India should be a container manufacturer and a lessor nation. As a maritime nation, India has a commanding position on the water routes that go through the World.
The recent attention to containers and its movement was highlighted by the blockage of the Suez Canal by a giant container vessel.
India needs to specialise on “small is beautiful”.
Ships across the world have grown in size and this has been engineered at shipyards based on the growing demand for the Eastern nations and the Western nations. Eastern nations have ramped up their manufacturing capacities of all the basic requirements as well as the enhanced requirements of Europe, USA, and OECD countries.
The advent of marine containers started in the early 80s. Containers were basically well-designed to accommodate a fixed quantity. Now, different kinds of marine containers are easily available globally and the shipment costs by containers have reduced to some extent; the costs associated with transportation of smaller items. This has supported small and medium enterprises around the world – the ability to do, manufacture, fabricate and send across the world. The shipping companies of the world have evolved to accepting and delivering containers and this has become a major world innovation of reckoning.
It would be appropriate to celebrate over 50 years of this basic change that happened in shipping. The basic change, it was an innovation that improved and expanded Commerce like never before.
There are an estimated 30 million marine containers in the world. Some of these containers are owned by the shipping companies but most of it is leased from lessors. The lessors are companies around the world who specialise in this activity.
The manufacture and assembly of containers require special attention as they are having rigid specifications which cannot be compromised. The steel, which goes into fabrication of containers is complex at its base but simple in its structure.
The estimated cost of a container would be in the region of USD 3000, approximately Rs 219,000.
1.1) The Government of India and State Governments must get together to promote container utilisation within the nation. It brings in simplicity to operation that a container is unloaded for de-stuffing and it is available for stuffing at the same location or any other location using trailers or special lorries. A container basically is a unit which can be safely locked and kept separately and stacked. It acts like a warehouse inside and that is the speciality.
1.2) India has many Special Economic Zones where there is sufficient place for encouraging the manufacture and assembly of marine containers of all description.
1.3) This can be done by encouraging FDI or Indian manufacturers to take it up. India is not new to container manufacturing. A public sector company called Balmer Lawrie in Kolkata and others have manufactured and delivered them.
1.4) China’s engineering dominance is a reason why India has not emerged as a container assembling nation.
1.5) The container manufacture and assembling sector can be encouraged with at least 7 major manufacturers. Each of them could be given an objective target that collectively 1 million containers must be fabricated within the next three or four years. The testing facilities and the required conformity requirements will then get addressed as a cluster.
Once the containers are manufactured and fabricated, they will have to be leased out.
1(i) India has developed a great NBFC sector. Among the twenty major NBFCs, at least seven of them can be encouraged to establish subsidiaries in the Special Economic Zones.
1(ii) They should be allowed capital account convertibility and associate themselves with the shipping companies of the world.
1(iii) These NBFCs can be owning the operating companies that will be leasing these containers annually or for a period of three or five years.
1(iv) Engineering majors like L&T can be invited and encouraged to make special containers.
The advantage of the marine containers remaining in India is that it will be the operating base for these containers. Ultimately, they will get repositioned back to India.
There is a shortage of containers currently in the world due to various factors. Eventually they will be made up. But Indian owned container ships require to be grown especially in the small and medium category.
India then becomes a maritime connection to all the nations in the world, at smaller ports, and not necessarily the bigger ports of the world as these are adequately taken care of by the giants.
India should advocate “small is beautiful” in the process of shipments and encourage shipping companies by registering them in the India registry; but these ships can be owned and managed from Special Economic Zones of the nation.
Dollar based or Euro based financing can then be available to all these categories. It is not difficult to attract capital in India when there is regular income and profitability.
India has had a very good inflow of Foreign Direct Investment and Portfolio Investment. The world is hungry for positive returns; which India can provide.
It is a known fact that the lease income exceeds the investment costs. In the sense that the return on investment is higher, it is only the negotiating skills and strengths that can make a difference.
With India’s vast domestic economy, another million containers will get fungible, meaning they can be deployed in India as well as in overseas nations.
1 (A)The issue about internationally leased containers getting into India is that the containers are required to be given a bond that they are to be shipped back. If they are Indian owned containers from Special Economic Zones and a blanket permit is given, these containers can be taken to any part of India and taken back to the overseas markets under the registry.
1. (B) Government of India, Ministry of Commerce and Ministry of Shipping should give the best of resources to the concept and make it implemented as early as possible since Indian exports and imports are getting uncompetitive.
1. (C) An objective support document is also ready to be made and in this regard the Federation of Indian Chambers of Commerce and Industry, Karnataka should take the lead in encouraging this concept to be established as a pioneer industry in Karnataka.
The North Karnataka region is highly suitable for the handling of the activity for container assembling.
1. (D) The ArcelorMittal group has chosen Karnataka as an investment destination for its steel plant. It has already secured the land and all the citing has been done for a steel plant. A sector specific SEZ can be declared to house all the container manufacturers in one location.
The demand for steel from this location will be considered as a deemed export from other steel plants of India.
The ArcelorMittal group can make available the required quantity of steel overseas into the Special Economic Zone by allocating itself the Mangalore SEZ available land into both an SEZ specific activity, which is where the leasing will happen in international currency.
1. (E) The Mangalore SEZ Ltd also has surplus land in the DTA area where the domestic leasing or sales can happen.
The employment generation can also happen if the global container surpluses can be brought into Karnataka, where it can be reconditioned and refurbished or sold as scrap.
All these activities are a combination between the Special Economic Zone and Domestic Tariff Area. The Mangalore SEZ is well connected to the Indian railway network. Therefore, the evacuation of the containers or bringing in the containers in the Indian context can be done both by National Highways as well as by Indian Railways.
The CONCOR is intended to be a special purpose vehicle. The CONCOR can be encouraged to be the first pioneer investor of having the first 125,000 containers fabricated and owned as a pioneer and at least seven other nations’ companies can be encouraged to do this.
This activity must be done with effortless ease as it is highly conducive for the Indian economy to grow to a Rs 400 Trillion economy.
The movement of goods in containers and pallets must be an organised activity in which India can catch up with the developed nations in the quality and ease of doing business.
