BL reported that domestic shipbuilders have demanded that the proposed INR 10,000 crore soft loan to shipowner under Government consideration should be linked to placing orders with them.
The Indian National Shipowners Association has sought the Center’s help to create a fund of at least INR 10,000 crore, which could be used to provide low cost finances to Indian shipowner.
The Shipping Ministry has forwarded the proposal to the Finance Ministry. But with the country heading for elections in April to May, a decision on the issue is expected only after a new Government is in place.
Mr V Kumar MD of Bharati Shipyard and chairman of Shipyards Association of India on the sidelines of a recent FICCI seminar on infrastructure said that “With regard to the Indian shipping companies’ demand on INR 10,000 crore soft loan, the Government should make it mandatory for the shipowner to allow the Indian shipyards the right of first refusal. We have already written to the Shipping Ministry on the issue.”
Mr Rajeev Gupta joint secretary, Ministry of Shipping said “Shipowners are finding it difficult to raise funds even if ships are available. With shipping freight rates touching new lows globally, some companies are finding it difficult to meet even their operating expenses from freight revenues.” Domestic shipbuilders are also demanding extension of the Government’s 5 year shipbuilding subsidy, which lapsed on August 14, 2007.
The India Government till August 2007, had a provision of extending subsidy to Indian shipbuilders for all the export orders and certain domestic orders, provided the orders were obtained through competitive bidding.
The Union Cabinet earlier this month gave its nod to disburse INR 5,000 crore of outstanding subsidy to Indian shipbuilders under the scheme. Since August 2007, Indian shipbuilders have seen a significant dip in the orders. But it is not clear whether the drop is only on account of withdrawal of subsidy or the global downturn. Between 2002 and 2007, the order book of Indian shipbuilders swelled to INR 14,877 crore, supported by the subsidy and global upswing in the shipping industry.
(Sourced from Business Line)
