Fund crunch halts shipping growth

NEW DELHI, May 12: Handicapped by severe resource crunch and unattractive freight rates, the growth of Indian shipping industry has come to a grinding halt, with the shipping firms failing miserably to expand capacity. These firms have only added a mere 13,000 tonne in the last 15 months to take the gross tonnage GT to 7.015 million .

According to sources, the overseas shipping tonnage increased by barely 8,000 tonne from 6.304 million GT in December 1995 to 6.312 million GT in February 1997. Similarly, the coastal tonnage went up by just 5000 GT to reach 7.03 lakh in the corresponding period. While the actual growth in the last 15 months has been shocking, only six vessels aggregating about 90,000 GT have been acquired to replace the older vessels as against a replacement target of 51 vessels aggregating about 1 million GT in 1996-97.

Industry sources attribute this to the tight money market and sluggish capital market due to considerable drop in the Baltic Freight Index BFI, resource crunch and lack of incentives. The balance of payment position and shortage of foreign exchange reserves were also responsible for the lack of growth in the first half of 1996. Further, the shipping companies have not been able to fully utilise their fund raising capabilities due to the restrictions imposed on External Commercial Borrowings ECB.