International Trade

Trade in Services - General Agreement on Trade in Services

Indian Papers/ submissions on Services in WTO

RESTRICTED
World Trade S/NGMTS/W/2/Add.36
30 October 1995

Organization
(95-3348)

Original: English
Negotiating Group on Maritime Transport Services

COMMUNICATION FROM INDIA
Response to Questionnaire on Maritime Transport Services

The following communication is circulated at the request of India to members of the Negotiating Group on Maritime Transport Services.

I. Market Structure

1. The structure of the nationally owned and operated fleet in terms of total number of vessels, tonnage and flags is attached at Annex 1 as on 1 January 1995 which comprises 437 ships. It will be seen from the Annex that as on 1 January 1995 the nationally-owned overseas fleet is of 231 vessels of 9.615 million DWT with coastal fleet of 206 vessels of 0.897 million DWT totalling 437 vessels of 10.51 million DWT. In addition to the above, Indian shipping companies have acquired 18 vessels comprising of 0.461 million DWT on bareboat-cum-demise-charter. This tonnage will be added to the National fleet after termination of the bare-boat-cum-demise charter.

2. All major ports during the year 1993-94 handled an aggregate of 179.26 million tonnes of cargo. Out of these, 53.22 million tonnes of cargo was loaded for shipment overseas and 23.41 million tonnes of cargo was loaded for coastal shipping. Approximately 81 million tonnes of cargo was received from overseas and 21.70 million tonnes as coastal shipment cargo. About 95 per cent of India's international trade by volume and 77 per cent by value moves by sea transport.

3. The export for the year 1993-94 by value was US$22,155.8 million and the imports for the same year was US$ 23,194 million. Of this, about 77 per cent was carried by sea. The Indian export by volume carried by sea is 47.11 million tonnes while the import is 75.19 million tonnes for the year 1992-93 (latest available).

4. Out of the total overseas trade of 122.30 million tonnes in the year 1992-1993 (latest available), the cargo carried by Indian lines was 42.66 million tonnes (34.9 per cent) and the quantity carried by foreign lines was 79.64 million tones (65.1 per cent).

5. Data for share of cross trading cargo carried by National flag ships is not available.

6. The total quantity of cargo for the year 1992-93 carried by:

Liner shipping 17.14 million tonnes (14.01 %)
Dry Bulk shipping 59.12 million tonnes (48.34 %)
Liquid Bulk shipping 46.04 million tonnes (37.64 %)

7. Information regarding estimated share in terms of value, of liner shipping which is carried by conferences and consortia in India's external trade is not available.

However, information is available only in respect of liner exports from four major ports viz. Bombay/JNPT, Cochin, Madras and Calcutta and the information for the year 1992-93 is as under:

Approximate share of IFG in the three major liner routes as under:

UK continent 18.33 %
India/Japan Far East 10.20 %
India/US Atlantic East 16.21 %
Coast/Canada

8. Refer to answer Question 7.

9.  

10. During the year 1993-94, all major ports in the country handled 12.25 million tonnes of containerized cargo as against the total traffic of 179.26 million tonnes.

11. Below 25 per cent.

12. During the year 1993-94, all major ports handled an aggregate of 179.26 million tonnes of cargo. The details of cargo handled at various major ports are as below:

Out of 179.26 million tonnes, 12.25 million tonnes of cargo was containerized.

13. There is no preference to foreign suppliers vis-a-vis the national suppliers in any of the services. The demand for a particular supplier is determined by the factors of demand and supply depending on the quality of service rendered. The customs clearance system is through a statutory act and all the duties levied, whether it is a foreign supplier of a national supplier, are as per the schedule of tariff contained in the Customs Act.

Shippers and importers situated in India do not have any specific preference for foreign suppliers of auxiliary services in items referred in the questionnaire. The decision of shippers to patronise a supplier is influenced by the quality of services offered and not on the fact whether the operator is foreign based or not.

Decisions regarding maintenance and repair of vessels are solely influenced by operational requirements, cost and efficiency and time parameters. No preference is given to foreign parties, however, spares required for maintenance and repairs to the equipment on the vessels have to be procured from the original manufacturers of the equipment who are mostly foreign suppliers. With the easing of foreign exchange position in India, Indian shipping lines are now allowed to utilize foreign repair yards wherever necessary after taking into consideration the time and cost factors.

There are quite a few foreign agencies which have come forward for setting up of container freight stations/Inland Container Depots. Some foreign agencies have shown interest for setting up of cargo handling, storage, warehousing facilities and freight forwarding services in India.

