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The Indian shipping ministry has established a Non-Banking Finance Company (NBFC) under the Sagarmala project to address the ongoing challenges of the shipping industry and to meet the financing needs of this industry and shipyard sectors. And the two senior officials are aware of the matter.
This step aims to bolster financing options and enhance infrastructure development within the sector. This proposal is part of the Sagarmala initiative, which seeks to improve port connectivity, promote port-led development, and develop advanced port infrastructure across India.
A Non-Banking Financial Company registered under the Companies Act of 2013 and plays a crucial role in the shipping industry. The Reserve Bank of India (RBI) regulates NBFCs’ operations.
By setting up as a financial entity, the government try to overcome the financial hurdles that obstruct the growth and efficiency of this industry. NBFC would play a crucial role in financing focus on financing infrastructure upgrades, providing financial support to shipping and port-related projects, etc., thereby contributing to the overall development of the shipping industry. The Reserve Bank of India approaches rules and regulations for NBFCs. In terms of Section 45-IA of the RBI Act,1934, a license from RBI is required to start an NBFC in India.
Chart your course to success in the shipping industry by registering your NBFC now and be the financial lifelines for vital infrastructure and shipping advancement.
As per the Companies Act 2013, an applicant company must be registered, have a minimum of Rs. 10 crore net-owned funds, and have been arranged to obtain an NBFC license. The applicant company should deposit a minimum of Rs. 10 crore net-owned fund fixed deposit at any nationalized bank.
The Sagarmala programme is a key initiative of the Ministry of Ports, Shipping, and Waterways to transform the country’s shipping industry. It represents a visionary approach by the Indian Government. With India’s large coastline, navigable waterways, and maritime trade routes, Sagarmala aims to unlock its untapped potential for port-led development and upliftment of coastal communities.
The Indian government established the Sagarmala project after the approval of the Cabinet on 25th March 2015 for port-led development in India. This project aims to tackle the country’s 7500 km long coastline, covering 13 states and union territories to unleash its economic capacities.
The Sagarmala programme aims to decrease the need for extensive infrastructure investments by leveraging coastal and water transportation. This will make logistics more efficient and improve the competitiveness of exports in India.
The Government of India has over 600 projects worth USD 127 Bn under the main initiatives; 522 are already in various stages, such as planning, implementation, and completion. The delimited main focus areas are port-linked industrialization, modernizing the port, developing a new port, enhancing port connectivity, and developing the coastal community.
The Sagarmala Programme brings many benefits to India. It mainly focuses on critical aspects of the shipping industry, such as capacity enhancement at Indian ports, improving India’s port infrastructure, facilitating efficient cargo movement, and minimizing logistics costs. This increases trade, encourages the growth of the industry, and also enhances the competitiveness and skill development of coastal communities.
The shipping industry vision for 2030 has identified almost 150+ initiatives across ports, shipping, and waterways subsectors to propel the Indian shipping industry to the next level of growth in the coming decades. The shipping sector in India has been the backbone of the country’s trade and has grown manifold every year.
The Sagarmala Programme has many key objectives. It aims to streamline port and logistics infrastructure, minimize logistics costs, promote the development of port-based industrial clusters, and improve coastal shipping and inland waterways transportation.
Many financing schemes, such as banks, private equity, and capital markets, are available as a component of shipping investment and encompass not only shipping but other sectors such as ports, shipyards, etc. Capital structure of any company (debt/equity mix) and handle non-performing shipping industry loans (debtor’s and creditor’s perspective).
The Sagarmala initiative is a flagship national initiative aimed at bringing about a related step change in India’s logistics sector performance by unlocking the potential of India’s coastline and waterways. Sagarmala envisions minimizing domestic and EXIM cargo logistics costs with streamlined infrastructure investment.
Coastal shipping in India faces several problems, including weather conditions and higher expenses per tonne compared to road and rail. The primary challenges in coastal shipping are the non-availability of return cargo, frequent port calls, limiting night-time operations, navigational hazards, and inadequate parcel size for transportation through vessels.
Land weather patterns affect Coastal shipping routes more than the deep sea or open ocean. The Modi government’s ambitious Sagarmala initiative needs to address these problems as a priority.
Experts believe the problems troubled this sector due to the higher taxes and lack of finances.
Another problem for this industry is dredging in ports. A lack of dredging makes it more difficult for ships to enter at low tide over a fixed period of time. Dredging keeps waterways and ports navigable and assists coastal protection, land reclamation, and coastal infrastructure redevelopment by gathering up bottom sediments and transporting them elsewhere.
The Dredging Corporation of India is fully equipped to meet the maintenance dredging requirements of all major Indian dredge ports. The problems facing Indian shipping are that Indian ports are not well planned and connected with their hinterland, lack facilities, and are overcrowded.
The Government of India proposed to launch a non-banking financial company (NBFC) under Sagarmala to reduce the hindrances to the shipping industry. The Sagarmala programme is based on a scheme to enhance the economy of India in the shipping industry.
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The NBFC is expected to raise funds from the banks and corporate market to on-lend. The NBFC within Sagarmala provides financial support to shipping and port-related projects and works as a specialist lender for shipping-related companies and shipyards.
The Sagarmala programme or project is the flagship project of the Ministry of Ports, Shipping, and Waterways.
As per Section 45-IA of the RBI Act, 1934, no NBFC in the shipping industry can commence or carry on business of a non-banking financial institution without a bank registration certificate, such as RBI.
NBFCs are important for the economic growth of the shipping industry. These non-banking financial companies are involved in providing credit facilities to the unorganized sectors and small borrowers at the local level.
The problems faced by the Sagarmala project include land acquisition for infrastructure development projects, limited hinterland linkages, and limited development in coastal areas. Due to legal, environmental, and social considerations, this process can be complex.
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