An amendment in import norms has hit second-hand ship acquisition plans of Essar Shipping and Varun Shipping.
Essar Shipping had plans to acquire an oil tanker and a bulk carrier, while Varun Shipping was looking for a LPG carrier and a bulk carrier.
According to the current market price list of second-hand ships issued by the Indian National Ship Owners Association, the ship import plans were collectively worth around $80 million. Industry sources also said the Great Eastern Shipping has also approached the ministry with an acquisition plan for a bulk carrier.
Shipping company sources said the Union government, in its Exim policy for 1997, had placed the import of ships under the open general licence (OGL) agreement.
However, in the Exim policy for 1999, the government termed second-hand ships as capital goods which makes companies to get a special licence while importing such ships.
Further, if the companies want to import ships that are more than 10 years old, they have to approach the Restricted Items Licensing Committee under the Union commerce ministry and permission will be given only on a case-to-case basis.
It may be noted that the domestic shipping industry mainly depends on ships beyond 10 years old mainly due to the shortage of cargo and delay in getting new vessels in time after placing an order.
Though the Union commerce ministry introduced the import restrictions around a year back, none of the ministry officials raised any objection against the move. Last year, big as well as medium-sized shipping companies together imported around 44 ships.
According to the ministry, the OGL provision is applicable only to the import of new ships, and second-hand ships come under the capital goods category.
However, company officials said, a notification issued by the Director General of Foreign Trade on March 31, 1999, states that import of ships may be made without a licence on the basis of the approval issued by the Union ministry of surface transport.
