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A sinking ship
Shipping is the only Indian business that was inextricably linked to the South-East Asian region's trade fortunes. It is therefore the worst hit among the industries by the currency mayhem that recently rocked the region. The Indian shipping industry was already reeling under its own problems: policy apathy, lack of financing options, ageing fleets, crumbling port infrastructure, continuing red-tape problems with customs etc. The currency crisis in South-East Asia, which over the last decade or so has been the engine of world trade growth, has only hastened what must surely be a major industry shakeout.Such a shakeout was avoidable. The government keeps talking about wanting to boost exports, but its policy moves in this regard always skirt around the shipping industry. Ports have been declared as part of the core sector, thus according it major tax relief. Shipping has not been given the same status. The government imagines that ports can develop without a strong Indian shipping sector, but relying
entirely on foreign shipping companies may be dangerous for the government and the investors in port infrastructure. Shipping subsidies have been removed, and shipping companies are suddenly finding it difficult to finance fleets. The high interest regime that prevailed till last year, and the limited access to international commercial borrowings have rendered previous loans bad. The upcoming elections could be the last straw. The government was considering a high-level committee submitted in July this year to frame its first-ever shipping policy. The political developments have postponed that indefinitely. The question is, if shipping sinks for want of takers, will the Indian economy sail smoothly? Given the already plummeting exports, and extremely adverse trade situation, perhaps not.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
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