of five years w.e.f 02-09-2015. With this relaxation, vessel operators will be allowed to bring foreign flagged vessels of this category to ply on the coastal routes. Such special vessels are in short supply in the country but since they cater to specific class of cargo, their availability will make it possible to shift cargo movement for these commodities from road and rail to coastal shipping. 
7.       Developing 78 lighthouses as tourism centers
          The Ministry of Shipping, along with the Directorate General of Lighthouses and Lightships (DGLL) has drawn up an ambitious programme to develop 78 lighthouses in the country as centres of tourism in the first phase under Public Private Partnership (PPP). The identified lighthouses are in Gujarat, Maharashtra, Goa, Karnataka, Kerala, Lakshadweep, Tamil Nadu, Puducherry, Andhra Pradesh, Odisha, West Bengal and Andaman and Nicobar Islands. 

          This has been at the core of the efforts of the Ministry during the year. Focus has beenonsimplifying procedures by removing irritants that make it cumbersome to carry on business smoothly. The major highlights in this regard are:
1.                  Obsolete Rules under the Merchant Shipping Act, 1958 weeded out

The Ministry of Shipping has decided to rescind 13 Rules under the Merchant Shipping Act, 1958 (as amended), having found them to be obsolete and unnecessary.  Out of the 13 Rules, 6 has been rescinded and 7 have been pre-published before rescindments. 

2.                  Ship Repair Units no longer required to register with DG Shipping

The Ministry simplified the procedure and eliminated the requirement of registration of Ship Repair Units (SRUs) with Directorate General (Shipping). Ministry of Finance and Ministry of Commerce & Industry have been informed to extend concessions and facilities to SRUs without insisting on the requirement of registration with DG (Shipping). 

3.                  Re Rolled Steel from Ship Breaking allowed for Shipbuilding

To meet the growing demand for steel by ship and barge builders, the Ministry decided that re-rolled steel obtained from re-cycling yards/ship breaking units would be certified for use in construction of inland barges, river sea vessels (RSV Types 1 & 2) and port and harbour crafts, after ascertaining its sourcing and processing. This will help in bringing down the cost of constructions of barges, river sea vessels and port and harbour crafts.

4.                  E-governance initiatives
    Initiatives of Directorate General of Shipping
The following services have now been made online -
·         registration of ships.
·         application and seat booking for written and oral examinations.
·         application  and processing of Continuous Discharge Certificates (CDCs), renewal and replacement/duplicate CDCs.  
·         application processing and issuance of Certificate of Competencies (CoCs), dangerous cargo, GMDSS, Cookery certificates.
·         application, processing and issuance of chartering permission.
·         issue of registration certificate to transport operators.
·         Master checker for seafarers.

     Initiative of Directorate General of Lighthouses and Lightships (DGLL)

·         Online Collection of Light Dues 

          Many initiatives have been taken up in the area of ship building and manufacture of dredgers, promoting the objectives of Make in India
1.                  Product Diversification by Cochin Shipyard Ltd(CSL)
·                     CSL has received license from GTT of France of Mark III Flex technology for making cargo containment systems for LNG carriers.

·                     CSL has entered into a technology tie up with Samsung Heavy Industry of Republic of Korea for manufacture of LNGvessels. With the above two initiatives CSL becomes the first port in India to manufacture LNG carrying vessels.

·                     CSL has manufactured six Fast Patrol Vessels for the Indian Coast Guard and one Platform Supply Vessel

·                     CSL has undertaken a project to build a passenger ship of 1200 capacity for Andaman & Nicobar Islands

·                     CSL has entered into a technology tie up with IHC Holland BV for manufacturing dredgers.

·                     CSL has constructed a state of the art Buoy Tender Vessel for Directorate General of Lighthouses and Lightships

2.       Initial Public Offer of Cochin Shipyard Limited 

The Cabinet Committee on Economic Affairs has accorded approval for issue of an Initial Public Offer (IPO) of Cochin Shipyard Limited (CSL). The approval is for issue of an IPO to the public consisting of 3,39,84,000 equity shares of Rs. 10 each amounting to an equity capital of Rs. 33.984 crore of CSL consisting of fresh issue of 2,26,56,000 equity shares and sale of Government of India's stake in CSL worth 1,13,28,000 equity shares of Rs. 10, through a public offering in the domestic market according to Securities and Exchange Board of India (SEBI) rules and regulations. 
          The proceeds of the IPO will be used to set up new Dry Dock in Cochin Shipyard and International Ship Repair Facility at Cochin Port.
1.             Performance of ports improves

          After a fall in their performance during 2008-14, the performance of major ports showed improvement in 2015. The focus of the present government is on modernization of Major Ports and increasing their operational efficiency. With new initiatives, Major Ports have shown an improvement in their performance with the volume of cargo handled increasing by 4.6% and revenue increasing by 8.7% in 2015.

