Surat to have India’s first diamond SEZ soon.

 

Special Economic Zone (SEZ) is commonly used as a generic term to refer to any modern economic zone. The business and trade laws generally differ from the rest of the country in these zones. SEZ’s are located within a country’s national border. The aims of these zones include: increased trade, increased investment, job creation and effective administration. Liberal policies are introduced to encourage business setups in these zones. The creation of SEZ’s by a country may be to motivate foreign direct investments.

After gaining success in a line-up of special economic zones, Gujarat is now proposing to set up an only-for-exports hub for diamonds at Surat. This venture will be a first of its kind in India. The state government is also keen that Surat should have an international airport. The Gujarat Finance Minister – Saurabh Patel has already met the Union Civil Aviation Minister Ashok Gajapathi Raju in this regard. There are also discussions to start direct flights to Dubai from Vadodara and Surat, and from Ahmedabad to London and New Jersey.

An international airport in Surat will help to boost business as well as tourism, in turn generating more employment opportunities. It is expected once the special economic zone is set up, the jewellery exporters would be able to bring in diamonds and have them processed in a notified area. Polished diamonds go to Antwerp, Dubai and other places. India's gems and jewellery sector accounts for about 15 per cent of the total exports. Total gems and jewellery exports from SEZs in April-July stood at $ 1.08 billion as against $ 1.58 billion in the year-ago period, whereas the countries total exports of cut and polished diamonds in the April-July period stood at $ 7.5 billion, as against $ 8.42 billion in the same period last year. With the birth of this new SEZ there is a lot to look ahead for in the coming future.

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Panama Canal: 100th Anniversary & Expansion Plans.

The construction of the Panama Canal began in yr. 1904 and was tagged as the most expensive project in US history of its time costing around $375m. It took 10 yrs. for its completion with its first voyage undertaken by a French crane boat Alexandre La Valley on 7^th Jan, 1914. Since the first transit a century ago, the Panama Canal has undeniably projected itself as an essential link in the global trade chain.

 

In changing times, the shipping industry has undergone dramatic transformation over the past 100 yrs. Vessels that were considered large in the 1960s are dwarfed by the behemoths operating today. Realising the advancements, the Panama Canal had to respond to this evolution in size or risk losing business as large ships turn to transit via the Capes to avoid the canal’s size constraints. The Panama Canal has had a significant influence on ship development and trade routes since opening in 1914. It marks its 100^th anniversary with plans to create a new lane for larger transits, expected to open in 2016, posing new challenges for the maritime community. New locks will enable new Panamax ships (12,600 TEU) to enter the canal. Existing locks only allow for the passage of vessels carrying 4,400 TEU. This expansion will enable between 12 and 14 larger vessels per day i.e. (approx. 4,750 additional ships a year) to transit the canal. The increased size of these vessels, particularly container ships of 12,600 TEU, will play a critical role in doubling the annual cargo capacity of the canal to 600 million PCUMs tons [Panama Canal Universal Measurement System].

 

The expansion plan at $5.25 bn began on 3 Sept, 2007 after six years of study and its approval. The project will see two new sets of locks constructed adding a third transit lane. The project also includes the deepening and widening of the canal entrances, excavation of a new north access channel for the pacific post – Panamax locks; elevation of Gatun lake’s (an artificial lake to the south of Panama which forms a major part of the canal) maximum operation level, and the deepening and widening of the Gatun lake and Culebra Cut navigational channels. The scheduled opening date for commercial transits is 2016.

It can be clearly stated as we draw to close the scheduled opening of the new canal, the Panama Canal has been shaping shipping business for the past century and its plan for the future promises an even greater influence over the world trading patterns going forward.

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Market Survey Report: “Shipping companies 2014 – Fit for Future”

HSH Nordbank, Germany is a commercial bank which is active in corporate and private banking, having their main focus on shipping, transportation, real estate and renewable energy. HSH conducted a market survey to understand the depths of current and future development in the shipping sector ascertain emerging financing trends and observe how markets are developing and how shipping companies are subsequently reacting to the same.

