As funding remains a concern for the Indian shipowners, the shippers? plans to expand the fleet seem far from implementation. The industry is in need of soft finances, as nearly half the shipping fleet (4 million gross register tonnage of the 9.03 million GRT) needs to be replaced in the next three years.

The replacement of this tonnage needs huge investments. According to industry estimates, for the domestic industry to retain its current 13% share in the national cargo, an investment of around $20 billion is needed during the Eleventh Plan.

?The current year has seen a slowdown in tonnage growth due to the economic downturn. Some major shipping companies are in a ?wait-and-watch? period and going slow on their acquisition plans,? commented Arvind Mahajan, executive director, KPMG.

?Though both new and old vessels are available in the global market, Indian ship owners are facing a trouble acquiring those, due to lack of finances,? he added.

As the shipping industry failed to get a stimulus during the Budget, shipping companies keep struggling with fund worries. Hence, many of the shipping companies have delayed their expansion plans.

Shipping Corporation of India needs around $2.5 billion to fund its proposed acquisition of some 29 ships to be delivered between 2009 and 2012 but the company has decided to wait before placing orders.

Similarly, Great Eastern Shipping is also looking to cancel more vessel orders, to reduce the load on its order book. The company has placed orders worth around $1 billion. The company recently cancelled an order for one new building dry bulk vessel, the third bulk vessel order it cancelled this year.

Speaking at an analyst conference call, Bharat Sheth, vice-chairman & MD, GE Shipping, said, ?We are in negotiation with all yards where we have orders and if we can work out a suitable deal, we will considering cancelling more ships, both on dry bulk and tanker.?

In January, the company had cancelled two new building contracts it had placed with a Chinese Shipyard in 2007, for the construction of two Supramax bulk carriers approximating 57,000 DWT (deadweight tonnage).

Similarly, Varun Shipping has already reduced its capital expenditure plan by almost three-fourth to $100 million and is also considering buying vessels from the second hand market.

All this has reflected in the flat trends in growth of the domestic shipping fleet in terms of gross tonnage (GT) in the last six months. India ?s shipping GT has been around 9.3-million-tonne mark in the first half of 2009. There has been a marginal increase in the number of ships.

In fact, during 2008, growth of shipping industry was slow. There was a meager addition of 0.27 million tonne of GT during 2008.

Moreover, industry analysts feel growth will remain subdued for the rest of 2009 as well, with shipowners? access to funds not likely to improve significantly. They also fear that this trend may upset the government?s target for expansion of the shipping fleet during the Eleventh Plan.

?There were hopes of getting stimulus in the Budget, however, nothing happened during Budget. Hence, the government’s target to have a fleet of 12 million tonne by 2012 looks like a difficult proposition right now,? commented an official from Indian National Shipowners’ Association.

Before the Budget was presented, shipping companies had sent a proposal to the finance ministry to set up an amount of Rs 10,000 crore for soft-lending to them, as international funds have stopped. But there was no mention of this in the Budget.