The shipping ministry is in talks to seek reversal of the 2019 Cabinet approval for Shipping Corporation of India's (SCI) disinvestment, according to reports from Business Standard. This move comes amid ongoing discussions about remerging SCI with its land assets arm, SCI Land Assets Ltd (SCILAL). The proposal was mooted after the shipping ministry earlier this year moved a merger proposal through inter-ministerial consultation before approaching the Cabinet for approval. In November 2019, the Union Cabinet had approved disinvestment plans for several government-owned entities, including SCI. The latest proposal was planned after the Department of Investment and Public Asset Management (DIPAM) opposed the merger during inter-ministerial consultation on the grounds that the demerger had taken place to begin with to enable the disinvestment of SCI, which the department is mandated to undertake.
The shipping ministry's merger proposal sought the reunion of SCI and SCILAL along with a dividend exemption for five years, which would have provided SCI access to around ₹1,000 crore of SCILAL's cash balance and approximately ₹2,500 crore from the dividend-declaration exemption. As reported by Business Standard, the Department of Investment and Public Asset Management (DIPAM) opposed this merger during inter-ministerial consultation, citing that the demerger was originally undertaken to enable SCI's disinvestment. At current valuations, SCI has a market capitalisation of ₹13,378 crore on the National Stock Exchange, with disinvestment potentially fetching the government ₹8,428 crore. The non-core assets that were carved out in 2021 include Shipping House, where the SCI headquarters are located, and a Maritime Training Institute in Mumbai.
The government announced maritime initiatives worth ₹2.2 trillion in October, which included a ₹1 trillion plan for SCI to increase its fleet to 216 vessels by 2047. According to Business Standard, SCI will lead the government's two proposed shipping lines - Bharat Container Shipping Line, slated to be India's national container carrier, and a joint venture with oil-marketing companies for crude-oil tankers. The investment required by stakeholders in these ventures is in the range of ₹12,000 crore, with SCI expected to contribute between ₹5,000 crore and ₹6,000 crore as equity infusion. Bharat Container Shipping Line's capital expenditure will be ₹60,000 crore over the long term and will support the government's ambition of increasing India's share in global maritime cargo movement.
The government's maritime expansion relies heavily on SCI and domestic carriers, with India's plans to become a leader in shipbuilding supported by recent developments including a memorandum of understanding with HD Korea Shipbuilding & Offshore Engineering Co Ltd. to develop a shipyard in Tamil Nadu. As reported by Business Standard, SCI has begun floating tenders for vessels where Indian yards have the right to first refusal, with the government expecting these new ventures to generate demand for ships made in India and support the nascent shipbuilding ecosystem into a virtuous investment cycle. The government's push for a greater share in global maritime operations sees SCI as a major enabler towards achieving these strategic objectives.
