Gold imports may cross 1,000-tonne mark this year: Analysts

Since the US sovereign debt downgrade and the new threats emanating from Eurozone economies, gold has rallied a whopping 14% this month alone, as investors shunned stocks and flocked to the yellow metal as a safe haven

Mumbai: Notwithstanding skyrocketing gold prices, its imports are likely to cross the 1,000-tonne mark this year on robust investment demand, reports PTI.

Since the US sovereign debt downgrade and the new threats emanating from Eurozone economies, gold has rallied a whopping 14% this month alone, as investors shunned stocks and flocked to the yellow metal as a safe haven.

The last time gold rose over 14% in a month was in 1999.

In the domestic market, gold scaled a new high of over Rs28,150 per 10 gm in futures market, while in global markets it hit a record $1,877 an ounce last Friday. In the domestic market, on that day gold rose as much as Rs1,310, the highest ever single day gain, they said.

"With rising prices, investment demand is likely to grow, especially in the gold ETFs (exchange traded funds) and coins, in expectation of better returns," brokerage firm Maya Iron Ores vice-chairman Praveen Kumar told PTI here.

The country's total gold ETFs investment has reached 15 tonne, which is expected to double in a year, Mr Kumar said.

However, jewellery demand is likely to decline due to rise in recycled gold in the market, he said.

India, the largest consumer of the yellow metal, had imported a hefty 958 tonne in 2010, according to the World Gold Council (WGC) data. During the first six months of this year, the import has already crossed 553 tonne, WGC said.

"The jewellery demand may decline as people will try and sell to take advantage of high prices. This will give rise to recycled jewellery which will make jewellers reduce their stocks," Mr Kumar added.

Echoing Mr Kumar, Geojit Comtrade senior analyst Anand James said import is likely to top the 1,000-tonne mark as investment demand is strong.

"Investment demand is likely to remain firm with the price rise," Mr James said, adding, however, on the physical side also demand will remain robust as people will buy expecting a further rise in prices.

Meanwhile, the market is expecting the gold rush to gain further momentum and prices may even scale Rs30,000 before Diwali, as the global economic concerns get confounded by the day.

Earlier this week, WGC had indicated that gold import could cross the 1,000-tonne mark this year.

"The first half performance was very strong and if this trend continues, then we may cross the 1,000-tonne mark this year," WGC managing director (India and Middle East) Ajay Mitra had told reporters here earlier last week.


There are limits to what a strong anti-corruption law can do. We should reward whistle blowers and advertise the names of the corrupt

Economic incentives of agents who run the institution are to enrich themselves and they will either corrupt or prevent other members of the institution who might have the task of stopping the theft. But if corruption is exposed and the disincentives are high, then corruption would cease

Last week, veteran Indian activist Anna Hazare was arrested hours before launching a hunger protest. His cause is corruption. He is demanding that the government pass a stronger law to combat corruption. The government rather disingenuously threw him in prison. Prime minister Manmohan Singh says that Mr Hazare's methods of protest, which includes hunger strike, posed "grave consequences" for Indian democracy.

Still, Mr Singh's remarks and his government's actions are hardly surprising and go to the heart of the problem of corruption. For contrary to its definition, corruption is not a moral issue, it is an economic issue, a law and economic issue.

Laws are provided by the state. Each and every law guides behavior by providing incentives and disincentives. For example a law governing criminal conduct, like stealing, provides the disincentive of incarceration. Some laws provide economic disincentives like fines. Other laws provide economic incentives. An example would be a tax law that provides you with a special tax rate if you take certain actions.
Most legislatures and governments feel that they can solve problems with laws. They can't. There are very real limits to what laws can do. The reason has to do with enforcement. Some laws cannot be enforced. For example, laws relating to certain goods or services like drugs and prostitution are basically impossible to enforce. The reason is that the economic demand for these goods and services are widespread.

Other laws concerning the market are also difficult to enforce. The Chinese feel that they can control inflation with laws relating to price controls, but these always fail. Their attempt to restrict exports of rare earth metals just led to smuggling. Any international investment banker worth their salt can circumvent regulations or utilise regulatory arbitrage to lessen their effect.

The same problem exists with corruption. The problem is that the government is trying to use law to cleanse itself, but that is an enormous conflict of interest. It is really an agency problem.

