Ministry seeks special body to fund shipping projects

Seeking a separate financing arm, the shipping ministry has proposed setting up a finance corporation or a dedicated corpus under a refinancing corporation to facilitate fund flow for the sector.

If approved, the government may create a separate shipping finance corporation for the industry or ask agencies like India Infrastructure Finance Corporation Ltd to keep aside a certain portion of its corpus for it.

"We have submitted a proposal to the finance ministry for creating a separate corporation for the sector or ensuring any of existing refinance agencies reserves a certain portion of their funds for providing long-term assistance to the sector," a senior official told reporters in New Delhi on Friday.

The proposed agency would help shipping companies to arrange long-term debt "at a reasonable cost" as financing for the sector from the international markets has dried up.

Infrastructure refinance company IIFCL was asked by the government to provide low-cost funds worth Rs1,00,000 crore for the development of new core sector projects by leveraging money to be raised through tax-free bonds, as announced in the stimulus packages.

The shipping industry has also asked the government to set up special fund to help the industry finance projects, as the traditional avenues to obtain loans for expansion and modernisation plans had dried up.

''Generally, this sector remains neglected when it comes to financing of infrastructure projects. The separate financing arm will also ensure debt at affordable rates,'' the official said.

''We have also asked the finance ministry to increase the budget allocation for modernisation of ports,'' he added.