Indian private shipbuilders risk going under: Association
New Delhi : Indian private shipbuilders have called for a level playing field in the country, failing which they risk going under jeopardizing the livelihood of more than 11.5 lakh families, the Shipyards Association of India (SAI) said.
Briefing reporters here on Monday following a meeting with Road Transport and Shipping Minister Nitin Gadkari, SAI said it had urged the Minister to create an atmosphere of inclusive growth between public and private sector companies operating in the field.
"The Indian private shipbuilding industry appealed for a speedy resolution of critical areas of concern and sought a level playing field between the public sector undertakings(PSUs) and private shipyards," SAI President V. Kumar told reporters.
"The Indian government is directing and awarding most of its orders today, worth around Rs 2 lakh crore, to PSU shipyards. Cases in point of the impact of this are of two big private sector shipyards shutting down, and other major shipyards are being financially stressed."
SAI said the Minister gave a patient hearing to their appeal for a review of policies and for removing bottlenecks in the shipbuilding industry, which is the only one not given any protection in the way of domestic tariff barriers via customs duties.
The private shipbuilders pointed out that between 2002 and 2007, the government had declared a subsidy scheme for all shipbuilding contracts made during the period.
"The majority of contracts, however, were signed at the fag end of the period as it took considerable time for Indian shipyards to market their capabilities in the international arena and convert them into orders," Kumar said.
In addition, there are outstanding dues that the government needs to pay to shipyards.
"Put together, the total subsidy claims pending with the government under the 2002-2007 subsidy scheme are more than Rs 900 crore," he said, adding that at the meeting SAI urged the Minister to expedite the release of long overdue subsidy amounts.
He said the stressed shipyards are facing a situation where assets of Rs 25,000-30,000 crore are under insolvency proceedings under the new Insolvency and Bankruptcy Code (IBC).
"Others, financially stressed, account for another Rs 20,000-25,000 crore worth of stressed assets," the SAI President said.
In this scenario, while private shipbuilders find it very difficult to raise capital from the banks, Kumar pointed out that financial assistance worth Rs 5,000 crore of working capital would be sufficient to help revive the industry.
Among SAI's demands is the creation of a separate shipbuilding division within the ministry to handle the issue of assets.
According to SAI, private sector shipyards currently face extreme hardship and a starvation of orders due to the global meltdown of the shipbuilding market over the past 7-8 years, and deprivation of domestic orders on account of favouring PSU shipyards.