The Indian National Shipowners’ Association (INSA) has disputed the reported claims of Union Shipping Secretary Gopal Krishna that the government’s move to relax cabotage had led to reduction in coastal shipping rates. The Shipping Ministry, had in May this year, relaxed cabotage for foreign-registered vessels to bring down logistics costs.
“As per information obtained from Directorate General of Shipping, Foreign Container Companies (FCCs) have moved 55,420 empty containers during this period free of cost, which has translated into gains of millions of dollars for foreign companies,” INSA said.
“But ironically, FCCs have not passed even a part of the profit to Indian consumers. Therefore, Indian businesses have not seen even $1 as reduction in freight. Instead, FCCs have reportedly increased the peak season surcharge on EXIM cargo about eight times in the five-month period from May to September 2018, thereby directly impacting the freight payable by Indian businesses,” the association said.
INSA said foreign vessels, unlike Indian ships, do not pay GST for transport of empty or laden containers, which is a direct loss to the Indian exchequer. “Data shows that relaxing licensing norms for foreign container companies has eventually led to no reduction in coastal shipping rates till date,” INSA asserted.
The Indian shipowners’ body has also countered the Shipping Secretary’s claim that Indian ports like Krishnapatnam and Visakhapatnam had started attracting a share of cargo, which was previously transshipped at Singapore or Colombo.
“As per available information this may not be the case. For example, cargo from India being transshipped over Colombo has in fact increased by around 10% Y-o-Y in FY18. From May 2018 to August 2018 also, Indian cargo volumes in Colombo have increased by 9%, which translates to 36% on an annualised basis,” the association said.
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