| "Indian industry will need an investment of $25 billion to own a tonnage of 35 million GT by 2010 while it can only source about $7 billion through reserves created by way of tonnage tax," said a senior shipping company executive. |
| India's share in world fleet slipped from 40 per cent in 1980s to 13.8 per cent in 2005. Ironically, over 30 per cent of Indian fleet are 20 years old and need replacement in next five years at a cost of $2 billion. |
| "Indian shipping tonnage should touch 35 million GT as companies are enjoying better return on investment. But it seems Indian companies are risk averse. Government is open to foreign direct investment (FDI) and we are ready for one-to-one meeting with interested players," said joint secretary of MoS Susheel Kumar. |
| The Shipping Corporation of India (SCI) chairman and managing director, S S Hajara said the domestic shipping companies have earmarked Rs 625 crore as a part of tonnage tax reserve for acquistion. |
| "The companies can mop up to Rs 3,000 crore with 20 per cent equity and debt for fleet aquisition programme every year at current prices," Hajara said. |
| However, shipping analysts point out that the country could only invest upto $7 billion going by tonnage tax reserve fund for fleet acquisition by 2010. |
| "Even if India mop up $10 billion, it needs at least 15 billion by 2010. Interestingly, Indian tonnage registered only 18 per cent last year following the introduction of tonnage tax. All these estimates are made out of the current prices. The prices trend of vessels will certainly not be same in next 10 years," they said. |
| Mercator Lines Ltd (MLL) joint managing director, Atul J Agarwal said that though the target set by government seems as ambitious, practically it is unrealistic. |
| "While the tonnage of Singapore and China grew 133 per cent and 33 per cent in last 10 years, India reported only 7 per cent. This signals the pace of growth and investment required for India," Agarwal said. |
| But, a senior shipping company executive, said FDI is the need of the hour to enhance the Indian fleet but "a single penny has not come to Indian shipping since government opened the FDI gate eight years ago". |
| Great Eastern Shipping Co deputy chairman and managing director, Bharat Sheth said that the industry is having plethora of taxes, including fringe benefit tax, withholding tax and service tax in addition to investment blues. |
| "Shipping companies have to pay nearly a dozen taxes such as dividend distribution tax and taxation on seafearers. This is virtually nullifying the positive impact of tonnage tax", he added. |
| MoS secretary, D T Joseph, however, said that the government is well aware about the tax burden of shipping companies but cannot accept entire demand of the industry. |
| "Government has introduced tonnage tax for the industry in 2004 and had extended its benefits to dredgers this year. It is practically difficult to implement entire demand on tax," Joesph added. |
| Meanwhile, the domestic shipping industry has sought a reassessment of the price earning (PE) ratio which is at an abysmally low level of 4.6 due to its cyclical nature of business, said Varun Shipping Company Ltd managing director, Yudhishthir Khatau. |
| "Shipping companies are facing capital mobilization challenges as the PE ratio of the segment is pegged at 4.6 compared to hotel industry's 32 and petrochemicals' 7.8. There is a need to review the shipping industry's PE ratio", said Khatau who is also the President of Indian National Shipowers Association. |
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