People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 15

April 11, 2004

‘Shining’ Shipping Industry in India?

M K Pandhe


THAT the multi-crore ‘India Shining’ campaign carried out by the BJP-led NDA government is fraudulent has been clearly established sector-wise by the CPI(M) as part of its “Lies, Damned Lies and Statistics” series. When we examine the shipping industry also it becomes clear how fraudulent this ‘India Shining’ campaign has been.


The tonnage of Indian shipping industry is continuously showing a declining trend during the tenure of the Vajpayee government. The India Flag tonnage which stood at 7.06 million gross tonnes in 2001 went down to 6.82 million gross tonnes as on March 31, 2002. The decline continued and as on January 31, 2004 it slipped further to 6.72 million gross tonnes. The stagnation of shipping industry under the BJP regime can be seen more shockingly when we see that in 1985 Indian Flag tonnage stood at 6.6 million gross tonnes!




To cover up its failure to develop shipping industry on a self-reliant basis, the Vajpayee government has now embarked upon Sagar Mala Programme on the eve of the elections to show that it wanted to do something for the shipping industry. The programme is advertised as a new vision of the prime minister to develop the Indian shipping industry on international standards. In actual practice the entire scheme is nothing but a scheme prepared by several private sector companies including multinational companies to invest money in the shipping industry in order to keep it under their control.


The programme visualises privatisation of all ports and foreign direct investors will be given full freedom to control the operation of  these ports. Already the Vallarpadam Terminal at Kochi was handed over to a multinational company as a landlord port in which the foreign company will have all the powers of running the container terminal. A part of Jawaharlal Nehru Port Trust (JNPT) has already been handed over to P&O, an Australian multinational company which is basing its operations completely on contractual employment on extremely low rate of wages. This Australian company has already given facility at Kandla Port and is minting money at the cost of India’s foreign trade. A proposal is being mooted by the government to give the status of export processing zones to the newly developed landlord ports in the private sector so that they could indulge in several smuggling activities in the name of development of Indian ports and shipping industry.  The programme  envisages nearly 1 lakh crore of investment in the next eight to ten years – 85 per cent of which would be coming from the private sector companies, including foreign direct investors, and the remaining 15 per cent from the government. The government investment would be utilised for infrastructure development so that the private companies can earn more profits with the facilities thus created. The minor ports will also developed in the private sector and they will be free to earn profits and will have full power to decide the tariff for handling the cargo.


The government has totally ignored the security aspect while allowing the port operations to be handled by foreign private sector companies. Since most of the naval operations are carried out using these ports, the private foreign companies will have access to all information about the naval movements, which will put national security in jeopardy.


The Sagar Mala project, in the name of rationalisation of labour practices, will give full authority to the private sector operators to adopt anti-labour policies, including increase of workload to exploit the workers on a big scale. The government has promised no regulation and private sector will be given full authority to decide the policy of shipping industry and port operation. The foreign shipping companies have more say in the matter of development of Indian shipyard and shipping building industry.


The Sagar Mala progarmme is nothing but a programme of  development of the entire water front  at the mercy of private capital, both Indian and foreign. As we have seen earlier the foreign companies have already captured the bulk of the share of Indian cargo and with the new progrmame they will have complete control over the whole operation of the shipping industry and the functioning of the sea ports in the country. The Sagar Mala project has given a complete go bye to the policy of self reliance and country’s national interest will be seriously compromised if such a programme is implemented in the forthcoming period.


The NDA government’s flawed policy in regard to ship building, coastal shipping and inland water transport development will lead to handing over of complete control over these crucial sectors to private sector monopolists through the process of privatisation. These sectors will become a tool for profit making in the hands of hungry private investors and will make water transport more costly for the Indian industry.  This will seriously  affect the development of Indian industry since all export-import shipments will be highly controlled by MNCs.




The office of the Director General of Shipping is seething with corruption. In May 2002 it was discovered that Rs 92.78 crore of statutory seamen’s PF money had suddenly disappeared. The Seamen’s PF Commissioner was himself involved in the scam. It is reported that he along with some senior officials of DG Shipping used this money in share market transactions without any record and the money just could not be traced. The surface transport ministry failed to take strong action against the culprits and thousands of seamen whose life savings were invested in the PF have been victims of the scam.


The NDA government has not yet reimbursed the money to the seamen despite assurance given by the surface transport minister. The callousness of the NDA government towards the issues of the workers could be easily seen from this instance. The National Shipping Board has been repeatedly taking up this matter with the government but the workers are yet to get any relief so far.


While the central government does not charge any income tax on seamen employed in foreign going ships owned by foreign shipping companies, it is doing so on seamen working in Indian shipping companies. This is a gross injustice done to seamen working on board the Indian shipping. A large number of trained officers prefer to join ships owned by foreign shipping companies causing serious shortage of officers for the Indian shipping companies. This is one of the reasons for the slow development of Indian shipping companies investing in foreign going vessels.




