New Delhi: Finance minister Nirmala Sitharaman on Thursday called for setting up a domestic Protection and Indemnity (P&I) entity to offer insurance for shipowners, aiming to bolster India’s resilience against international sanctions and enhance the strategic agility of its shipping operations.
Speaking at the Global Maritime Indian Summit 2023, Sitharaman said an India-based P&I body will also provide protection to liabilities of Indian ships operating in coastal regions and inland waterways.
“It will provide a foothold in the specialised segment of protection and indemnity business, currently dominated by few players internationally,” the minister said.
She pointed out that India currently lacks representation in this specific market segment and suggested the Ministry of Ports, Shipping and Waterways consider the proposition seriously. “I would think that it (P&I body) is a very important thing which we need to work on.”
Shipowners buy P&I insurance to cover the potentially high expenses of any damage they unintentionally do to people, property, and the environment.
These are usually purchased from global players.
In the past, India has struggled to find tankers and vessels, and insurance to ship crude and petroleum products from Russia amid global trade sanctions on the country. This came at a time when India resorted to higher purcahses of Russian crude shipment amid rising oil prices.
Sitharaman said India also needs to develop capabilities and legal systems to set up an international arbitration centre for the maritime sector.
India’s problems, often unique to its jurisdiction, ‘are less put forward’ in the international arbitration courts, Sitharaman said. “The way we link with (maritime) arbitration needs to improve so we can improve standards of arbitration.”.
Sitharaman highlighted that setting up an India-based P&I body and international arbitration centre will help mitigate the unpredictability faced by shipping sector, with shipping of major commodities often at risk due to disruptions.
Indian shipping operators should also look at fundraising by monetisation of their assets, she added.
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Updated: 19 Oct 2023, 03:43 PM IST