Context:

On February 24, the Director General of Shipping issued a notification imposing age restrictions on ships in India, which was promoted as a “pro-environment” move intended to improve the quality of Indian tonnage.

• The Director General of Shipping intends to do away with cargo ships older than 25 years altogether, albeit after three years. 

Adverse impacts of the restriction:

• The average cost of fabricating a new mini bulk carrier (MBC) — the smallest class of cargo vessel used almost exclusively for coastal shipping — is between Rs 25-30 crore. 
  • The issued notification is estimated to affect 90 per cent of MBCs currently sailing in India. 
• Ships are not readily available in showrooms and need to be commissioned from shipyards, and India is woefully undersupplied on this front.
• Not only does shipbuilding in India struggle because of its capital-intensive nature, skilled manpower is also inadequately available.
• Most of these ships are unlikely to be replaced due to financing challenges and the non-availability of shipyards. 
• Instead of improving the quality of Indian tonnage, this would defeat the Ministry of Shipping’s objective to reduce carbon emissions in India. 

Importance of Shipping:

• Shipping has lower carbon emissions compared to road or rail transport, despite 90% of the world’s goods moving via the sea. 
  • Shipping accounts for only 2.9% of global emissions. 
• Coastal shipping plays an important role in keeping input costs for various commodities low, especially for distances above 500 miles.

Way Ahead:

• Considering the high cost of shipbuilding, the Indian government’s measures to provide viability gap funding and provide the shipping sector “infrastructure status” will fall short of meeting industry requirements, especially for smaller ship owners who lack the deep pockets of large shipping lines.
• A viable alternative would be to come out with strict standards for ships on the subject of environmental compliance. 
• It would be far more cost-effective and practical to demand higher environmental standards from existing Indian tonnage rather than purging it entirely. 
• There are engineering solutions to integrate new age fuels such as green hydrogen and green ammonia in old ships as well.

News Source: The Indian Express