India is taking a revolutionary step towards creating its own protection and indemnity (P&I) insurance company, which is a noteworthy event with broad implications. The purpose of this calculated action is to give Indian shipowners—especially those doing business there—an alternative to the insurance plans that are provided by major Western companies. The establishment of a domestic shipping insurance company has the potential to completely transform the logistics industry as India experiences a revolution in inland waterways. Within the Ministry of Ports, Shipping, and Waterways, discussions have already begun regarding the creation of this P&I body.
Changing the Landscape
With an initial emphasis on internal waterways and coastal shipping, India hopes to grow its P&I company and provide a competitive alternative to the current Western-centric shipping insurance market. Like most of the globe, India currently gets its shipping insurance from the International Group of P&I Clubs, which is made up of 13 clubs with headquarters in London, United Kingdom, and has considerable influence over the shipping insurance market worldwide.
Global Implications of Shipping Insurance
Global supply networks rely heavily on maritime shipping, which means that for smooth operations, vessels must be insured by reputable protection and indemnity (P&I) insurance. In terms of regulating global maritime transport, Western nations enjoy a significant advantage because of the International Group of P&I Clubs’ current supremacy. This ability was demonstrated when the West used the group as a weapon to enforce sanctions on Russia, highlighting the possible danger it poses to international supply networks.
India’s Resolve and “Atmanirbharta”
India, a nation on the rise and independent, will not submit to Western powers controlling the destiny of ships travelling the oceans. The current practice of using the international network of P&I clubs to impose sanctions on companies deemed unfriendly to the West has created worries, notably for India and the Global South. India’s reaction challenges the Western monopoly on international shipping insurance and is consistent with its mission to provide solutions to developing and underprivileged countries.
Empowering Indian Shipping
India’s goal of creating its own P&I institution is not merely a response to Western hegemony; it is a response to the negative consequences that the West has had on international shipping. The story of Mumbai-based Gatik Ship Management serves as an example; once the International Group of P&I Clubs withdrew its insurance, the company’s fleet size significantly decreased. The vulnerability of Indian vessels and strategic interests under the current shipping insurance regime, which is dominated by the West, is highlighted by this episode.
Strategic Vision for Shipbuilding
The Modi administration’s push for self-sufficiency in shipping insurance goes beyond opposing Western domination; it is consistent with its larger goal of making India rank among the top five shipbuilding nations in the world within the next ten years. This ambitious plan aims to increase the number of ships in India’s fleet significantly, with a particular emphasis on obtaining indigenous insurance for these vessels instead of depending on Western insurers. With the introduction of the nation’s “blue economy” strategy paper and a number of marine projects in October of last year, Prime Minister Narendra Modi demonstrated the government’s dedication to developing a strong maritime industry.
Maritime India Vision 2030
The government’s strategic initiatives, encapsulated in the Maritime India Vision 2030 plan, aim to develop world-class mega ports, trans-shipment hubs, and modernise essential infrastructure. With an estimated investment cost of Rs. 1.25 trillion, this vision seeks to position India as a formidable maritime player. The Union Minister for Ports, Shipping, and Waterways, Sarbananda Sonowal, highlighted investment opportunities exceeding Rs 10 lakh crore in the maritime sector, expected to generate over 15 lakh new jobs.
Maritime Sector Growth
India’s maritime sector is experiencing a substantial upswing, evident in various statistics:
India has ascended to the 22nd rank in the global rankings for ‘International Shipments’ from the 44th position in 2014.
The capacity of India’s 12 major ports has expanded from 871 million metric tonnes (MMT) in 2015 to 1,617 MMT.
The total capacity of Indian ports has surged from about 1,560 MMT in 2015 to over 2,600 MMT.
The value of operationalization of public-private partnership projects in major ports has risen by 150 percent, from Rs 16,000 crore in 2015 to Rs 40,000 crore in 2022–23.
The momentum and scale at which India’s maritime sector is evolving underscore the need for the country to have its own shipping insurance entity. While the number of India-flagged shipping vessels has been relatively low historically, the recent reforms in the maritime sector and substantial investment make the establishment of a P&I entity imperative.
The Strategic Importance of Indian Shipping Insurance
As India prepares itself to play a key role in global maritime affairs, establishing its own shipping insurance entity becomes a strategic need. It’s possible that fewer ships flying the Indian flag in the past caused earlier administrations to give a P&I organisation less serious thought. However, the redesigned marine sector, backed by new legislation and huge investment, emphasises the critical need for India to establish its shipping insurance authority.
Challenges to the West’s Shipping Insurance Dominance The move towards establishing an Indian P&I entity is not merely a response to Western dominance; it represents a bold step towards providing a real alternative to the existing shipping insurance “club” controlled by the West. India’s commitment to “Atmanirbharta” (self-reliance) and its vision for a “Vishwamitra” (friend of the world) image align with the broader narrative of creating a more inclusive and diverse global shipping insurance landscape.
India’s vision to redefine the global shipping insurance landscape is not just a strategic move but a significant shift in the dynamics of maritime affairs. By establishing its P&I entity, India seeks to liberate its ships from the constraints imposed by Western-dominated insurance frameworks and safeguard its strategic interests. The ambitious plans outlined in Maritime India Vision 2030, coupled with the growth of India’s maritime sector, underscore the necessity for a robust and self-sufficient shipping insurance mechanism. As India progresses towards becoming a major maritime player on the global stage, the establishment of its P&I entity symbolises a commitment to autonomy, resilience, and a more inclusive world order in the realm of maritime affairs.
