Finance Minister Nirmala Sitharaman on Thursday said there is a need for setting up a protection and indemnity entity which is owned by India and based domestically.
Such an entity will help the country reduce its vulnerabilities to any international sanctions and pressures, she said while speaking at the Global Maritime India Summit 2023.
“A need has been felt to have a full-fledged India-owned and India-based protection and indemnity (P&I) entity. I would think it is important to have a P&I of India’s own ownership,” Sitharaman said.
Protection and indemnity or shipowner’s liability insurance is a form of insurance that provides cover to shipowners and operators against any risk associated with the operations of a vessel. It covers liabilities arising from loss of life, injury of crew, and passengers, damage caused to cargo during operations, oil spills and war.
Explaining the rationale for a P&I entity in India, the finance minister said, “It would reduce India’s vulnerability to international sanctions and pressures to provide greater strategic flexibility in the shipping operations.”
The entity would provide protection against liabilities to the ships operating in coastal as well as inland waters during their operations.
It would also give a foothold into the specialised segments of protection and indemnity business which currently is dominated by very few players internationally, and where India presently doesn’t have a presence, Sitharaman said.
The Indian protection and indemnity services can also help in encouraging and increasing maritime arbitrations in India, she said.
Sitharaman said the country has an arbitration centre and it is now improving its strength in arbitration. Currently, most arbitrations happen in Singapore or in the United Kingdom.
“For a country of our size, for the coastline that we have and for the potential in maritime activities we do, at least we should start with an arbitration centre in India so that our disputes are redressed here,” she noted.
The finance minister also urged banks to work with the shipping ministry in order to provide adequate funding to the sector.
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Sitharaman further said of the total foreign direct investment (FDI) inflows that came into the sea transport sector in India in the last 23 years, 75 per cent or $4.2 billion was received in the last nine years.
The total cargo handling capacity of Indian ports has doubled between 2014 and 2023. It has increased from 1,400 million metric tonnes to 2,600 million metric tonnes as of 2023. Cargo volumes have also more than doubled over the last nine years.
She said the turn-around time of the Indian ports has also improved.