Raising Finance for the Post Liberalization Indian Shipping Industry

by Sanjay Mehta, American Marine Advisors

The rigidly controlled and regulated Indian shipping industry has undergone a veritable sea of change since the introduction of liberalization and free trade policies enacted in mid-1991. What has yet to be realized by the Indian shipping community, however, is that liberalization is a mixed package. It may take quite some time for the industry to adjust to the new economic environment, become truly self-reliant and internationally competitive, and learn to do without the government support and protection that it had long been accustomed to. But the effects of a prolonged recession, which Indian shipping companies have withstood quite well, have helped make them resilient and have developed their self-reliance and confidence. This will put them in good standing in the new environment of globalization and competitiveness.

The biggest challenge facing Indian shipping is marshaling the resources for replacing an aging fleet and increasing tonnage. An alarming 80% of the Indian fleet is over 10 years old and about 35% will have completed its normal economic life by the end of 1995. Indian fleet growth has been sluggish in the past decade. Between 1981-85, it increased from 9.08m dwt to 10.414m dwt. Over the following nine years, it fell back to 6.57m dwt, a result of fewer acquisitions and accelerated scrapping of aging vessels.

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