Boosting India’s Shipbuilding Capacity

Union Finance and Corporate Affairs Minister Nirmala Sitharaman recently chaired a session on ‘Maritime Financing, Insurance, and Arbitration’ at the Global Maritime India Summit (GMIS) 2023 in Mumbai. She emphasized the need for innovative financing, robust insurance mechanisms, and diverse options to strengthen India’s shipbuilding capacity.

Opening New Maritime Routes

Sitharaman unveiled plans to establish the India-Middle East-Europe economic corridor to connect Europe via maritime and land routes. This ambitious initiative aims to streamline logistics and reduce costs.

Challenges and Solutions

Highlighting global challenges related to supply chain disruptions, security issues, and inflation, Sitharaman underlined the significance of GMIS 2023. She stressed the importance of addressing these challenges effectively.

Marine Cargo Pool and Reinsurance Sector

The Finance Minister discussed the establishment of a “Marine Cargo Pool” with support from IRDAI and Indian insurers in response to the COVID pandemic. She also mentioned the approval of modifications by IRDAI to encourage growth in India’s blue economy services and attract more reinsurers to operate within the country.

Promoting Maritime Arbitration

Sitharaman emphasized the need for a dedicated Indian-owned and India-based Protection and Indemnity (P&I) entity. Such an entity would reduce India’s vulnerability to international sanctions, protect liabilities in coastal and inland waters, and promote maritime arbitration in the country.

Harmonized Master List and Infrastructure Framework

An expert committee has been formed to review the Harmonized Master List (HML) and enhance infrastructure understanding across financing and regulatory institutions. This framework will help in updating HML and categorizing relevant sectors as infrastructure.

National Monetisation Pipeline and Alternative Dispute Resolution

The Finance Minister noted that 31 projects in nine major ports have been identified for monetization under the National Monetisation Pipeline (NMP). Additionally, she highlighted the establishment of ‘SAROD-Ports’ (Society for Affordable Redressal of Disputes – Ports) as an alternative dispute resolution (ADR) mechanism.

India’s Global Ranking and Infrastructure

Sitharaman proudly stated that India has significantly improved its global ranking in international shipments, moving from 44th in 2014 to 22nd in 2023. She also mentioned the impressive ‘Turn Around Time’ of Indian ports, which is less than other prominent countries like Singapore, UAE, Germany, USA, Australia, Russia, and South Africa.

Financial Benefits in GIFT City

The Finance Minister discussed the financial benefits available in the International Financial Services Centre Authority (IFSCA) located in GIFT City. These benefits include tax incentives, exemptions, and no capital gains tax on ship leasing.

International Arbitration Centre in GIFT City

Sitharaman also revealed the establishment of an International Arbitration Centre (IAC) in GIFT City, providing a faster dispute resolution process.

Prioritizing Port-Led Development

In her address, Sitharaman highlighted the government’s commitment to port-led development over the past nine years. Several maritime-related policies and financial support, including significant FDI inflows in the sea transport sector, increased cargo handling capacity, and doubled cargo volumes, showcased India’s maritime growth.

In Conclusion

Nirmala Sitharaman’s advocacy for maritime financing, insurance, and arbitration underscored the government’s commitment to fostering India’s shipbuilding capacity and enhancing its maritime infrastructure. Her emphasis on tackling global challenges and streamlining processes is a testament to India’s commitment to becoming a maritime powerhouse.