Foreign shipping firms anchor in India

Indian shipping companies have started to flag out their vessels to foreign countries to avail of tax breaks.

This comes at a time when a clutch of global shipping companies, including Oceanic Transport Private Ltd, Nord Scan Line, Polestar Maritime Ltd, Ocean Bulk Carrier, OBC London, Standard Marine Tpg Inc and Ernst Russ GmbH & Co KG are at various stages of setting up shop here to bring their vessels under the Indian flag.

Indian National Shipowners' Association Secretary-General SS Kulkarni said the strong growth in domestic cargo was attracting foreign shipping lines to India.

Most of these companies are coming to India with one or two old vessels and are focusing on coastal trade and COAs (contracts of affreightment).

COAs assure them of cargo over a longer tenure and also provides them with flexibility to take advantage of the spot market. In other words, under COAs, their vessels are engaged for a predetermined schedule in a month, while they can have discretionary trade movement when they are free.

"We are planning to expand the Indian market by bringing in more ships, hopefully under the Indian flag, to train Indian seafarers in handling heavy-lift cargoes," a Nord Scan Line executive said.

Denmark-based Nord Scan Line has formed a joint venture with Mumbai-based Sai Freight for deploying one multipurpose heavy-lift vessel.

UK-based Oceanic Transport has floated a company here and is in the process of transferring its British flag bulk carrier to Indian flag. Polestar Maritime is also acquiring a bulk carrier, which will be registered under the Indian flag.

Shipping industry sources said most foreign companies entering India were small in size.

"The foreign companies have only one or two ships. Despite high overheads and taxes, they can run profitably as they are using old vessels, which they cannot do overseas. Besides, they are assured of tonnage. What we are seeing is migration of tonnage from the West to Asia," pointed out an analyst.