During 1961 India Flag tonnage was only 9.5 lakh gross tonnes while it went up to 6.6 million gross tonnes in 1985. This progress of the Indian Shipping industry was possible only after the formation of Shipping Corporation of India. However, the industry started stagnating since 1985 as successive central governments failed to invest more funds in the shipping industry.


But more dangerously the NDA government has decided to privatise the Shipping Corporation of India despite it earning good profits currently. The valuable assets of a premiere public undertaking are sought to be handed over to private shipping companies at throw away prices. And foreign shipping companies are trying to take control by having a tie-up with private Indian shipping magnets.


Internationally accepted Cabbotage Law provides that the coastal trade should be handled only by domestic carriers and foreign ships should not be allowed to operate on coastal trade. But the Vajpayee government has decided to allow foreign ships on coastal trade which has affected Indian shipping industry. Foreign ships are competing with Indian ships in unfair manner reducing the cargo carried by domestic carriers.


The UNCTAD had decided that in international trade a minimum of 40 per cent of the cargo should be carried in domestic vessels. When NDA government came to power the share of the Indian ships in international  trade was about 30 per cent. However, during 2000-01 it came down to 22.5 per cent while in  2001-02 it further declined to 17 per cent.


The government was earlier giving cargo support to Indian ships through Stanchart. This was withdrawn by the NDA government and foreign shipping companies were given a free hand to operate in Indian waters. Even Indian shipping companies were permitted to chart out their vessels to foreign companies without prior approval of the government. As a result the cargo carried by Indian ships has been declining under NDA government and foreign shipping companies are taking full advantage of the concessions given to them by the government.




Because the NDA government allowed import of all types of ships under “open general license”, the Indian ship building industry is today in doldrums. All the six public sector shipyards and three defence shipyards, except Cochin Shipyard, are running in losses. For want of orders, they are running at only 20 to 50 per cent of their rated capacity. Some of the ship building shipyards are being converted into ship repair shops and the whole purpose of their commissioning is being defeated. Even Cochin Shipyard is earmarked for privatisation despite its improved performance in the recent past.


The BJP-led government’s pro-MNC attitude was raised in a meeting of the National Shipping Board in its meeting held in February end by M K Pandhe. He pointed out that Hindusthan Shipyard, Vishakhapatnam, had carried out massive repair work of floating Dock Navy in 1998 valuing about Rs 34 crores. Despite this the  defence ministry has given the work of Navy at Port Blair to Singapore Technologies Marine which has no expertise in handling this type of work. Though Hindustan Shipyard completed all formalities and was invited for the opening of the tender, the defence ministry opened the tender on  November 10, 2003 without informing the public sector undertaking and the contract was given to the Singapore company violating all the norms of tendering.


The National Shipping Board has taken up the matter with the defence ministry. However, the matter highlights how the NDA government is killing India’s ship building industry in order to favour the MNCs who offer huge kickbacks to those who favour them with orders.


The NDA government has abandoned the aim of making the Indian ship building industry self-reliant. It has on the contrary created a situation where the industry is threatened with closure at any moment or is likely to be handed over to the private sector at throw away prices.




India has 7517 km of coastal line which remains unutilised for coastal trade. In European Union 43 per cent of the cargo is handled by coastal shipping while in India it represents only 7 per cent of the domestic traffic. India’s coastal fleet, excluding offshore supply vessels, increased marginally from 4.7 lakh to 6 lakh gross tonnes during the last 10 years!


During the last two decades the National Shipping Board repeatedly drew the attention of the  surface transport ministry about the need to develop coastal shipping as one of the cheapest modes of transport. It also has tremendous potential to generate jobs in the country. Yet the  government disregarded these exhortations resulting in this crucial sector being totally  neglected.


Seventy five per cent of the coastal cargo is handled by 12  major ports while 185 minor ports are totally underdeveloped with no adequate facilities for carrying commercial cargo. The central government has given the responsibility of developing minor ports to state governments. With inadequate financial resources the state governments could not pay much attention to develop them. Moreover the central government failed to give much financial assistance to the state governments to develop the minor ports. Without development of  proper facilities of cargo handling in minor ports the coastal shipping cannot be developed in the country.



According to an official report, India has approximately 15,000 km of  navigable waterways consisting of varieties of river systems, canals, backwaters, etc. However, today only 2,700 km is being used to some extent. The share of  Inland Water Transport in the total cargo traffic is only 0.15 per cent. Due to absence of infrastructure development, this important mode of transport remains unutilised. The public sector Inland Water Transport Corporation is a sick unit and facing acute financial crisis due to utter neglect by the NDA government. Though the National Transport Policy Committee had recommended to the central government more than 15 years ago to give proper emphasis on this mode of transport, no attention has been paid so far.  The net result being that this area of vast potential remains unutilised adversely affecting the faster economic growth of the country. More importantly a proper development of this sector can give considerable boost  to the rural economy of the country.


In view of all this, it is therefore imperative that the BJP government’s waterfront policy has to be totally opposed by democratic forces and trade union movement in the country. They should not be allowed to implement such anti-national programme that will seriously damage the national interest. An opportunity to do so is available to the people in the forthcoming elections.