Page 79: of Maritime Reporter Magazine (August 2014)

www.marinelink.com 79 Coastal ShippingCommenting on the recent budget Anand Sharma had this to say: ?Several new building opportunities are likely to come up in the near future as the govern-ment plans to shift at least 15% of the cargo transported by road and rail to the coastal and inland waterways. Further, only ships made in India and operated by Indian shipowners will be allowed to move the cargo on the coast which is a welcome move. However, the number of vessels available for coastal move-ment and inland waterways movement are very small and of low value. Hence, the opportunities arising from that sector would mostly be taken by smaller ship-yards in India and to some extent may beneÞ t the large shipyards in India.? Capt. Sandeep Kalia, Vice President of Indian Coastal Conference Shipping Association said, ?For the Þ rst time the government has given an unprecedent-ed boost to coastal shipping and inland waterways transport. Today, there are around 638 vessels under the Indian ß ag operating along India?s long coastline. The government?s plan is to double the cargo transported along the coast in Þ ve years, which means there will be a need to double the number of vessels that will have to be built by Indian shipbuilding yards.To help shipyards come out of the red the government has been in discussion with the Shipyard Association of India (SAI) for formulating measures for fund-ing. Prashant Govil, Advisor to SAI said ?We have been in talks with the Ministry of Shipping, government of India for Þ -nalizing details on the creation of a fund for ship building. A corpus of $16.7B is to be formed by IDFC with invest-ments from foreign investors, foreign banks and Þ nancial institutions. Called the ?Shipbuilding Development Fund for Low Cost of Capital? funds from this corpus maybe used to provide shipyards term loans and working capital loans ? at interest rates of 6.5%.?Another proposal is for raising ECBs for Working Capital and Term Loans. For this a Þ nancial institution will be appointed as a nodal Þ nancial agency with a dedicated window for providing Þ nance to the shipbuilding and shipping sector. The agency will raise ECBs, and in turn provide loans, with a minimum Þ xed spread over ECB borrowing cost, for both working capital and long term capital (of say tenure 25 years and a moratorium of 2 years), to the Indian Shipbuilding industry. The proceeds could also be utilized by shipyards for prepayment/repayment of term loans and working capital loans. It is also proposed to allow shipyards to utilize the proceeds of ECBs raised directly, for meeting the requirements of working capital, as well as prepayment/ repayment of term loans and working capital loans. This is in ad- dition to the prevailing ECB guidelines, which allows the proceeds of ECBs to be utilized for capital expenditure only. There is also a proposal to give ship-building an Infrastructure Status. This will help the shipbuilding sector to be on par with those of others countries that enjoy similar status such as long gesta-tion periods and high capital expendi-ture. Thus shipbuilding industry in India will be able to access Þ nancing at prefer- ential terms (low interest rates and lon-ger terms) as well as avail tax beneÞ ts - if infrastructure status is granted to the sector. The government has set the ball rolling and the industry experts are conÞ dent of seeing better days ahead. Having sur- vived the downturn Indian ship builders can no doubt be expected to come out much stronger in time to come. MR #8 (74-81).indd 79MR #8 (74-81).indd 798/5/2014 9:54:04 AM8/5/2014 9:54:04 AM