People's Democracy

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


No. 30

July 24, 2011


Whither Indian Shipping?


                                                                                   M K Pandhe


THOUGH India has the second largest population in the world and the government of India has also been claiming that we are the second fastest growing economy in the world, India is lagging far behind in developing the maritime industry. India ranks today 15th in deadweight tonnage capacity in shipping industry.  Despite the fact that 95 per cent of India’s export-import trade is done through the sea routes, 14 per cent of the Indian cargo is carried in domestic bottoms.  Even the UNCTAD resolution that at least 40 per cent of the cargo in every country should be carried by domestic ships, the share of the country’s shipping industry in international trade has not been picking up. To make the matters worse, foreign fishing trawlers too are being allowed to freely enter the Indian waters and catch fish recklessly, adversely affecting the Indian fishermen and their livelihood.




The fact is that Indian shipyards are facing a crisis due to the policy of the government of India to liberally permit Indian shipping companies to purchase the ships built in foreign lands. It is even allowing the purchase of second hand ships from foreign countries and some of our shipyards are being converted into ship repair yards. Though the government of India has agreed to give 30 per cent subsidy to the shipyards executing export orders, there is no assistance for the ships sold within the country.


Even though India has 10 major ports, the central government is out to boost the private ports whose share in the country’s export-import trade is gradually increasing. It is an official estimate of the union government that private ports would be handing over 50 per cent of our foreign trade by 2020. Nay more, even multinational companies like the P&O are being given the responsibility of running the Indian ports. The government of India has clearly given up the policy of self-reliance in the shipping industry.


The government of India does not ensure that the Indian corporate houses send their cargoes through the Indian shipping companies only. Even the public sector undertakings are undertaking foreign trade in the ships belonging to foreign shipping companies. How far the kickbacks given by foreign shipping magnets are responsible for such a policy is a matter of investigation.


The mishaps that occur to the Indian ships while they are on the sea is also a big problem, causing serious concern about environment. The oil spills from some of the ships that sunk while taking a turn has caused several environmental problems for the onshore people as well as the marine life. There is no law in the country to recover from the shipowners the cost of removal of the environmental damage. The instances of ship becoming aground, as it recently happened in a case near the Juhu Beach of Mumbai, create serious environmental problems for the people staying in the nearby areas. The National Shipping Board has noted an increase in the occurrence of such mishaps in the recent period, and therefore the government of India needs to pay more attention to the problem.




An important agenda discussed in the recent meeting of the National Shipping Board was that of piracy in the Aden Gulf region. Here the area of operation of the Somali pirates is spreading and there have been over 500 hostages in the custody of the pirates. Another matter of concern is that the business is becoming lucrative and anti-social elements from Kenya, Ethiopia, Eritrea and Yemen too have joined the business of piracy. They extract billions of dollars from shipowners as ransom every year.  According to the information made available in the meeting of the National Shipping Board, the annual quantum of ransom extracted has reached up to 7 to 12 billion US dollars. As a recent case which came to light showed, a shipowner had had to pay a ransom of 8 million US dollars for the release of two Spanish sailors.


As it is, these pirates have with them most modern weapons, satellite mobile phones and other communication equipment which obviously come to them from western multinational companies.  There is practically no effective controlling government in Somalia and the pirates have full sway in the coastal areas. The western shipping companies ensure the safety of their ships by employing trained and armed guards on their merchant ships. But the Indian government has not yet decided about providing armed guards to the Indian ships going via the Aden Gulf region, where Indian ships still face the menace of piracy. Indian sailors clandestinely employed by foreign shipping companies are also falling victim to these pirates. It is estimated that more than 30 Indian sailors are still in the custody of these pirates.


The interviews given by some of the sailors who were released after having spent a period as hostage, reveal that they had to face severe difficulties about getting proper food. Some of the Indian seamen died in captivity due to non-availability of adequate medical treatment. They find it extremely difficult to contact their family members. The released hostages have mentioned the callous attitude of the concerned government officials who failed to show even necessary humanitarian attitude towards the sailors. Relatives of some of the victims have also complained about the unhelpful attitude of the officials concerned. The government leaves everything to the shipowners who involve in negotiations with the pirates for ransom. Some seamen had to be in the captivity of the pirates for as long as 14 months in most inhuman living conditions.


There are also reports that some shipowners do not pay the ransom demanded and prefer to surrender the ship to the pirates, thus leaving their seamen at the latter’s mercy. When the pirates release some sailors after receiving ransom, there is the possibility that another team of pirates would attack them. This enhances the threat to the life of our sailors.




The National Shipping Board has several times discussed the question of development of coastal shipping industry in India. But the Ministry of Surface Transport has been showing utter disregard to this important problem. India has a 7500 km long coastline and thus has vast employment generation potential if this kind of shipping properly developed. The National Transport Policy Committee, appointed by the government of India over two decades ago, had highlighted how coastal shipping and inland water transport could provide a cheaper mode of transport for the county.


According to official statistics, water transport has been the cheapest mode of transport. The cost of fuel in water transport is only 4.5 per cent of the total cost of operation while it works out to be 8 per cent in case of rail transport and 31 per cent in case of road transport.


