North Block questions Transchart arrangement

The finance ministry has questioned how continuing with the centralised shipping arrangement through Transchart could help improve user satisfaction.

Already, there was a proposal pending with the Cabinet on allowing Indian Oil Corporation to make its own arrangement to import oil, ministry officials said pointing out that a centralised system was not suited to the needs of the users.

The shipping ministry, in its draft maritime policy circulated to various ministries for comments, has not suggested any change in chartering norms of the ministry.

The finance ministry has also said the practice of insisting on the free-on-board (FOB) imports by the government and the public sector units (PSUs) was also not clear. In FOB contracts, the importer has to only pay for the cost of the material.

The shipping ministry is of the view that once companies were free to make its own shipping arrangements, they would start importing on cost and freight (C&F) basis.

"Under C&F norms, the seller makes the shipping arrangements and the Indian buyer not only has to pay for the cost of the material but also the freight. As the freight costs vary, importing on that basis would make price manipulations possible," a shipping ministry official said.

The proposals of capping domestic steel prices for shipyards and setting up a directorate-general of ports (DG-Ports) has also not found favour with the Planning Commission and the finance ministry.

Another proposal that has received flak from both is that of central government equity in minor ports. The draft policy has suggested that in order to develop minor ports, the Centre be allowed to pick up 33.33 per cent equity not exceeding Rs 300 crore.

The Planning Commission said there was no need for introducing such a scheme as a number of states were encouraging private investment on their own.

The finance ministry too was not in favour of the proposal. Minor ports were under the jurisdiction of states and it was not appropriate to provide central support, it said adding that it would also involve legal complications.

The finance ministry also said creating another body"" DG Ports"" in addition to the existing DG Shipping should be reconsidered. "Coordination in the port sector should be left to free play of market forces," it said.

The draft policy has suggested setting up of DG Ports on the lines of DG Shipping with a mandate to work out and implement framework for overall development of all ports. DG Ports would act as a link between the central ministry and the maritime states with minor ports.

The proposal of capping steel prices for making the shipbuilding industry more competitive has also been objected to. The finance ministry has asked for deletion of such a provision as it was against the government policy.