The shipping industry helps in the transportation of various products and services either from one state to another state or from one country to another. While this industry might be in the background in the overall picture, there is no denying their importance in the seamless movement of different range of products and services.
This industry helps move goods using all the means of transport like airways, seaways, railways and highways. The reason why this industry is important for the growth of the country is because without this industry, international trade would be impossible. And with the latest technology in this industry, it is now even easier to buy and sell goods internationally.
Important Updates in Shipping Industry:
India is the 16th largest maritime country in the world with a coastline stretching up to 7,517 km. Maritime transport is the biggest contributor in value terms in the shipping industry as it handles 70% of the country’s trading.
The Government has been very supportive of the shipping industry because the industry provides smooth movement of finished products to and from other countries. This helps boost India’s foreign trade.
To show its support, the Government has introduced a lot of fiscal and non-fiscal initiatives to encourage international trade. For example, the Government launched the Sagarmala Programme in March 2017 to develop new ports and with this, to also develop the logistics-centric industries. Under this programme, the Government will set up six new mega ports across the country.
Also, for the Sagarmala initiative, the Government will invest $123 billion to support 415 different projects which will come under port modernization and new port development, port connectivity enhancement and many others.
These projects will have great impact on the shipping industry. These impacts are
- Investing $58 billion on infrastructure for the industry
- Reduced time in export by 5 days
- Merchandise exports will be boosted by $110 billion
- Create 4 million new direct and 6 million new indirect jobs
The Government has even allowed 100% FDI investment under both the Government and automatic route. It will also give a 10-year tax holiday to organisations working to develop, maintain and operate ports, inland waterways and ports.
The Government in its Union Budget of 2020-21 has allocated INR 1800 crores ($257.22 million) to the Ministry of Shipping.
COVID Impact on Shipping Industry:
However, the COVID impact can be clearly seen on the shipping industry as well, as most of the countries have stopped trading with other countries =. Because of this, the international shipping of various products has come to a halt. While only essential food items and products are allowed to be shipped, other non-essential products are suffering severe losses.
In the essential products section too, it is not easy to get the cargo or shipment through the customs during this pandemic. And this can lead to the perishable products rotting and causing businesses to incur losses.
Moreover, the Chinese shipping industry faced the most severe impact as all the countries dealing with China stopped all of its trade with the country. This led to lack of capacity utilization by 20% to 50% at some of the biggest Chinese ports.
The Chinese crude tankers saw the biggest drop as its demand dropped from 3.4 billion tonnes every day in 2019 to almost zero!
Hence, due to the pandemic, the industry has suffered a major jolt and will take a long time to recover from it.