Subsidy of any monetary kind: direct, indirect, tax planning, etc -as backlashed in SCICI (later merged with ICICI), ILFS, etc turning to sovereign guarantee wastage- is a nemesis and should be politically, policy-wise and any which way better be avoided and given a sea-burial.
It is a fallacy that it creates employment -with trickle down and multiplier economic effects- including technology transfer likewise, Port-led Shipping development is an absurd misnomer. Strong words to get heard in all `Blocks’ in New Delhi, before Budget-Finance Bill.
For, shipbuilding per force is welding and assembling of steel and equipment. As such MSMEs should get to that level as `CLUSTERS’ for outsourcing around shipyards. Yes, L&T, Cochin have made the foray in the wake of HSL, some in Goa and few smaller ones too. GIFT City too is making impact of late.
Development of shipboard equipment to save forex and leap forward is a must before anything else; as such marine techno parks is the way to go, facilitated with easy land leases. Position them all over the coasts, well-distributed -envisioned in Sagar Mala- to develop maritime settlements with potential to grow to towns, decongesting Metros and cities that had sprung up near old ports.
Resettling riparian populace enables decongesting river-banks, assuring cheap labour for clusters.
Start with bottom end of shipbuilding for national requirements, IRS as RO developing standard best-cheap models, and move up quickly catering to regional levels. For, internationally it is very competitive with soft funding. That can and must wait till we have enough and more forex reserves to prop up such funding.
Shipbuilding moved from UK and Europe to Japan, Taiwan, Korea, etc and was then cornered by China. Soft funding to shipyards through `Export Development Banks’ Bareboating long Period Charterers to Head Charterers, including major Listed Banks for reletting to `operators’ (like MAERSK, MSC, SHELL, etc) and eventual Time or Voyage Charterers are the operating modus prevalent.
It is a cyclical industry begging for bottom price most of the time when market curves are weak or steady, with few peaks when premium prices may be obtainable due to `no free yard space’! Second-hand markets and resales taking off phenomenally! As in any business, failed contracts, breaches, damages, liabilities, repossessions, auctions, scrapping, etc too may have to be provided for.
Shipbuilding requires volumes and varied sizes and types, with specialisation getting branded by established yards. There will be a steep learning curve. Joint ventures may be an option not to be brushed aside.
Research and development must be on-going, as in any industry, to keep ahead and abreast of foreseeable requirements, developments and regulations that are imposed after every disaster.
It is contextually emphasised (against Port Led Shipping Development) that Ship-owning -ipso facto or ineluctably- is not a compulsion, as most developed countries have opted out and rely on `Flags of Convenience’ for best freight rates based on Supply and Demand balancing.
It need be stressed that all such techno-commercial knowledge, that seems to evade know-alls, is easily available with professionals.
Marex Media