India needs a shipping line of its own if it wants to become a serious manufacturer and exporter in the global stage, and the budget offers an opportunity to set the ball rolling on this front, says Ajay Sahai, DG & CEO of the Federation of Indian Export Organisations (FIEO).
There are multiple issues that have to be addressed in logistics, and doing so will push up economic growth — all stakeholders agree on this. But Sahai explains how having a shipping line of global repute would help the country. “Last year, we remitted around $86 billion as transport freight charges only. The way our exports are increasing, this figure will cross $100 billion. And if we have an Indian shipping line that gets even 25% of this business, we would save around $25 billion a year,” says Sahai, at ET Online’s Rising Bharat Summit.
It will also ensure that India is never at the “mercy” of foreign shipping lines.
About 90% of global trade is dependent on shipping. This gives shipping companies an enormous hold over global trade. When they raise prices, manufacturers and traders have little option but to pay up. This makes goods costlier. For companies in India — which is looking to become a manufacturing hub and a prominent exporter — the inability to price goods competitively in the global market can be a major dampener. This would blunt initiatives such as “Make in India, Make for the World”.
Sahai argues that if India has a shipping line, manufacturers here would never have to rely on other carriers. This can help make Indian goods more competitive. Also, the shipping line can transport for other countries and make more money for the country.
“All that is required is probably tweaking some tax structure and maybe some fiscal support. Since the Shipping Corporation of India is being disinvested, we hope that some of the large private sector players enter this field and help the country develop capabilities in the shipping sector and make it atmanirbhar,” he says.
Sahai is upbeat about the overall trade situation and says the services sector, in particular, is performing on a stronger note. “We are doing very well in services and we have a large surplus in the segment.”
Source : economictimes