Indian shipping faces $4 bn bill

The Indian shipping industry will need to send 56% of its merchant fleet to the scrapyard in the next five years according to the Indian National Shipowners? Association (INSA) and, as a result, will need to spend about $4 billion on fleet renewal by 2009. As of March this year, Indian companies owned 739 ships.

The average age of the Indian fleet is about 18 years and 40% of the ships are more than 20 years old, said the association?s Secretary-General, SS Kulkarani. Moreover, most ships owned by private Indian companies are single-hull, all of which have to be phased out by 2010 under India?s commitment to the IMO.

To make matters worse, the threat of scrapping looms over the industry at a time when the share of Indian ships in the country?s overseas seaborne trade has slipped to 13.7% from the high of 40% in the late 1980s, while the share of foreign companies has been rising steadily. Companies will feel the pinch of replacement as the prices of second-hand ships have shot up by as much as 60% in the last three years. Only the state-owned Shipping Corporation of India has a policy of buying only new ships, while the private sector generally prefers pre-owned ones.