In game theory, managers, elected officials and even police officers are agents. Managers are the agents of a principal, the owner or shareholders. Elected officials, bureaucrats and security personnel are agents of citizens. The best move for an agent is to cheat the principal. The principal hires a watchdog and the agent's best move is to suborn the watchdog. As long as the institution has the job of policing itself, it will fail. The economic incentives of the agents, who run the institution, are to enrich themselves and they will either corrupt or prevent other members of the institution who might have the task of stopping the theft. So in many ways it does not matter how strong the anti-corruption law is. As prime minister Mr Singh has aptly illustrated, it is not in his best interests to stop what has helped keep his party in power.

This does not mean that citizens are helpless. It does mean that there are limits to what a strong anti-corruption law can do. The solution though might lie elsewhere. The best way to control corruption is to deal with the asymmetries of information and economic incentives. If corruption is exposed and if the disincentives are so high, then the corruption would cease.

Fortunately, we live in a time where each and every owner of a cell phone has access to millions as never before. You don't even need a computer. Your cell phone allows you the ability to network and that power allows all of us to expose corruption. The other part is to provide economic and social disincentives.

One thing that Mr Hazare's campaign has shown is that you can market anti-corruption. But why stop with just hunger strikes or inflammatory editorials? Make it a contest. In the United States and even Afghanistan there are televised contests and prizes for amateur performers. Why not have televised contests for whistle blowers? Whistle blowers, or enforcement personnel, should not only receive some sort of immunity, but celebrity status, cash rewards, honorary medals, titles, sinecures or automatic political office granted not by the government, but by cell phone vote. Cash could be generated by fines from both personal and corporate liability.

Corrupt officials should not be neglected. There should be contests for them as well. The most corrupt official should be the subject of both weekly, monthly and an annual vote for town state and country, perhaps on a specially designated Corruption Day. Annual lists should also include all past year's winners. Shame can be as powerful a disincentive as incarceration.

Stopping and preventing corruption is certainly possible, but to do so we have to recognise the limits of the law. If the institution is corrupt, which it is by definition, so will the law. But that does not mean that society is completely helpless. It just has to know how to advertise.

(The writer is president of Emerging Market Strategies and can be contacted at [email protected]  or [email protected].)



Dr Vaibhav Dhoka

5 years ago

Mr Prakash has rightly mentioned that the movement of ANTI CORRUPTION which has just started be a sustained and long lasting action plan be evolved without any political color.


5 years ago

There are two sides to the sides to the corruption coin.The giver and the receiver.The giver is either scared or in a hurry to get only his things done or he is on the wrong side of he law himself etc.Why is some one prepared to give a bribe is because he wants the law or the official to look the other way.If he was 100% right he would not be either demanded or he prepared to pay a bribe.

Precisely why we pay the policeman when we are caught driving without proper documents, or jumping a signal,parking in a no parking zone etc.Or we bribe the municipality official to reduce the property tax or allow us to build differently from the sanctioned plan.We bribe the income tax official to reduce our tax liability or the sales tax official to look the other way when we underinvoice goods sold.We bribe MLAs or ministers to get land allotted under some discretionary quota etc.The list goes on and on...

If all the people desist from giving any bribe anywhere,which means that they need to be honest first, the corruption tiger would not be what it is now.Can we honestly say that we will not break any rule or law and if caught we will pay all the fines and penalties.NO WE DO NOT.So......, it is not enough to have a Lokpal bill or whatever but the people should become civil and not be corrupt themselves.

Then why not shame the bribe receiver.Unfortunately now there is no color to the money one has.He is respected for the money he has, the means are not an issue anytime.He or his family are well received in the community for the car/property he owns,the jewelry the wife shows off or the snazzy clothes and the super bikes the kids of the corrupt display.

Now imagine the situation wherein the corrupt are paraded in their neighbourhood with a board around his neck stating"I AM CORRUPT" .Or when a banner is stuck in front of the corrupt official stating that this house belongs to the corrupt officer Mr/Ms______ working at ____ department.

The wife and children of the corrupt can put pressure on their spouse/parent to be straight because of the social embarassment and stigma attached as part of a corrupt family.

Why not the activists go to the identifiable corrupt offices and keep a vigil there?They can meet the head of the department or office and ask him to display a board which will mention as to the procedure involved for any work in the office and how long it would take to complete that.All visitors/persons having work in the office must be given serially numbered tokens and at the end of the day display the number of those tokens which are still pending.This will give an idea of why somebody was treated earlier preferentially.

