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As maritime sector is going through a makeover, to understand the changing dynamics of dredging industry globally and in India in particular, we caught up with Prof. Dr. George Yesu Vedha Victor, President, Mercator Limited; and Member of Board, EADA, & Secretary General, EADA (India)
Indian dredging industry is about 6.85 per cent of the global dredging market, but for long the dredging industry in India had experienced a hard time with very little fresh investment pouring into the sector. Though ambitious projects like inland waterways, river linking and Sagarmala generated some interest amid investors in the dredging sector but many of these projects hardly moved beyond announcement. The picture looked more gloomy when Union Cabinet announced to sell entire equity of the government in Dredging Corporation of India (DCI), but it turned out to be a blessing in disguise as it has already generated much needed curiosity amid investors in the Indian dredging scene. Currently, Indian dredging market is majorly dominated by Essar, Mercator, Marg, Dharti Dredging, apart from couple of Dutch and Belgian MNCs such as Jan De Nul, Dredging International, Royal Boskalis, and Van Oord. Industry veteran Prof. (Dr.) George Yesu Vedha Victor, President, Mercator Limited; and Member of Board, EADA, & Secretary General, EADA (India) believes that the current dredging market is on the predicted lines, although the maintenance dredging activities is saturated and the capital dredging works shall commence. Maintenance dredging shall continue to remain saturated for the next couple of years, before the turn around will take place. For the next 3 to 4 years, the capital dredging is likely to increase and subsequently maintenance dredging shall be required and hence by 2022, maintenance dredging shall linearly increase from its present saturation. “If India looks to attract giant vessels and stimulate EXIM activities, it is imperative that upgradation of the existing ports is imminent, however the extent of the upgradation needs to be studied as most of the major ports were not designed to take the load of the giant vessels and the deepening of the channel shall not be viable considering the foundation of structures,” Prof. (Dr.) Victor opines. A detailed study prior to upgrading the infrastructure at ports is required. Impact of DCI Disinvestment Following the announcement of disinvestment of DCI, many companies have expressed interest and more recently there are reports about willingness of Abu Dhabi’s National Marine Dredging Company (NMDC) to buy it. Notably, DCI has a market share of about 43 to 52 per cent of maintenance dredging volume with the revenue generation of about Rs. 500 to 600 crore per annum and this quantum of revenue generation shall be transferred to NMDC holding company overseas. The merger between the two will significantly influence NMDC’s global market dominance. Commenting on the scenario, Prof. (Dr.) Victor said, “Indeed, it is too premature to guess the potential buyer of the disinvested shares of DCI. If the news reports are to be believed in my opinion it will defeat the noble initiative of Hon’ble Prime Minister to “Make in India”. Perhaps taking over DCI by NMDC shall certainly have an impact and drastically change market dynamics, as in my opinion NMDC shall utilize TSHD to bid and win maintenance works in the gulf, where they are strong in marketing and liaison with sufficient substrata information. Secondly, if the government owned NMDC desires to involve government machinery to introduce the right of first refusal or mechanism to protect the local owned dredging company, there is a possibility that market dynamics could break all barriers.” If NMDC concentrate on the gulf TSHD market, it shall have greater impact in the Indian market transforming self-sufficiency to shortage of TSHD for maintenance works. “Hence either way, I am of the firm opinion that certainly Indian and global – in particular the gulf market dynamics shall change to a greater extent, for which Indian port should be ready to face,” Prof. (Dr.) Victor cautions.
Challenges for the industry
Dredging sector is riddled with the shortage of onshore and offshore manpower. DCI trains its own cadets for both engine and deck under government gazette notification to train the manpower under All India Dredging Cadre, and the certificate of competency is issued by DG Shipping under Sec 78 of MS Act 1958 for dredge grade exams, but these certification is not linked to The International Convention on Standards of Training, Certification and Watch Keeping for Seafarers (STCW). Hence, the certificates restrict the officers to work only on Indian flag dredgers. Such restriction results in brain drain of the trained officers to the main fleet for career growth, and the mainstream vessel earning are exempted from income tax and there are better post sailing career prospect. Currently there is no institute in India that offers training for dredge officers, as the demand and supply is very minimum. India also lacks qualified and experienced onshore personnel in comparison to European countries.
Another challenge that the industry face is the deviation from the FIDIC contract documents, as most of the tenders are based on modified version of FIDIC contract documents that are not coherent with other conditions and for cross reference.
Inland waterways project offers lot of potential for dredging industry, but the clarity is still lacking, and mapping of rivers and the ownership dispute and conflict of the river bed is yet to be resolved. Prof. (Dr.) Victor said, “As the dredging industry representative, I would expect IWAI to notify dredging policy for inland waterways, to formulate policy for beneficial use of the dredged river sand and to share the risk instead of loading it fully to the contractor. IWAI and State government should design the tenders based on the national dredging industry rather than following guidelines based for port sector resulting in discharging the tender often. It is evident river dredging and training is completely a new subject and not similar to the ports and harbor dredging works.” In the GST regime, the import duty on the dredgers are imposed as GST of 5 per cent, wherein in the past considering the dredgers under the Indian tonnage, it was proposed to the Ministry of Shipping to consider wavier of GST for import of dredgers.
Dredging calls for innovation
Dredging industry requires regular upgradation of the electronic, dredging equipment, production measurement gadgets and dredger monitoring system to increase the efficiency and productivity of the dredgers. Dredging is an integral part of port and maritime sector, but at the same time it is a capital intensive activity, which calls for an innovative approach to dredging to keep a check on cost. There is huge potential available in terms of maintenance, capital dredging works, flood control management, coastal defence works, dredging and training of the inland waterways. If the government decides to desilt dams and reservoirs that shall require additional capacity of inland dredgers to desilt dams and reservoirs as well the national waterways. Investors need to take a close look at the market predictions in the last two decades to understand the shortage of dredging capacity in the Indian market which shall prove the viability and potential in the dredging.
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