Alphard Maritime Group plans to set up a $500 million shipping fund in the Gujarat International Finance Tec-City (GIFT City) to become an enabler for Indian shipping tonnage, its Chairman and Promoter, Captain Alok Kumar, has said. GIFT City is India’s first International Financial Services Centre. Alphard Maritime is among a dozen shipping companies that have opened a unit in the GIFT city to undertake ship leasing activities.
“We are trying to set up a $500 million fund in GIFT City with Rs500 crore from our side and our associates will bring in about Rs4,500 crores,” Capt Alok Kumar told ET Infra in an interview on the sidelines of the ‘Global Ports and Shipping Summit’ organised by ET Infra in Mumbai on 26 September. The planned fund, according to Capt Alok, will support Indian fleet owners to buy assets in the range of $10-20 million. “Once the fund gets going, we are trying to be an enabler for Indian shipping tonnage,” he stated.
With the Union government offering shipbuilding financial assistance to local shipyards to build ships, Alphard Maritime said that it was keen to “come from the very beginning” and support those looking to construct their ships in India.
“Once we demonstrate that it can be done smoothly, we would like banks to come and support with funds for constructing ships,” Capt Alok said, noting that none of the Indian banks currently has a shipping desk to look at ship financing. “We have been doing it and we also own ships. There are European lenders who are doing business with us and who will lead the initiative in setting up the fund. We are in talks with PwC, we have progressed somewhat and will set it up soon,” Capt Alok said. He also urged the government to start a dedicated shipping fund at GIFT City.
“I am taking the initiative to float a fund in GIFT City. The government should also push the banks to allocate some funds only for shipping,” he suggested.
Alphard Maritime is also keen on building some ships in India.
While the government is offering subsidy to build ships in India, it becomes a “little expensive” due to the incidence of the Goods and Services Tax (GST). Hence, fleet owners build ships outside India, faster and cheaper. To overcome this disadvantage, Capt Alok suggested that state-owned firms such as the Oil and Natural Gas Corporation Ltd (ONGC) should extend long-term contracts to ship owners while hiring offshore vessels that are used in supporting offshore oil drilling operations. “Instead of giving a three-year contract which is currently the norm, ONGC should give 10-15 years contract. I will build the vessel as per the specifications in India, we will bring in the money and do everything on the back of a long-term contract,” he quipped.
Capt Alok said that Chinese funded Vietnamese and Indonesians are currently doing business in India’s offshore vessel market by deploying older vessels that are brought in a few months before attaining the 21 years age norm set by the government for this category of ships to ply on the country’s coast.
“If you want Indian companies to come up, they should give 10-15 years contracts and insist that the vessels must be built in India,” he added.
Lauding the initiatives taken by the GIFT City to promote ship leasing including the single window clearance process, Capt Alok felt there was still “lot of room for improvement”.
“The IFSC GIFT City authority is doing a good job with single window clearance and all that. But the moment a vessel comes to India via the IFSC GIFT City, all the shore based regulatory compliances applicable to ships in the domestic tariff area (DTA) regime kicks in. I would suggest that GIFT City should have its own infrastructure created for ship registry, certification and all those things. Or, it should have an office of the Directorate General of Shipping so that the officers sitting there can do these things much faster like what other international flags are doing,” he asserted. The Directorate General of Shipping is India’s maritime regulator.
Whatever methodology is chosen, the personnel should be hand-picked, who are forward thinking, enabling the business and making the business easy to do. Otherwise, the GIFT City should have its own team and pick 1-2 officers from the DG Shipping and train them in this process.
Capt Alok alluded to the passport issuing system followed by European countries whereby they have outsourced the task to a third-party service provider to improve the process. He also referred to the government’s decision to rope in an IT firm to facilitate and speed up the passport issuing process in India.
“It takes at least a month to get a ship cleared in India. In international jurisdictions, it takes two hours to get everything,” he stated.
He also advocated better “coordination” between the GIFT City officials and shore-based entities involved in import of ships to improve the process.
Alphard Maritime is of the view that economically and financially, it made sense to come through GIFT City for leasing ships due to a host of tax exemptions and holidays. “That’s why we have done it. Once a few more transactions take place, the initial problems will be sorted out,” he added.
Source: Alphard Maritime