The group against corruption can put up a board in front of the office stating "This is a corruption free office and we will ensure that".The board needs to have contact numbers of the group leaders/members to be contacted in case of need.If the group stays put in front of the office to catch hold of the corrupt, who in the office will be brave to take bribes.All the people who are now going to Ramlila grounds/Freedom park etc and the volunteers/youth/students can take turns to ensure vigil at offices.

It is not enough to pass a lok pal bill.

Group Action will also be needed to take the movement to its logical end.
It is a long haul but it can't end with slogan shouting and going on (hunger)strike!!

Dr Vaibhav Dhoka

5 years ago

The corruption is age old phenomenon but to what extent we have tolerated has crossed all imagination of common man.Post Independence we inherited INSPECTOR RAJ from Britishers and now we call it DEMON.Corruption takes place in different form.Unless some laws are changed and SERVICE act is enforced strictly corruption cannot be controlled,As far as legal system is concerned it should also be brought AT PAR with other department as no action is taken by judiciary even though complaint is sent by registered post.Their system of investigation is most suspicious and long drawn process.So EVERYBODY must be at par in case of complaint of corruption.

Narendra Doshi

5 years ago

The writer as well the commentators prior to me all have said thought provoking ideas, all of which together give us a ray of hope.

B Rajaram

5 years ago

Truly I am amused that clever people are unable to see the weakness of the corrupt. They need the secrecy to hide their activities. If we deny the secrecy, corruption ceases. The Lok Pal Act then becomes just a one page long. I give you the draft.
Draft Lok pall Bill Aug 2011.

Not with standing any thing contained in any other Act the following provisions of the Lok pal Act shall apply>

Each and every non-secret government order issued shall be necessarily released as authenticated electronic version along with all the policy background information, the file through which this excutive action is take under the policy, the complete set of documets relied upon. the noting of various levels of government officers/or PSU officers, or officers of the regulatory authority; all this shall be released in public domain on secure central government servers with mirror copies at the servers with the Lok Pals. These documents shall have complete legal validity without further authentication.

A special bench of Supreme Court of three judges at center and three Judges of each High Court shall be constituted by each Chief Justice with a minimum tenure of 2 years for the members, who are sitting judges of the court.

An additional registrar with special facilitation of electronic office with dedicated server with access to central data server which stores government orders and the concerned image files leading to the orders, complete by itself will be available for use of the Lok Pal.

Lok Pal will have a panel of experts to advise in each sector if needed.

The Lok Pal is free to initiate a case, suo moto or on appeal by an aggrieved party, or a CAG reference, or a media report with reference to the public data base of the file systems, based on information available on the servers with them, give one chance for the government to add any clarifications to the files already in servers, which also will be public, and then pronounce their judgement which can only be appealed to the central Lok Pal of the Supreme Court. this decision will be final for setting aside the order. But the punishment or other wise of the guilty will not arise at this stage. That is because most probably no damage would have occurred and after all it could be a matter interpretation.

Unless a repetitive or gross wanton misjudgment is detected, prima facie, the Lok Pal will not initiate steps for punishing the Minister or the officer involved.

When such occasion arises, then orders to take the person off the responsibility, and orders to initiate criminal proceedings will be given to the government which follows the normal course that law currently takes. Even here the documentary evidence and the Lok Pal's directive will be weighing factors unfavourably for the person so charged and the Sessions Court Judge will pass the orders for the fit punishment."


Utsal Karani

5 years ago


The problem in India is greater centralisation of authority in Government functionaries and antiquated laws and systems.There exists mind boggling corruption opportunities within the governance system. Anti-Corruption machinery can not transform the decision-making processes within the government and make decision-makers more accountable. India needs systemic reforms, improvements, changes in administration and decision making processes which have in-built opportunity for indulging in corruption and also amending antiquated laws which have lost relevance. (Its altogether a different issue that existing Anti-Corruption Departments are colluding with the corrupt).

The following are few examples of systemic reforms under implementation or to be implemented-

1) New building norms introduced by Municipal Commissioner of Greater Mumbai- The proposed new building norms will at one stroke reduce misuse of discretionary powers of Municipal Commissioner and thus significantly reduce FSI scams and massive corruption in Building Proposals department. More importantly, the new norms creates transparency in real estate transactions immensely benefiting flat purchasers. (It is well known that existing Vigilance Dept was colluding with the corrupt).

