Swaminathan S Anklesaria Aiyar
I see signs of one major labour-intensive industry shifting from Western countries and East Asia to India. This is ship-building and ship-repair. With little fanfare, several corporations are building huge shipyards across the coast of India, from Kutch to West Bengal. Ship-building consists mainly of riveting of steel plates to form a vessel, followed by internal fittings. This cannot be done on an assembly line by robots. It has to be done manually by skilled welders and fitters.
Ship-repairing is even more labour-intensive and skill-intensive. Every repair job requires individual analysis and customised solutions. It involves less material and far more labour than ship-building. India is well placed to supply cheap skilled labour that can compete with the best in the world. Yet, for decades ship-building has languished despite massive subsidies.
Why? Because, historically, the big shipyards — civilian and military — were inefficient public sector monopolies. A few private sector shipyards were licensed, but only for small vessels. However, with the abolition of industrial licensing in the 1990s, new shipbuilders like Bharti Shipyard and ABG Shipyard came up. ABG has set up a major shipyard costing Rs 1,600 crore at Dahej, Gujarat, and is flooded with orders worth over Rs 1,300 crore. It will build up to 25 ships a year, making it a major Asian player.
Sea King, owned by Nikhil Gandhi, is setting up a shipyard at Pipavav, Gujarat, to build ships of up to 300,000 deadweight tonnage (dwt), almost thrice as large as the biggest ships built by the government's Cochin shipyard. It is far cheaper to transport oil to deep-water Indian refineries using supertankers. Gandhi claims that his Pipavav Shipyard will be among the ten biggest in the world. It has bagged two advance orders worth $720 million to manufacture ships for Z Schifenbau of Germany and B F Shipping of Cyprus.
Takeover specialist PK Ruia, who in recent years has taken over Jessops, Dunlop, and Falcon Tyres, now proposes a mammoth shipyard at Haldia costing over Rs 3,000 crore. It will be among the biggest in the world, building 12 ships a year of Panamax size (the maximum size that can go thro-ugh the Panama Canal). The project will include ship-breaking and ship-repair units, as well as a mini-steel plant and captive power plant. It will employ as many as 16,000 workers, more than major auto manufacturers such as Tata Motors and Bajaj Auto.
The Adani group is setting up a Rs 1,000-crore shipyard at Mundra in Kutch, adjacent to its new deep-water port there. This can be expanded to rival the Pipavav shipyard.
Tata Steel plans a shipyard at its new coast-based plant in Orissa. Steel sheets and plates from its steel plant can go directly by conveyor belt to the shipyard, saving time and transport costs. Tata Steel has just formed a joint shipping line with NYK of Japan, and the shipyard will be a link between its steel and shipping business.
The labour cost per worker in India is estimated at $1,192 per year, against $10,743 and $21,317 per worker in leading shipbuilding countries like South Korea and Singapore. Apart from skilled welders and fitters, India has world-class naval engineers and architects. These, along with top-class management, can make India a global power.
Businessworld
S. Hajara, chairman and managing director, Shipping Corporation of India (SCI), and vice-president, Indian National Shippers’ Association, spoke to BW’s Vishaka Zadoo.
The Budget didn’t address taxes on services availed at foreign ports...
Yes, the service tax issue was not addressed, but we will continue to push for an exemption as it will help create a level playing field for Indian liners. (Foreign flags do not have this tax burden.)
What is the solution to acute shortage of seafarers at officer level?
This again is a taxation problem. Indian seafarers are taxed, while foreigners are not. Foreign flags do not hire officers above the age of 45, so Indians working in foreign flags look at us as a fall back option. Hiring from countries like Bangladesh and Sri Lanka will help.
SCI will be a part of a dredging special purpose vehicle (SPV). Why move away from your core activity?
Dredging Corporation of India (DCI) was carved out from SCI, which used to undertake dredging activities. DCI does not have the financial muscle to execute the large-scale dredging required in India today. The step will prevent the foreign dredging companies from quoting unreasonably high rates. It will build dredgers too — there is a plan to rope in Mazagaon Dock into the SPV.
Besides, our core activity will continue. We plan to acquire 16 vessels worth $2 billion over next four years.
The European Union wants shipping conferences to be phased out by 2008...
It is strange that conferences, which help in fixing freight benchmarks, are accused of cartelisation.