2.      Benchmarking performance of Indian Ports to International Standards

          A study to benchmark performance of major Indian Ports to comparable international ports has been completed and the recommendations of the study are being implemented.

3.             Mechanisation of East Quay (EQ) Berths-1, 2 and 3 at Paradip Port

          The Cabinet Committee on Economic Affairs (CCEA), approved  the project of Mechanisation of East Quay (EQ) Berths-1, 2 and 3 at Paradip Port on Build, Operate and Transfer (BOT) basis, under Public Private Partnership (PPP) mode' for handling thermal coal exports. The estimated cost of the project is Rs.1437.76 crore of which Rs. 1412.76 crore will be spent by the concessionaire. The remaining Rs.25 crore will be spent by the Paradip Port Trust on dredging. The project envisages mechanization of EQ 1, 2 and 3 Berths to increase their capacity from the existing 7.85 million tonnes to 30 million tonnes. The project is scheduled to be completed within three years from the date of award of concession. After completion of the project, the total thermal coal export handling capacity at Paradip Port will reach 50 million tonnes.

4.             Deepening Draft to Handle Large Vessels

          Major ports are undertaking studies to deepen the draft to 18 meters to handle large and modern vessels.Projects for deepening have been started at Mormugao Port and New Mangalore Port.

5.             Establishment of Dry Ports

          The purpose of dry ports is to reduce congestion at ports by processing and completing bulk of the formalities relating to cargo here so that ships can set sail without delay at the sea ports. Dry ports are proposed to be set up at Jalna and Wardha to service JNPT

6.             Financial Assistance to Ports for Pollution Response  Equipment 

          The Governmenthas formulated a new central sector scheme for providing financial assistance to all Major Ports and 26 oil handling non-major ports under State Maritime Boards/State Governments. The scheme would help them procure Pollution Response (PR) equipment/materials necessary for combating Tier-I oil spills in their waters. 

          Under the scheme, the ports have been put into categories A, B and C based on the risk of oil spill, in consultation with Indian Coast Guard. Financial assistance up to 50% of the cost of the equipment/materials, necessary to mitigate pollution due to oil spills, is provided to the ports. 

7.   Financial support to Major/ Non Major Ports to promote movement of cargo/ passengers by sea/ maritime waters

          A new central sector scheme has been formulated to provide financial support by way of grant to Major Ports/ Non-Major Ports for construction/ up-gradation of exclusive coastal berths for coastal cargo, berths/jetties for passenger ferries and construction of platforms/ jetties for hovercrafts/ seaplanes in port waters.

8.  Dredging at Major Port - Guidelines

          Comprehensive guidelines on dredging at Major Port have been finalised and issued for implementation in October, 2015. 
1.             Bill To  Declare 106 Additional Inland Waterways As National Waterways

          Lok Sabha has passed the National Waterways Bill, 2015, for declaration of 106 inland waterways as National Waterways. After the inclusion of 106 additional inland waterways to the existing five national waterways, the total number of national waterways will go upto 111. The aim is to create cost-effective and eco friendly waterways to ease the burden on roads and railways.
2.             MoU Signed For Logistic Hubs With Rail Connectivity 

          A Memorandum of Understanding (MoU) has been signed between the Inland Waterways Authority of India (IWAI) and the Dedicated Freight Corridor Corporation of India (DFCCIL) for creation of logistic hubs with rail connectivity at Varanasi and other places on National Waterways. This is expected to lead to convergence of inland waterways with rail and road connectivity and provide a seamless, efficient and cost effective cargo transportation solution

i.               India accedes to the Anti-Fouling Systems (AFS) Convention 2001 of International Maritime Organization (IMO)
          The Indian instrument of accession was deposited with the IMO on 24.4.2015 and the convention entered into force in India on 24.7.2015

ii.             India ratifies Maritime Labour Convention (MLC) 2006 of International Labour Organization (ILO)