2) RTI, PDS and a teenager- The continuing crusade of a teenager in Gujarat forced the Government to pass an order under section 4(1)(b) of RTI Act, making it compulsory for all fair price shops in the State to disclose all the details about rations received and kept in the ration shop. At one single stroke, the teenager reduced corruption in the PDS and alleviated the suffering of the masses who depend on ration shops for food grains. Unfortunately, this achievement was ignored by the media.

3) Reforms in indirect taxation- Introduction of Goods and Service Tax (GST) will eliminate multiple taxes, significantly reduce tax evasion, corruption and black money, reduce consumer prices and increase State revenues! It is estimated that India's GDP will increase by 2% by introduction of GST. For the first time in history, India will usher in a "Common Market".

4) Reforming subsidies- Creating efficiencies in subsidy delivery system to targeted sections of society based on UID/AADHAAR- Nandan Nilekani would be creating a revolution. The sums involved in subsidies are mind boggling in multiples of 2G scam, and that too annually! This will not only reduce quantum of subsidies, but simultaneously reduce wastage, inefficiencies and corruption inherent in the system.

5) Delivery of Govt. services in time bound manner as per Citizens Charter or Govt Rules- This significantly reduces corruption opportunities.

6) Agriculture Produce Marketing Committees Act (APMC) - Antiquated APMC laws (a State subject) across the country needs amendments. Farmers in Nashik or Pune are prohibited to sell farm produce directly to retail markets in Mumbai. They are compelled to sell their farm produce to the middlemen at the APMC Market, Vashi, Navi Mumbai controlled by a powerful lobby of traders and politicians. The farmer gets only about 30% of the final price paid by the consumer, rest is cornered by a chain of middlemen. There is an urgent need to at least exempt perishable farm produce like vegetables and fruits from the ambit of the Act which will reduce wastage (estimated at 25 to 40%), increase realisations for farmers and reduce prices for consumers.

7) Reforms in Police, Judiciary and Electoral system- It is well documented that these important areas need reforms.

8) Eliminating discretionary powers with authorities in various fields - Its well known that discretion breeds corruption. For instance, eliminate discretionary powers in land allotments and introduce transparent procedures.

9) Transparency and participation in Decision-making process- Decision-making has to involve the participation of the maximum number of people and there has to be a move from bureaucratic processes to democratic ones. The devolution of powers as envisaged in the 73rd and 74th Constitution amendment has to be implemented. The authorities should suo motto put important decisions of Govt/authorities in public domain/websites.This significantly reduces corruption.

10) Transparency in Administration as envisaged under section 4 of RTI Act has to be implemented- A few examples would be - a) Posting information on details of expenditure from discretionary funds of MPs, MLAs, Councillors, and Mayor on websites. b) Posting information of Building Proposals sanctions on MCGM website. c) Putting entire list with relevant details of MCGM owned Open Spaces (RG/PG) on website. There will be thousands of such examples across the country. Let all citizens act as Watchdogs!

11) Strong and Independent Regulators - Strong and independent Regulators in important economic areas like Oil & Gas, Mining/Natural Resources, Capital Markets, Telecom, Power, Insurance, Real Estate, etc. significantly reduces political interference and discretionary powers that cause big ticket corruption.

A right prescription can only be made if we truly attempt to diagnose the disease. If at all we believe that our anti-corruption prescription is only about creating hundreds of Anti-Corruption Watchdogs as panacea for all ills and turn India in to a Police State, then we are living in fools paradise. The corrupt will continue to thrive and invent ingenious methods and that too in collusion with the Police State. A true crusade against corruption and for good governance must begin with radically improving and changing State structures, institutions and processes.

(Associated with NGOs Janhit Manch, BEAG, and others)

Shantharam Shenai

5 years ago

Dear Sir, Your views are refreshing. I share your perception with the power to network through technology that is cheap, will become cheaper. One IT professional designed the site INDIA AGAINST CORRUPTION, then joined by two others, using ANDROID and open source software. When he saw the impact, he got server space and created room for many cities to upload their activities on their own.

Transparency can level much of the corruption too and technology is beginning to play an increasingly powerful role here too.

Anna says the corruption will go down 65%. I say even if it goes down 10%, it won't stop at that.

