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Will COVID-19’s devastation in India reset the country’s maritime sector?

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India’s efforts to boost and reset maritime across the years crippled by pandemic

The country has hit rock bottom. The intense lack of vaccination infrastructure left several shipping companies looking to Bangladeshis and Indonesians to run the vessels. The frantic search has no guarantee of qualified seafarers – hurling another wrench in sustaining world shipping.

India was on good stead
Being the 16th largest maritime country in the world, India’s shipping is instrumental in sustaining the country’s trade and commerce. Majority of vessels navigate between East Asia, America, Europe and Africa through Indian territorial waters. The country has 12 major ports and 200 non-major ones – handlings almost 95 per cent of trade volumes in India. The Government of India controls the major ports while the country’s Government Maritime Board handles the non-major ports. 44 ports within the non-major ones are strategically located on the world’s shipping routes.

To boost India’s maritime industry, the government announced several initiatives. In 2015, the Sagarmala initiative was launched to reduce logistics costs for both international and domestic trade with minimal infrastructure investment. A National Maritime Development Programme amounting to US$11.8 billion was also launched to develop India’s maritime sector. The country also announced the Major Ports Authorities Bill in 2020 to regulate and operate major ports.

The Indian government also allowed Foreign Direct Investment (FDI) of up to 100% under the automatic route for projects related to the construction and maintenance of ports and harbours, plus a 10-year tax holiday to enterprises engaged in ports. The ports sector in India has received a cumulative FDI of US$1.6 billion between April 2000 and June 2020.

On the verge of reset
The 12th edition of World Economic League Table 2021, and CEBR reported India’s economic ranking slipped 1 spot to the 6th across 195 countries in 2020 due to COVID-19. The CEBR annual report remarked, “India has been knocked off course somewhat through the impact of the pandemic. As a result, after overtaking the UK in 2019, the UK overtakes India again in this year’s forecasts and stays ahead till 2024 before India takes over again.”

Going back, the intense trade competition between India and China is not new. China’s position as a major exporter for India held the latter hostage for years. Sanjay Chadha, Additional Secretary of India’s Ministry of Commerce and Industry said recently at the All India Conference of China Studies (AICCS) that India’s reliance on China is a cause for concern. India’s strategy to reduce dependence through Production Linked Incentive (PLI) scheme to enhance domestic manufacturing entice enterprises to select India as alternative to set up operations.

Though China is India’s biggest source of imports, the import instead declined 10.8 per cent in 2020. Bilateral trade in 2020 fell by 5.6 per cent at $87.7 billion, while trade deficit declined to a five year low at $45.8 billion. Chadha noted that steel imports had fallen from a high of $2.8 billion to less than $1 billion, with China replaced by South Korea in part because of an FTA. India in 2019 withdrew from the Regional Comprehensive Economic Partnership (RCEP), which would have put India and China in the same trading bloc. “The FTA,” he said referring to the example of steel, “is resulting in diversification for free.”

The CEBR forecasts that the Indian economy will expand by 9 per cent in 2021 and by 7 per cent in 2022. However, the country is now struggling with the deadly second wave of 25 million COVID-19 infections accompanied with a death toll of 274,000. All forecasts about India’s economic recovery are now thrown into question.

Five steps back for India’s maritime?
Bangladeshis and Indonesians currently dominate the crew force. While Indian seafarers are deprived of vaccination, the Bangladeshis and Indonesians were given priority by their governments. Despite India’s Co-Win portal for citizens to register for vaccination injections, no appointments were allocated due to vaccine shortages. Moreover, India’s estimated 240,000 seafarers’ ages average between the ages of 18 and 45 years. This an age group was supposed to receive Indian-made vaccines, Covishield and Covaxin from 1 May 2021. Unfortunately, stock shortage compelled the authorities to postpone the injections.

Indian seafarers’ employment is worsened by the vaccine crisis, aggravated by fears of a deadlier variant B.1.617 – believed to be the cause of the wild fire-like outbreak. Early May, France’s health authorities identified some infected crew onboard an oil tanker which passed India. As the crew was too ill to pilot the vessel, it was reportedly towed to the eastern port of Le Havre by tugboats. The crew was quarantined in an isolated hotel.

In another report, South Africa’s port authority said 14 Filipino crew members onboard a cargo ship from India to Durban were quarantined after being tested positive for COVID-19. The ship’s chief engineer passed away of a heart attack. This is a clear reflection of austerity of this new variant – capable of immobilising a vessel.

Carl Schou, Chief Executive of Wilhelmsen, said the group sources 15 per cent of its approximately 10,000 workers from India, mainly officers. The company stopped crew changes in India from April 24 until at least the end of May and is looking at other nationalities to plug the gaps. He highlighted, “Certain segments such as gas and oil tankers have very specific requirements as to competence and levels of experience. Most of our pool of well qualified people come from India. So, all of a sudden, we’ve lost our most important source of officers. Going into our wider network and finding the right crew that matches the exact criteria is quite a problem.”

 

Global Shipowner Alliance

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