14. None in so far as road transport and inland water transport are concerned.

1. The International Maritime Transport Sector is governed by the Ministry of Surface Transport through its specialised organization of the Director-General of Shipping, Bombay. The Merchant Shipping Act, 1958 is administered by the Director-General of Shipping under the powers granted to him therein, encompassing all activities of shipping, like shipping administration, maritime safety, maritime training, examination and certification, shipping development, etc. The Director-General of Shipping is the designated authority in the country on all matters of shipping. All international Conventions pertaining to maritime sector are also serviced by the Director-General of Shipping towards ratification and necessary incorporation in the National Laws.

2. There are no regulatory measures adopted for transportation of dry cargo. The dry bulk cargoes are being transported as per the terms of the contract. However, shipping arrangements for dry bulk cargoes for Government owned and controlled cargo are made through Shipping Coordination and Chartering Organization in the Ministry of Surface Transport (TRANSCHART).

Consequent upon the de-canalization of cargoes like fertilizers, rock phosphate etc. these cargoes are now being transported as per the terms of the contract. The Government policy is to sell on CIF and buy on FOB basis. As per the policy of the Government, petroleum and other liquid oil cargo are transported mainly by Indian owned vessels and in case of non-availability of suitable Indian tonnage, crude is being carried by chartered foreign flag vessels. With regard to export on CIF and import on FOB for dry bulk cargoes, in the absence of suitable Indian vessels the exporters/importers have to take necessary charter permission for engaging foreign flag vessels from the Director-General of Shipping.

3. For operating Indian vessels on liner routes necessary permission has been given for three national lines viz. Shipping Corporation of India, SCINIDIA Steam Navigational Company and India Steamship Company. Government has now thrown open the liner routes to the private sector shipping in the sectors in which the above three lines are not operating services. For operating all vessels registered under Merchant Shipping Act, necessary licence has to be obtained for the Director-General of Shipping as per the provisions of Merchant Shipping Act. Similarly, for operation of foreign flag vessel in the Indian coast, the operators have to take proper licence under Section 407 of Merchant Shipping Act. Port clearance will not be given to these vessels which do not have a proper licence from Director-General of Shipping for transportation from one Indian port to another Indian Port.

4. The Multimodal Transport Operators are required to be registered under the Multimodal Transportation of Goods Act, 1993, with the competent authority, i.e. Director-General of Shipping. The minimum requirements for registration have been detailed in Section 4 of this Act.

5. Responding to the needs of international trade, the Ministry of Surface Transport has already opened its Ports Sector for private sector participation. Broadly, following areas have been identified for private sector participation in the Port Sector:

1. Construction, operation & maintenance of container terminals.

2. Construction, operation & maintenance of various cargo handling terminals.

3. Creation, operation & maintenance of dry docking & ship repair facilities.

4. Creation and operation of new warehousing and storage facilities.

5. Provision, operation and maintenance of floating crafts.

6. Provision of cranage services.

7. Dredging.

8. General maintenance and other miscellaneous services.

The land and waterfront is leased to various parties for erection of new facilities under Section 34 of major Port Trusts Act, 1963. Entrepreneurs are also allowed to perform the functions which have been entrusted to Port Trust Boards under Section 42 of MPT Act.

For the allotment/leasing of land/waterfront/other facilities for a commercial purpose, the ports invite competitive bids and select the best offers(s) after examining the financial and technical soundness of each proposal.

6. International Maritime Transport has not been defined as such in the Merchant Shipping Act, 1958. However, Section 3(18)(A) defines "International Voyage" as the voyage from or to a port or place in India to or from a port or place outside India.

Similarly, the coastal trade of India has also been defined under Section 3(2) as follows:

"Coastal trade of India means the carriage by sea of passengers or goods from any port or place in India to any other port or place on the continent of India."

7. Section 3(18) defines "Indian ship" as a ship registered as such under this Act and includes any ship registered in any port in India at the commencement of this Act which is recognized as an Indian ship under the provision of sub-section (2) of Section 22. National Shipping Enterprise has not been defined as such. However, Section 21 of the MS Act brings out the requirements for a company (or National Shipping Enterprise) or an individual to own Indian ships. The basic requirements are that the owner will have to be a citizen of India or a company or cooperative society which will have to be established under any Central or State Act and must have the principal place of business in India.

