Shipping crisis exposes gaps in India’s maritime strategy

NEW DELHI : Industry leaders argue that the crisis underscores the urgent need for India to expand its national fleet. Anil Devli, CEO of Indian National Shipowners Association, emphasised that a portion of critical imports—such as crude oil, LPG, coal, and fertilizers—must be carried on Indian-flagged vessels. “Ships are needed today, not five or ten years later,” he said, advocating policies that encourage the acquisition of second-hand vessels to quickly build capacity.

A key structural issue lies in how India contracts its imports. A large share of cargo currently comes under Cost, Insurance, and Freight (CIF) terms, where the seller controls shipping. This limits opportunities for Indian shipowners. In contrast, Free on Board (FOB) contracts—where the buyer arranges transport—allow greater control over logistics and support domestic fleet growth.

Ideally, at least a por­tion of imports should be FOB and exports, CIF, for stra­tegic reas­ons. Des­pite earlier policy pref­er­ences for FOB imports, the trend has shif­ted toward CIF, said Mr. Devli. This has sig­ni­fic­ant fin­an­cial implic­a­tions, with mil­lions in freight pay­ments flow­ing over­seas.

Cer­tain sec­tors high­light the imbal­ance. About half of India’s crude oil imports are on FOB terms and some 40% of LPG is car­ried by Indian flagged car­ri­ers. But fer­til­isers such as urea are almost entirely impor­ted under CIF con­tracts, leav­ing them depend­ent on for­eign ves­sels. Dur­ing crises, such cargo is among the first to face delays. Experts sug­gest that India should aim to carry at least 50% of its stra­tegic com­mod­it­ies — energy and food — on its own ships.

Former Dir­ector Gen­eral of Ship­ping Amit­abh Kumar said the pat­tern was pre­dict­able: whenever a crisis hits, global ship­ping capa­city tight­ens sharply.

This has dir­ect implic­a­tions for coun­tries like India. Low­mar­gin goods— par­tic­u­larly agri­cul­tural com­mod­it­ies—are often left behind, while high­value cargo such as elec­tron­ics con­tin­ues to move des­pite rising freight costs.

The impact is com­poun­ded by equip­ment short­ages and logist­ical bot­tle­necks.

Bey­ond eco­nom­ics, the crisis has also raised con­cerns about the safety of sea­farers. Thou­sands of Indian sea­farers are stran­ded on the ships stuck in the Per­sian Gulf. There have been cas­u­al­ties, too.

Source : The Hindu