Age Limits Will Hit Small Shipowners Hard

This move by the government will hinder the growth of small and medium-sized shipowners, who provide a huge amount of employment to those at the lower end of resources and formal competencies

The imposition of age limits on Indian ships by the Indian government is a topic of debate that has the Indian industry in an uproar. As we will see unfortunately, it is mostly the smaller shipowner who is going to be hit badly by this move by the Directorate General of Shipping.

While the intention behind this policy is to ensure the safety and efficiency of the ships, it raises questions about its economic feasibility and potential impact on the industry.

The primary aim of imposing age limits on Indian ships is to prevent the operation of older vessels that may have decreased safety standards or may be more prone to breakdowns. It is believed that newer ships are equipped with better technology, enhanced safety features, and stricter adherence to international regulations. Therefore, by limiting the age of ships, the government aims to reduce maritime accidents, protect the environment, and maintain a higher level of operational efficiency.

From an economic perspective, the imposition of age limits on ships can have both positive and negative implications. On one hand, it can stimulate the shipping industry by encouraging shipowners to invest in new vessels. This, in turn, leads to an influx of capital into the sector, boosts shipbuilding activities, and creates employment opportunities. Newer ships are more fuel-efficient, thereby reducing operational costs and environmental impact. Additionally, the use of modern technology and equipment can enhance productivity and competitiveness.

On the other hand, the imposition of age limits can pose economic challenges for shipowners, especially in a country like India, where the majority of the fleet consists of older vessels. Replacing older ships with newer ones requires significant capital investment, which may not be financially viable for all shipowners, particularly those with limited resources. The cost of acquiring new ships, adhering to stricter environmental regulations, and training crew members can be substantial and may hinder the growth of small and medium-sized shipowners.

Furthermore, the imposition of age limits can lead to a decrease in the availability of ships, which can potentially impact the supply-demand dynamics in the industry. If older ships are forced out of operation, it may result in a shortage of vessels, leading to an increase in freight rates and transportation costs. This can have a ripple effect on various sectors of the economy, including trade, manufacturing, and consumer goods, ultimately hurting the common man.

It is essential to consider the context and condition of the ships when implementing age limits. Some older vessels may still be well-maintained, meet safety standards, and perform efficiently. In such cases, imposing age limits solely based on the age of the ship may not necessarily result in improved safety or economic benefits. Instead, stricter enforcement of maintenance and inspection regimes can ensure that all ships, regardless of age, conform to safety and operational standards.

A more practical approach could be to implement a thorough evaluation of ships’ condition and adopt a risk-based approach to determine their suitability for continued operation. This would involve periodic surveys, audits, and adherence to international standards and classification societies’ guidelines. By focusing on the ship’s condition rather than solely age, the government can ensure that vessels are operated safely and effectively, without imposing unnecessary economic burdens on small & medium shipowners.

Hence, while the imposition of age limits on Indian ships is driven by the noble intention to enhance safety and operational efficiency, its economic feasibility needs to be carefully considered. Safety is very important, but it shouldn’t result in the killing off of small and medium sized shipowners, who find it very hard to raise capital in the Indian financial markets at workable interest rates, but yet provide a service at rates that are in tune with the needs of the local economy.

-Marex Media
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Capt Kamal Chadha photo & details you have