8. (a), (b) & (c)

At present the costal trade of India is restricted to Indian ships only in national interest. Therefore, the coastal trade is not available to foreign shipping, except under a licence granted by the Director-General of Shipping. However, the Cabotage Law has been relaxed by the Government for the limited purpose of container vessels and lash barges. Indian lines operating on a particular route have to obtain a trading licence from Director-General of Shipping. Further, there is preference of employing national vessels for carriage of liquid cargo and before deploying a foreign flag vessel for import/export of dry bulk, it is confirmed that national vessels are not available.

Restriction of the coastal trade is not based on the quantity of cargo carried or any other numerical quota. There is an overall restriction on coastal trade and is relaxable on case to case basis in national interest.

There is no mandatory form of cargo sharing with partner countries. However, a modified cargo support scheme has been approved by the Government for implementation. Under this Scheme, the Government has decided to offer cargo support in a phased manner to Indian flag vessels in the following three sectors in the carriage of India's overseas export trade:

India/UK/Continent 30%

India/Japan-Far East 20%

India/US Atlantic East Coast/Canada 25%

The above share would be gradually increased to 40 per cent in the near future.

As regards dry bulk and oil cargoes, though there is no mandatory cargo sharing mechanism, preference is given to Indian lines.

8(d). The government of India permits employment of foreign nationals in areas connected to maritime transport wherever they are a part of a larger turn-key project e.g. oil exploration/Off -shore platform operations, etc. In such cases, the participation of foreign nationals comes by way of need of expertise or as a matter of technological requirement.

9. For supply of Shipping transport services commercial presence is necessary as an Indian ship can be owned by a citizen of India or a company, or a body established by Law which has its principal place of business in India or Cooperative Society registered under Cooperative Societies Act.

All vessels are expected to use the port equipments, if they are available for handling the cargo. In case these are not available, the vessels can use their own equipment. However, there is no discrimination in allotment of port equipments between the foreign and national maritime transport suppliers.

10. No. Investment in Indian shipping companies is permitted to Non-Indian citizens up to 51 per cent under automatic clearance procedure and shareholding over 51 per cent has to be cleared by the Foreign Investment Board.

(Source: INSA Annual Review 1993-1994)

11. Only Indian ships registered with the Registrar of Indian ships can fly the Indian national flag. An Indian ship is one which is owned wholly by the person who is a citizen of India or by a body established by Law which has its principal place of business in India or a Cooperative Society established under Indian Cooperative Societies Act.

11(a). As given above.

11(b). All Indian ships require a licence for trading. Permission of government is required for participation of foreign capital in a particular investment.

12. There is no preferential treatment granted to national shipping vis-a-vis international shipping in matters of auxiliary services, treatment at ports etc. However, there is a preferential treatment for Indian shipping companies placing orders for construction of ships with Indian shipyards to the extent of 30 per cent of cost, 20 per cent to be met by Government and 10 per cent by the Indian ship-owners.

13. All major ports provide pilotage, towing and tug assistance, provisioning, fuelling, watering, garbage collecting, ballast waste disposal and ports captain's services, navigation aids, shore-based operational services essential to ship operations, including communications, water and electrical supplies and Anchorage, berth and berthing services. Emergency ship-repair facilities are available at the ports of Calcutta, Madras, Bombay and Vizag. There is a proposal to set up new ship repair facilities with the help of private sector at the ports of Mormugao, Haldia, Cochin and Paradip.

14. Pilotage, towing and tug assistance, provisioning, fuelling and watering, garbage collecting and ballast waste disposal and Port Captain's services, navigation aids, shore-based operational services, essential to ship operations including communications, water and electrical supplies, anchorage, berth and berthing services are always provided by ports.

15. All the services are available to various shipping lines on non-discriminatory basis.

16. No

17. No.

18. All vessels are expected to use the port equipment if they are available for handling the cargo. In case these are not available, the vessels can use their own equipments. However, there is no discrimination in the allotment of port equipments between the foreign and national maritime transport suppliers.

19. No.

Most-favoured-nation treatment

20&21. India has entered into bilateral Shipping Agreements with several countries. These Agreements always provide for sharing of cargo with partner countries on the principles of parity and equality.

