Transportation and logistics services

India Rolls Out Subsidies and Preferential Financing for its Shipyards

18.11.2024

India is set to unveil a new policy aimed at incentivizing domestic shipbuilding. The ports, shipping and waterways ministry (MoPSW) is finalizing a cabinet note on incentives to promote domestic shipyards, reported the Indian business newspaper Mint. The proposed incentives are primarily focused on encouraging the development of fuel-efficient and technologically advanced vessels.

The new incentive program is the second phase of the existing Shipbuilding Financial Assistance Policy (SBFAP), which was adopted in 2016 and slated to expire in 2026. In the first phase of SBFAP, 313 vessel orders encompassing both domestic and export orders have been procured by 39 shipyards. So far, 135 vessels have been delivered.

During the second phase, the government reportedly wants to allocate $2.1 billion for the program. This will help provide a 25 percent subsidy for specialized vessels, rising to 30 percent for green and highly specialized vessels.

Another significant proposal is issuing credit notes worth 40 percent of a ship’s scrap value. After a demolition sale, the credit note could be reimbursed against the cost of constructing a new vessel at an Indian shipyard. Through this proposal, the government is hoping to encourage fleet renewal of Indian vessels. Around 44 percent of India’s merchant shipping fleet is above 20 years of age, data from MoPSW shows.

In addition, the government is also considering to introduce a purchase preference policy beginning in fiscal year 2031. This means vessels seeking new registration for coastal cargo transport in India would need to be built at a domestic shipyard.

India is targeting the shipbuilding industry as one of the critical pillars in achieving its Atmanirbhar Bharat vision (self-reliant India). The goal is to increase the percentage share of India-built ships in India’s fleet to seven percent by 2030 and 69 percent by 2047. The subsidy programs are key in making Indian yards as competitive as those of China and South Korea.

India is also in the process of giving the shipping industry infrastructure status for the first time. Currently, only shipbuilding and shipyards have infrastructure status, but the broader coverage will help reduce project costs for the shipping sector. Infrastructure status means a company can float infrastructure bonds, hence attracting investments from commercial banks and other kinds of concessions.

China Angered by the Philippines' New Maritime Laws

11.11.2024

On Friday, the Philippine government enacted two long-awaited laws to reinforce its jurisdiction over its western exclusive economic zone, where China has been steadily encroaching for the last 10 years. The new legislation drew immediate pushback from Beijing, and China's foreign ministry summoned the Philippine ambassador to register its objections.

"With these pieces of legislation, we align our domestic laws with international law, specifically the United Nations Convention on the Law of the Sea or UNCLOS, improve our capacity for governance, and reinforce our maritime policies for economic development and for national security," said Philippine President Ferdinand Marcos Jr. "Our people, especially our fisher folk, should be able to pursue their livelihood free from uncertainty and harassment."

The new Maritime Zones Act formally designates the Philippines' economic zone boundaries, and the new Archipelagic Sea Lanes Act describes a set of designated sea lanes for merchant shipping.

While the Philippines' EEZ is well-defined under UNCLOS, the new Maritime Zones Act reinforces the country's sovereign claim by enshrining it in national law. It also formalizes the government's preferred term for the contested area: for the purposes of Philippine law, the portion of the South China Sea that falls within the Philippine EEZ is now the "West Philippine Sea," removing the word "China" from the area.

"There’s no space for doubt because it’s clear under international law and our domestic laws where our limits are," maritime law expert Jay Batongbacal explained to Rappler. "That’s the final step to make clear what is ours."

In addition, the new Archipelagic Sea Lanes Act will set out three new standard routes for navigation through Philippine waters, and Manila will submit these to the IMO for debate and approval. Indonesia is the only other nation to have gone through this consultative process.

China's government summoned the Philippine ambassador immediately after the laws were signed, and Chinese officials delivered a vigorous and public protest.

China claims sovereignty over almost all of the South China Sea, citing a history of Chinese navigation and activity in the region. Its claim area encompasses international waters and the EEZs of its neighbors, up to a thousand nautical miles away from the Chinese mainland. Beijing asserts that the UN Convention on the Law of the Sea validates its historically-based claim, but the treaty is based on physical distances, and lacks text regarding historical events. The Permanent Court of Arbitration in the Hague ruled against China's sweeping claims in 2016; however, the China Coast Guard continues to attempt to implement Chinese control over the Philippine EEZ using water-cannoning, ramming, boarding and vessel confiscation.

"The so-called arbitral award on the South China Sea is illegal, null and void. China does not accept or recognize it. We oppose and do not accept any claim or action based on the award," explained Chinese foreign ministry spokeswoman Mao Ning on Friday. "The Philippines seeks to justify its illegal claims and actions in the South China Sea by approving the so-called “Maritime Zones Act” in the name of implementing UNCLOS. This is illegal, null and void. . . . China will firmly oppose any infringement activities and provocations by the Philippines in the South China Sea based on the act." 

Wishing you a very happy and prosperous Diwali! May the light of the diyas guide you towards the path of happiness and success.

31.10.2024