 

The survey report indicates that many market investors forecast this year as the right time to do investment. Regardless of overcapacity, shipping companies continue to invest in very large container vessels to reduce transport unit costs and achieve a profit despite the reduction in average rates. The decline of shipbuilding orders is facilitating low market entry prices in relation to old tonnage. In the case of new ship building, overcapacity at shipyards has lowered the price of new vessels, which in turn has triggered an increased willingness to invest. To meet future challenges within the shipping industry, companies are looking to bring their existing fleet in line with energy efficiency and environmental standards and also optimise business processes. Newly built ‘eco’ ships purchased at favourable prices in recent years will probably achieve the highest profit margins, particularly when the market recovers.

Besides equity capital, bank loans play a predominant role as a source for capital. Shipping companies believe bank loans will continue to be indispensable for ship financing in future as they are the primary form of finance amongst shipping companies. It is noted that today 14% of shipping companies are partially financing their new ships with private equity as international companies find private equity as more favourable.

It is forecasted that there are considerable market opportunities for small container vessels and bulkers. Handymax and handysize bulkers are thought to offer the largest market potential. In the container segment ships ranging from 4,000 TEU to 12,000 TEU in size are expected to provide the best market opportunities over the next three years. There are speculations that by the end of 2014 bulker charter rates would go up by 70% but only 30% are projecting rising rates in container shipping. However on basis of the survey, half of the companies expect the charter rates to remain unchanged.

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Shopping at Alang Bazaar !!!

The word shopping is widely accepted as a passion for the feminine fraternity. However at times it can also be associated to the male fraternity following a commercial approach. Going by the quote “If men liked shopping, they'd call it research.” clearly sets a different impression to grasp the concept of shopping in this case. As famous shopping destinations are renowned for their unique artefacts, one such destination is immensely gaining popularity in the marine circuit for its reusable produce – ALANG.

 

Closing to its end, a ship is taken apart to its every last valuable ounce of metal and recycled. A vibrant industry has emerged at Alang selling every reusable part found in a ship, ranging from furniture, crockery, appliances, boats, gym equipment’s, navigation equipment’s, heavy machinery parts and tools. Primarily grounding the base for large and small businesses. Being the world’s largest ship recycling facility, scrapping about 400 ships annually it gives opportunity to avail a wide range of consumer and industrial goods procured from these vessels.

There are Marine stores that sell generators, machinery and their parts of various makes, types and sizes. Machineries like air compressors, chilling units, lathe machines, drilling machines, welding generators, oil purifiers, oil and water pumps, heat exchangers, condensers, diesel generators, alternators, marine engines and many more are available at these stores. These machineries are categorized as new, reconditioned or second hand and are sold on per kg basis. This segment plays saviour to owners with old ships as manufactures constantly upgrade their productions and post an interval their old produces are phased out. The quality of wood, steel and other base metals used for manufacturing of these products is of supreme quality as they have to sustain for long period. They are available at cheap rates, often as cheap as their scrap value.

Many hotels, restaurants, schools, hostels, institutions, etc. use products bought from Alang as this reduces their capital investment and thus encourages them to expand their respective business. Alang also plays an important role in supporting the economy by inflow of foreign currency through its sales and generating employment for related trades like transportation, workshops, classification societies and logistics.

 

The Alang bazaar is not only a business place but also a sight to watch. It’s unique and special in its own way so “Happy Shopping……..”

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Ministry of Shipping takes charge of Ship breaking sector

In order to attract more vessels to Indian ship breaking yards, including the world’s largest at Alang in Gujarat, and for better marketing Indian ship recycling yards to international shipping, the Ministry of Shipping has decided to bring the ship breaking sector under its wings from the Steel Ministry. The ship breaking industry provides direct employment to nearly 40,000 people and earns annual revenues of around 2,500 crore. However, it is not in a healthy state due to competition from neighbouring countries. This segment of the industry has relatively been less spoken or heard about, however it is an important fragment of the industry which in its time has also flourished a new market for reusable products.