Thank you once again for encouraging discussion.


m k tyagi

5 years ago

This article hits nail of problem of coruption on head.
There is no dearth of honest Indians. These Indians should be protected when they blow whistle. The irony is that these whistle blowers are crushed and corrupt against whom whistle is blown are awarded.
My advice to Dr Manmohan Singh to protect whistle blowers was not taken and the result is real chaos all around.
Even now Dr Manmohan Singh can salvage the grim situation by passing JAN LOK PAL BILL.


Govind Shanbhag

In Reply to m k tyagi 5 years ago

Mr.Gamble jee - Talking about corruption, first thing Lokpal as and comes into existance should ban this constituency development fund of corporate rs and other elected representatives. This mumbai and other cities it is being used for paver blocks which hardly lasts for six months construction of lavatories in govt land, reported beautification of gardens only on paper.

Another piracy attack on Fairchem Bogey; the threat to national security and economic growth just gets bigger

India's national security and economic growth are at risk at the hands of a ragtag bunch of pirates, who can reach within miles of the Indian coast and pick up whatever they want, when they want. This is the bigger issue, which gets subsumed while emotions well up on the issue of the seafarers in captivity for months

Twenty-one families all over India must have woken up on Friday, 19 August 2011, breathing a sigh of relief that their breadwinners on board the MT Fairchem Bogey (IMO No. 9423750) were out of the piracy-infested waters in and around Oman. Anchored just about 4-5 miles off Salalah in Oman, the Marshall Island flagged tanker was partially loaded with methanol and waiting to berth inside the port to load some more.

Methanol, without going into details, is as dangerous to transport as petrol, if not more so. And under some circumstances, like if there is a change in pressure or higher ambient temperature, it can be much more dangerous. It's not a job for every seafarer. You certainly have to be one among a special breed of highly committed, experienced and trained seafarers to work on a modern tanker. Carrying methanol puts you a cut above this lot, too, and people who work on such ships are worth every dollar they earn, and more. Put it this way, even without the additional stress and risk of piracy, there is bound to be enough on the minds of the officers and crew on board a methanol carrier tanker ship.

So, when on the morning of Saturday, 20 August 2011, a fairly large group of pirates, in multiple boats, swarmed the Fairchem Bogey, the first thing on the minds of the people on board, over and above their own personal safety, would probably have been to ensure that the ship and the cargo or residual cargo on board did not suddenly become a huge explosion.

There is a huge port nearby, with a big city next to it, and millions of lives to think about. Then, and only after they had taken these precautions, would they have-in all probability-headed for the safe area/citadel on board. By that time it was simply too late. The pirates had taken over, and with guns to their heads, the ship pulled up anchor and set sail in a south-westerly direction towards Somalia.
After all, nobody in their wildest of dreams could have imagined that such an audacious raid would take place hardly 4-5 miles from a port considered to be so safe, that the minimum level of anti-piracy safety also known as BMP-1, was in position at Salalah. Even Mumbai, far away from the piracy lanes, is kept at BMP-3 most of the time. That this part of the world is observing Ramadan is a fact that, also, cannot be overlooked.

BMP (best management practices) for anti-piracy along with some other details are provided here.

Here are some points that must be taken into account.

1) 4-5 nautical miles is less than the distance that you see most ships anchored off the Gateway of India. That's the reality. One of the tourist boats at the Gateway would take an hour or more to cover that distance in good weather and longer during the monsoon. We already know the level of coordination that exists between the authorities if in case something like this happened off an Indian port.

2) BMP levels sound very good on paper, but, in reality, on working ships with bare minimum safe-manning levels, they tend to stress and over-strain the already over-worked staff to a point where there is simply no bandwidth left to do everything that the management ashore recommends. This is specially on ships carrying dangerous cargoes. You simply do not have people left over for security duty, and even if there were, how much can they do with fire hoses? In many cases that this writer has heard of, the pirates simply walk around the seamen with the hose, and cut the hose with a sharp knife. End of resistance.

So now, 21 families are being consoled and counseled, and my contemporaries at the ship-management company (Anglo Eastern, in Mumbai) as well as the Directorate General of Shipping, are again putting into effect their post-piracy processes. This includes ensuring that senior management are in contact with families, offering full support, and now, in the case of some of the better companies, double salaries while under capture by pirates.

There is really no more benefit in hitting the authorities on their heads anymore, for not taking steps which could have prevented such incidents. After all, what good would armed guards with guns be on a tanker carrying methanol? In addition, as has been explained to me, Delhi is deaf to all entreaties and logic as far as trying to explain the connection between piracy in the Arabian Sea and the larger issues of national security and protecting the Indian economy are concerned.

