Indian Seaborne trade and investment in Shipping – with focus on dry cargo – Bulk and Break bulk trade

In 2022, India’s seaborne dry Cargo – Bulk and Break bulk Trade recorded about 470 MMT; Imports recorded about 322 MMT, Exports about 73 MMT; Coastal trade about 76MMT. Coastal trade has increased substantially over the years, exceeding Export Volumes.

Major commodities imported are coal, fertilizer and raw/ semi/  finished goods related to energy, agriculture and construction sectors. These are essential and critical for the economy.

Major commodities exported are agri- products, minerals, steel etc which earn valuable foreign exchange for the country.

In addition, coal, iron ore and other agri and construction materials are transported along the coast which is vital for the economy.

India’s Dry Bulk ships dead weight tonnage Capacity continues to be around 6 Million, which is about 0.6% of the Global Capacity. Whilst, the share of cargo volume is about 7% of Global Exim trade Volume. More than 90% of Indian seaborne Dry Cargo Volume is dependent on foreign tonnage.The share of Indian Flag vessels-Imports is just 9 mmt out of 332 mmt – just abt 3% share. Exports is 1.0 mmt out of 72.8 mmt- just abt 1.4 % share Coastal is 34.0 mmt out of 75.7 mmt – abt 45% Indian Shipping seems to be surviving due to the cargo reservation and support offered through cabotage rules. Indian EXIM trade through Indian flag vessel is hardly 2.5% and is highly dependent on Foreign flag vessel which is not good and conducive for India.Indian seaborne trade will be affected badly, in case , there are any sanctions and / or  external aggression,  affecting energy, agriculture and construction industries in India. It is recommended that min 50% of the seaborne trade is carried through Indian Flag or controlled tonnages. This needs huge financial investments in the shipping sector. Budgetary support in 2022-23 was a meagre – less than usd 100 million with very complicated rules . Investment planned for the Sagar mala project is USD 65 billion but there is hardly any allocation for ship acquisition.

Investment in Indian Shipping –

Currently, the total value of all ships across the globe is estimated to be about usd 900 billion to USD 1 trillion. India needs about USD 100 billion overall investment to meet its tonnage capacity, to transport her seaborne trade volumes on Indian flag vessels. But its investment is presently much less than USD 5 billion. Due to the high rate of Interest on borrowed capital, and low rate of returns, shipping has been a low priority segment for the investors in India.

Government allocates substantial funds for Highways, Railways, port Sector in every year’s budget but has totally neglected investments on ship tonnage acquisition and augmentation. Hence, India’s Seaborne Trade continues to be heavily dependent on foreign tonnage. Should anything go wrong in the support extended by foreign ship owners, India’s seaborne trade could be impacted badly, affecting seaborne trade and the economy.

Indian Stock Market is worth over USD 3 trillion. India’s annual budget is about USD 400 Billion per annum. But, Shipping Industry has not been able to attract even USD 5 billion per annum from both the Government and Indian investors. This may be due to low and unreliable returns on Investment and poor image of the industry.

India needs min USD 5 billion per annum, low interest finance to improve capacity through budgetary support or through suitable financing methods , to be self reliant.. This investment is not high considering the current status of Indian Economy. Indian Shipping is  Second line of defence  India considers Shipping as second line of defence, as per one of the objectives of the Shipping Ministry. Trade and commerce is vital to the economy and needs Government’s and the industry’s attention to improve the share of trade through Indian Flag vessels, even during external aggression. Hence, suitable policy amendments and funding is essential before India’s seaborne trade is 100 % in the grip of foreign powers!

Marex Media