Though 700 coastal ships are operating in India today, they carry only 1.01 million tonnes of cargo. If coastal shipping is becoming uneconomic, it is because only 30 per cent of the time of these ships is being gainfully utilised while for the rest of the time these ships keep waiting at the ports for want of sufficient traffic load.  The failure of the government of India to develop this sector could be seen from the fact that only 8 per cent of the domestic cargo is carried out by coastal shipping.


An argument was advanced during a meeting of the National Shipping Board that high manning costs are responsible for the uneconomic operation of these ships. This was opposed by the CITU representative who pointed out that the wages paid to the workers in coastal ships are extremely low and cannot be said to be responsible for uneconomic operation of coastal shipping.


Most of the Indian rivers too can be made navigable it the government of India pays attention to developing this sector of our economy. The river transport from Kolkata to Allahabad was considered to be most economical but no attention whatsoever was paid to this aspect. Whatever navigation was undertaken in the river Brahmaputra in the British days, has declined considerably due to lack of any attention by the central government. The Narmada, Godavari, Krishna and Kaveri rivers too have good potential for development of the inland water transport. The Central Inland Water Transport Corporation, a public sector undertaking, has become a sick unit due to lack of support and assistance from the government of India.


Several committees appointed by the government of India in the past have emphasised the economic advantages and employment generation capacity of this sector, but the government has shown utter disregard to this aspect.


National governments all over the world exercise the cabotage law, i.e. the right of control over air traffic, coastal shipping and trade within the national territory. This clearly stipulates that the costal shipping should be reserved only for domestic shipping companies.  However, due to the pressure of multinational shipping magnates, the union government has permitted foreign shipping companies to undertake coastal shipping in utter violation of the cabotage law.  This has adversely affected the coastal shipping industry as well. Despite the repeated recommendations by the National Shipping Board, the central government continues to disregard the national interest. The Shipping Board once again drew the government of India’s attention to the need of strictly following the cabotage law in the overall interest of the national shipping industry.




As per Section 6 of the Income Tax Act, an Indian seafarer serving on Indian ships outside India for a period of 182 days or more in a year is considered to be a non-resident and does not have to pay income tax for the work done outside India. However, by a circular issued by the Central Board of Direct Taxes, the period of seafarers’ service on Indian ships in Indian territorial waters is considered as a period of service in India. As noted by the Indian National Shipowners Association, “Indian ships which generally operate in Indian trades frequently called at Indian ports and as a result a large number of Seafarers employed on Indian ships, though trading outside India faces difficulty in complying with the 182 days criteria for becoming a non-resident Indian status.” As against this, the foreign shipowners are not subject to this regulation which enables the foreign shipowners to escape the income tax net for the period they have spent in Indian waters.


Indian shipping industry is facing acute shortage of trained officers “because of the drift of personnel from Indian ships to foreign flag ships under lure of tax free pay packet”.  To quote again INSA observation,  “The situation has become so had that it is threatening cargo due to the constraints on the operation of Indian vessels on account of non-availability of  suitable officer”.


The CITU had been raising this issue during the Union Finance Ministers pre-budget discussions on several occasions but the government did not pay any attention to this gross discrimination against Indian Seamen.  This issue was discussed at length in the meeting of the National Shipping Board and it was decided that the Chairman should lead a delegation of the National Shipping Board to the Prime Minister and the Union Finance Minister to get this discrimination withdrawn by the Government of India.  The Ministry of Shipping has supported the proposal to exempt Indian Seafarers from the income tax net, but the Ministry of Finance is still not agreeable to the proposal so far.  This issue has been raised by the National Shipping Board on several occasions in the past but the UPA Government is consistently refusing to end the discrimination against Indian Seamen.


There is acute shortage of marine offices for Indian Ships who are compelled to engage foreign marine offices at higher salaries to meet the statutory requirement.




The National Maritime Board (NMB), which finalises two year wage settlements for foreign-going seamen, has not yet seriously commenced the wage negotiations. The management has proposed a two year moratorium on wage settlement and the National Union of Seafarers of India (NUSI) has clandestinely agreed to one year moratorium. The Forward Seamen’s Union of India (FSUI), an affiliate of the CITU, has opposed any such moratorium and proposed that wage settlement should cover the two year period.


It is now proposed that the NMB should cover the offshore vessels, home-trade ships and petty officers also. But the membership of the NMB has not been adjusted to cover the expanded companies.  In these sectors, the FSUI covers a majority of workers but its representatives are not included in the negotiating team. The FSUI has demanded an equal number of representatives of the NUSI and FSUI on the NMB but the NUSI is opposing the proposal; this has resulted in a stalemate in the wage negotiations. There is acute discontent among the seamen and the FSUI has called for a struggle for commencement of the negotiations with a reorganised NMB.


The Director General of Shipping has filed an affidavit in the Mumbai High Court stating that the NUSI should alone negotiate with the management. This has complicated the matters.  According to the verification conducted by the government of India, the FSUI has the largest membership among the Indian seamen, but the DG Shipping’s office has totally ignored this reality. The shipowners have given their opinion that they would like to negotiate with both the unions but yet the stalemate continues because of the recalcitrant attitude of the NUSI. Therefore the FSUI has decided to launch a struggle including a strike action to ventilate the grievances of the workers.


The seamen all over the country have supported the position of the FSUI. The workers are not going to accept any moratorium on wage settlement. They have expressed their firm opinion to oppose any moratorium and to fight for a just settlement on the charter of demands submitted by the trade unions in the shipping industry.