The government is considering a proposal to make it mandatory for the public sector undertakings to  import of commodities, including oil and coal, to engage the services of Shipping Corporation and other domestic companies. The importing firms may be told to sign a 5 year contract with them for the inbound cargo.

The proposal is similar to the practice being followed in China, Japan and Korea. This is to protect the domestic shipping industry. “An inter-ministerial group is at present considering the proposal that government PSUs, based on some international benchmarks, could give domestic shipliners contracts for cargo imports for five years,” an official source said.

The proposal involves giving 50% or more of the total cargo imports by oil, coal and steel etc PSUs to domestic shipliners, the source added. Five year contracts with PSUs would provide confidence to the lenders to provide assistance to Indian companies

This would shift freight worth billions of dollars to domestic shipliners like Shipping Corporation of India (SCI), Great Eastern Shipping and Mercator Lines, among others.

Such a move, apart from domestic shipliners, would also encourage Indian seafarers and boost the domestic industry, he added. At present, Indian vessels barely account of 12% of EXIM trade.