MUMBAI: The Directorate General of Shipping (DGS) is mulling to set up a dedicated 'maritime fund' to enable the small and mid-size entrepreneurs in the sector to access domestic and foreign funds at cheaper rates.
"We have received a proposal for maritime fund from the EXIM Bank and we are studying the intricacies involved in it. We would soon send this proposal to the shipping ministry for its consideration," director general of shipping Amitabh Kumar told PTI.
The purpose of proposed fund is aimed at raising the long-term funds in domestic and international markets and create an equity corpus, which can be leveraged and in lending to these players at competitive rates, Kumar said. Along with this, the DGS is also seeking allowance of up to 49 per cent investment by foreign investors including non-resident Indians in Indian flag ships.
At present, only Indians or firms registered under Indian law can register their ships. "Even though 100 per cent FDI is allowed in the shipping industry, players with large balance sheets can access international funds through the external commercial borrowings (ECB) route. Also, they can get access to funds from banks, which smaller players cannot, given the reluctance of the banking sector to provide finance to them," Kumar said.
He further said if the foreigners are allowed to partly own Indian flagship vessels, a lot of foreign investment will flow into the sector making it more competitive in the global market. "As per the statistics, the number of Indian flag ships registered as well as the seafarers have increased. However, when we compare the share of Indian ships in our exim trade, it has gradually come down from 40 per cent in 1980s to 7-7.5 per cent today. Also, the share of Indian flag ships in the coastal shipping has been a meager 10 per cent," he said.
Kumar noted that the government's ambitious plan for the shipping and maritime sector will be successful if the small and medium entrepreneurs are encouraged. The ministry of shipping has embarked on an ambitious port-led development project touted Sagarmala Programme, which includes 577 projects entailing an investment of Rs 8.57 trillion.
The projects include port modernisation, connectivity enhancement, port-linked industrialisation and coastal communication development.