The ministry of shipping has asked the finance ministry to provide support for raising funds worth Rs 35,000 crore to help the Indian shipping industry acquire tonnage. This has come on the back of fears that India’s share in mercantile trade, which is currently 9 per cent, may decline rapidly given its ageing and inadequate fleet. The ministry of shipping has asked the ministry of finance to allow it to raise the money by way of issuing bonds or seeking debt from banks in Europe at a soft loan rate backed by the government or both.

India needs at least 7 million tonnes of new gross registered tonnage (GRT) to maintain its share in mercantile trade, which has been constantly falling since the eighties when it used to hover around 40 per cent. The current GRT of the country is about 9.03 million tonnes of which half is ageing and needs to be replaced. Assuming 6-7 per cent GDP growth over the next two years India needs a GRT of at least 11 million tonnes.

“We have proposed the ministry of finance to allow us to issue bonds and raise money from the market. For this a separate entity under the aegis of the ministry of shipping can be set up. The industry can be saved if there is good policy support,” a senior government official told The Indian Express.

Shipping ministry has suggested a two way formula comprising of both equity and loan. Of the Rs 35,000 crore needed by the Indian shipping industry 70 per cent can be raised through soft loans and the balance Rs 10,500 crore from debt instruments. In fact, according to calculations made by it, the new tonnage added itself will cover up the financial cost to the government on account of interest subvention, the official added. However, at a time when the government is looking at controlling fiscal deficit this may not come through. According to sources, the current priority areas for the government remain power, ports and roads which themselves are crunched for funds. The proposal is lying with the revenue department of the ministry of finance.

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