Shipping stocks sailing on high seas

The shipping stocks are all sailing on high seas today buoyed by new rules announced for the sector yesterday by the Govt. The Cabinet is considering making it mandatory for PSU fertilsier, coal, oil and steel companies, which import goods to route at least 50% of its cargoes through local, domestic bred shipping companies – a way to protect and boost growth of the limping shipping industry. The Govt is planning to impose a 5 year contract which importers need to sign with desi shipping companies.

Those in the sector that this is a great move as it will help being in billions of dollars worth of freight to Indian shipping companies. This is also expected to boost the fleet size of companies. If rule comes into play, foreign shipping companies in India could see a dent in their earnings. Shockingly, in FY14, India had paid about $57 billion in freight payments to foreign firms while sadly domestic firms struggled to stay afloat.