Under the 15 major projects taken up under the Ministry’s comprehensive action plan, it had constituted an inter-ministerial ship breaking scrap committee.

The Ministry would be seeking help from the Japan International Cooperation Agency to upgrade the existing infrastructure at Alang. Besides, steps would be taken to modernise the Darukhana ship breaking facility at Mumbai Port.

It was announced in the recent Union Budget that the basic Customs duty on ships imported for breaking would be rationalised from 5% to 2.5%. The duty cut also puts ship-breakers on a par with their primary and nearly three times bigger competitor, the molten-scrap importers, who have enjoyed 2.5 per cent import duty for a long time. The duty cut, however, is not expected to significantly increase business volumes for these secondary sources of steel. But for ship-breakers, profitability and competitiveness, which had eroded as a plunging rupee last fiscal helped Bangladeshi, Pakistani and Chinese rivals do better, will improve hopefully in their favour.

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Government initiatives to attract FDI in Maritime sector.

The Indian port and shipping industry plays a crucial role in sustaining growth in the country's trade and commerce. According to the Ministry of Shipping, around 95 per cent of India's trade by volume and 70 per cent by value is undertaken through maritime transport. Driven by new manufacturing and power projects and higher cargo traffic at ports, the sector is certainly poised for significant growth and development.

India, with her 7,517 km long coastline studded with 12 major ports and 200 non-major ports provides tremendous opportunities for the development of this sector. Further, cargo traffic has been predicted to reach 1,758 MMT by 2017. Increasing investments and cargo traffic point to a healthy outlook for port support services. In realisation of the same, our government has allowed foreign direct investment (FDI) of up to 100 per cent for projects related to the construction and maintenance of ports and harbours as well as other related segments including oil and gas sector, pipelines and refineries.
 
Registering the fact that foreign investments provide a great stimulus for growth of the Indian economy and alongside it also manifests the faith of the foreign investors in the Indian economy. Our government has allowed a 10-year tax holiday to enterprises engaged in the business of developing, maintaining, and operating ports, inland waterways, and inland ports. This move has been initiated by the government as currently there are limited service providers for port operations and maintenance thus inducing an opportunity for domestic and overseas players in that segment. Further there are also thoughts on reviewing the TAMP (Tariff Authority for Major Ports).

These initiatives will depict India as a more viable place to invest contingently yielding more employment opportunities under these sectors and would emblazon a better future for the marine world.

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INDIA – the 16th largest Cargo carrying fleet of the present world.

Cargo – on the very first ear to this word or the sight of the same an image created in your mind would be that of a huge vessel carrying goods. As unknowingly knowing you have learned that shipping has been a major contributor to the world commerce. Approximately 95% of our country’s trade volume is moved by sea. India has one of the largest merchant shipping fleet among the developing countries and ranks 16th amongst the countries with the largest cargo carrying fleet. Indian maritime sector facilitates not only transportation of national and international cargoes but also provides a variety of other services such as cargo handling services, shipbuilding and ship repairing, freight forwarding, light house facilities and training of marine personnel, etc.

 

It is estimated that cargo traffic of petroleum, oil & lubricants (POL), the largest commodity handled by major ports, is expected to grow by 4.1% in 2013-14. The growth is likely to be backed by an increase in crude oil imports and petroleum product exports. On the same lines cargo traffic of containers is expected to grow by 2.3% to 122.5 million tonnes in 2013-14. This will boost an increase in the foreign trade volumes of commodities like automobiles (passenger cars, multi-utility vehicles and three-wheelers), capital goods, textiles (yarn, cloth and apparels), electronic goods and agro-products.

National shipping has made a significant contribution to the foreign exchange earnings of the country. India’s national flagships provide an essential means of transport for crude oil and petroleum product imports. India, with her 7,517 km long coastline studded with 13 major ports and 200 non-major ports provides congenial and favourable conditions for the development of this sector. Further cargo traffic is predicted to reach 1,758 MMT by 2017.

The road way to this goal would yield better results when all hands of related business sectors come closer and work cordially as this will create a win – win situation for all stakeholders in the long run.

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