22. As per the UNCTAD Code of Conduct for Liner Conferences, a minimum 20 per cent cargo is to be reserved for the third flag, leaving the balance 80 per cent to be shared equitably between the two participating countries, whose two-way trade is covered under the arrangement situated at either end. It is for each Conference to devise an appropriate pooling arrangement and allocate the share to the national lines as envisaged in the provision of UNCTAD Code for Liner Conferences. However, even though India is a signatory to the UNCTAD Code for Liner Conferences, the government has not imposed any mandatory requirement on the Conferences to allocate cargo under such an arrangement.

23. India has already concluded Agreements for avoidance of double taxation (DTAAs) with more than 40 countries. These agreements, inter alia, cover taxes payable on profits earned by the shipping enterprises of the Contracting parties from international traffic and provide for full or partial exemption of such profits from double taxation. These agreements are oriented to encourage free flow of trade between the Contracting parties by providing such exemptions.

24. There is no preferential treatment to any particular country with respect to access to use of port and harbour facilities.

25. There are currently no counter measures which enable the Government to retaliate unilaterally in the face of perceived restrictions by partner countries.

26. There are no such measures including imposition of selective restrictions on the supply of maritime transport and related services.

27. There are currently no measures relating to access to non-commercial cargoes.

28. Containers are being procured by the Multimodal Transport Operators on lease or on outright purchase basis. Since a container is treated as a marine equipment, requisite permission is being given by the director-General of Shipping to a Multimodal Transport Operator of releasing the container from abroad. Containerisation of cargo will improve the efficient and safe transportation of cargo.

29. (a). No comments.

(b). Multimodal Transportation is covered by MMTG (Multimodal Transportation of Goods) Act, 1993. The Act came into force w.e.f. 16 October 1993, and the Act provides for regulation of the Multimodal Transportation of Goods from any place in India to a place outside India on the basis of a multimodal transport contract and for matters connected with or incidental to multimodal transportation. According to this Act, no person shall carry on or commence business on multimodal transportation unless he is registered under the said Act. Such registration is granted by the competent authority, namely Directorate General of Shipping. The applicant company for such registration should be a company registered under the Companies Act and partnership and proprietary firms are not eligible for registration. The Multimodal Transport Operator so registered under the Act will issue multimodal transport document and the document will be signed by the Multimodal Transport Operator or a person duly authorised for the purpose. This document can be issued either in negotiable or non-negotiable form.

(c) & (d). The Monopolies and Restrictive Trade Practices Commission of India is competent to redress any grievance regarding competition or absence thereof in the Maritime transport.

30. Yes.

31&32. Shipping lines operating service to USA are required to file the tariff with Federal Maritime Commission and are subject to its rules and regulation. Non-compliance would involve penalties leviable by the FMC. Similarly, lines loading cargoes ex Sri Lankan port(s) are required to file the tariff with Sri Lanka Freight Bureau. In Bangladesh, quantum of cargo to be lifted by a shipping line is subject to grant of waiver by the Bangladesh Director-General of Shipping.

However, in India, no Conference Agreements/tariffs are required to be notified. No statutory authority has the power to ensure compliance of the tariff.

33. All conferences allow Independent Rate Action.

34. There are no institutional arrangements dealing with loyalty arrangements between Conferences and shippers and Agreements entered into between Conference and Outsiders.

35. After the introduction of Multimodal Transportation of Goods Act, documents are being issued by Multimodal Transport Operators. Under this arrangement, the earlier system of documents being issued by the shippers is being shifted to the Multimodal Transport Operators. As per the new arrangement, MTOs will negotiate with shippers and it will help transporting the cargo. The responsibility of the cargo solely lies on the Multimodal Transport Operator and there exists only a contract, loyalty between the MTOs and the shippers.

With regard to settlement of disputes, the shippers/carriers/MTOs are free to amicably resolve the issues or settle the same through legal recourse. The MTOs shall be liable for loss resulting from any loss or damage to the consignment as well as delay in delivery of the consignment and any consequential loss of damage arising from such delay. This makes MTO strictly liable for any loss which cannot be passed on to the shipper. Even if the servants/agents/shippers/carriers are responsible for loss or damage or delay in delivery, the liability exists only on MTO. The MTO has excess liability than that of the carrier.

36. There is no Law which provides consultations with shippers by Shipping Lines. However, grievance of the shippers are sometimes referred to Director-General of Shipping who also tries to get the grievances settled amicably and mutually. There is no statutory powers available with DG(S) to intervene in commercial disputes.

1. The structure of the nationally-owned or operated fleet in terms of total number of vessels, tonnage and freight by the principal types of vessels are as under:

STRUCTURE OF NATIONALLY-OWNED OR OPERATED FLEET