          This Convention is considered as the 'Bill of Rights' for the seafarers across the world.   India has the second largest number of seafarers after the Philippines and by  ratifying the MLC, has ensured improvement in the working and living conditions, and employment rights of Indian national seafarers. The Indian Instrument of Ratification was deposited with ILO on 09.10.2015 and the Convention will enter into force in India on 09.10.2016.

iii.           The Merchant Shipping (Amendment) Bill 2015 to incorporate the provisions of the three IMO Conventions, namely, Bunker Convention, Nairobi Convention and Salvage Convention introduced in Parliament.
1.             Development of Chahbahar Port in Iran

          India signed an MoU with Iran for developing Chahbahar Port. An SPV, Indian Ports Global Ltd has been formed with equity participation from Jawaharlal Nehru Port and Kandla Port to execute the project.

2.             Vision for coastal shipping, tourism and regional development

Ministry of Shipping has prepared a vision for coastal shipping, tourism and regional development to increase the share of coastal/IWT mode from 7% to 10% by 2019-20.  An action plan to achieve the objective has also been prepared and is being implemented.  The key elements of the initiative include development of coastal shipping as an end-to-end supply chain, integration of IWT and coastal route, development of regional centers to generate cargo for coastal traffic, development of domestic cruise industry and promotion of lighthouse tourism.  

3.             MoU with Republic of Korea on Maritime Transport

          An MoU was signed with Republic of Korea to promote bilateral cooperationin maritime transport.

4.             Coastal Shipping Agreement with Bangladesh

          India signed an agreement on coastal shipping with Bangladesh.  This agreement would allow River Sea Vessels (RSV) to carry cargo between the two neighbours. In terms of berthing charges and light dues, both the countries would extend national treatment to one another. The commencement of coastal shipping between the two countries would give a boost to Exim trade between India and Bangladesh. The two countries also signed the Standard Operating Procedure (SOP) to operationalize the “Agreement on Coastal Shipping.

5.             India and Bangladesh Initial a Draft MoU on Passenger and Cruise Services on Coastal and Protocol Route 

6.             India and Bangladesh Agree on Extension of Protocol on Inland Water Transit and Trade
          India and Bangladesh have agreed on the extension of Protocol on Inland Water Transit and Trade (PIWTT) with the provision of automatic renewal in line with the proposed amendment to the Bangladesh-India trade agreement during a Secretary-level talk between the two countries.

7.             MoU between India and Spain on cooperation in Port matters

          The Union Cabinet has given its approval for signing a Memorandum of Understanding (MoU) between India and Spain on cooperation in Port matters.
8.             Agreement between India and Jordan on maritime transport

          The Union Cabinet has approved signing of a shipping agreement between India and Jordan. Recognizing the significant mutual benefit that can be derived from cooperation in the area of shipping between the two countries, it has been decided to sign the agreement with a view to strengthening cooperation and to provide sustained mutual assistance and advice on merchant shipping and other related maritime matters.

9.             Agreement between India and Egypt on Maritime Transport 

          The Union Cabinet has given its approval for signing of an agreement between India and Egypt on Maritime Transport. Recognizing the significant mutual benefit that can be derived from-cooperation in the area of shipping between the two countries, it has been decided to sign the Agreement with a view to strengthening cooperation and to render sustained mutual assistance and advice on merchant shipping and other related maritime matters

H.           SECURITY
1.             Ratification of International Labour Organisation Convention No. 185 on the Seafarers Identity Document

          The Union Cabinet has approved the Ratification of the International Labour Organisation (ILO) Convention No. 185 on the Seafarers Identity Document (SID). A biometric based seafarer's identity document will be developed, mainly, to ensure a foolproof security system to ward off the potential risk of breach of security and possible terrorist attacks. India's ratification of this Convention will benefit Indian seafarers, who may otherwise find a threat to their job opportunities, in the near future, in the global maritime sector if India doesn't ratify the Convention.

2.             Re-Drawal of the High Risk Area in the Indian Ocean

          International bodies have agreed to India’s efforts to push back the High Risk Area (HRA) from 78 degrees East longitude to the 65 degrees East longitude. This will result in huge savings for India’s EXIM trade and consumers on account of reduced insurance premium and consequently freight costs. This will be a major gain for India on global maritime stage, resulting in a saving of about Rs. 1500 crore per annum for merchant ships.

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