Let's face it, about 6% of the world's seafaring community is from India. About 10% of tanker officers are from India. These numbers are simply not enough to make a dent on anything, even if the Indian government takes some unilateral action in the context of Indian seafarers on Indian or foreign flag vessels.

Next, all calculations on deciding vulnerabilities of ships used to take into account maximum speed, as well as the effect of the ship's wake and bow wave, as she sped past. Now, with this revival of attacks while at anchor, which is one step further into outright hijacks and piracy, a whole new approach will have to be figured out because there are bound to be copycat attacks soon, especially as the monsoon weakens over the Arabian Sea. Incidentally, being attacked while the ship is at anchor is nothing new, but it was usually all about quickly stealing whatever they could lay their hands on and running away.
Yes, ships have been purloined from anchorages in the past-certain liberation movements in neighbouring countries were known to do so, killing the crew members in the bargain and then using the ships for their own purposes. But hijacking a ship for ransom, pure and simple monetary, has not been heard of in a long while, barring the still unresolved case of the MV Arctic Sea which was hijacked from the English Channel a few years ago.

There is really not much one can do or suggest anymore, because the authorities as well as the ship owners and ship managers are comfortable with the concept that the Indian seafarers on board are collateral damage, who knew what they were letting themselves in for when they chose to work on such high-risk ships in high-risk areas carrying high-risk cargoes. However, one can only hope that the ship owners and ship managers offer as much support as possible to the families of the seafarers on board, and more.

Because, this is for sure, the ship and cargo on board is certainly heavily insured for any and all risks. This needs to be extended to the seafarers too. If, at the end of the day, it is all about money for all the players in such episodes (owners, insurers, pirates, cargo interests, and others) then the seafarers need to be covered too. Because, the fact remains, nobody promised us a risk-free career when we came out to sea, lured as much by the glamour as the money. The glamour is now history; so if it is all about money, then so be it. That's as far as the seafarer is concerned.
But the larger picture, the one that the Indian government needs to really get concerned about, is the threat to India's national security and economic growth. Both are now at risk, at the hands of a ragtag bunch of pirates, who can reach within miles of the Indian coast and pick up whatever they want, when they want. This is the bigger issue, which gets subsumed while emotions well up on the issue of the seafarers in captivity for months. And for just that reason, the attitude of the Directorate General of Shipping, ship owners, managers and unions, of keeping everything hush-hush, is almost anti-national. Come out, and be done with it, let the media in on whatever is happening. Because the issues are much bigger.



Anil Devli

5 years ago

A few points from INSA (Indian National Shipowners Association) to provide Indian shipping’s perspective on this issue.

The usage and utility of armed guards has been debated much as various international fora including at the IMO who has finally come out with a position on the use of Armed Guards, as have other international associations or agencies such as BIMCO, ICS, and ISF. The use of armed guards on merchant vessels was discussed at the 89th session of the IMO in May 2011 and interim guidance on the employment of privately contracted armed security personnel on board ships transiting the high risk piracy area was approved.

The use of such PCASP is not considered as an alternative to Best Management Practices (BMP) and other protective measures. Placing armed guards on board as a means to secure and protect the vessel and its crew is only an additional measure at best, and something which all Indian ship owners would do in discussion and in consultation with the Master of the vessel. However, much of this is academic since we are awaiting permission from the GoI to employ such Privately Contracted Armed Security Personnel (PCASP). We have been told that such a policy should be released soon. Incidentally, it is not unknown for tankers to have used PCASP’s on board their vessels.

However, while the usage of PCASP’s are an interim measure, INSA has always advocated the use of our Naval Personnel, (trained commandos) who would be posted on Indian flag vessels in order to secure the safety of the crew, the cargo and the vessel. The comfort factor to the Indian seafarer of having somebody from his own armed forces guarding him is immense but equally important is the fact that having our own Navy guarding our ships ensures that the national security angle within our ports and our coastal waters is also secured. INSA hopes to see a positive comeback from the Indian government on this.

It would be erroneous to assume that some ship owning company is always at fault whenever an Indian seafarer is in peril. As it is incorrect to suggest that ship owners and ship managers are comfortable with seafarers on board being the collateral damage. On the contrary, Indian flag ship owning companies have shared a long relationship with its crew – with several of them rising from the rank of trainee cadets over the years.

What in fact has broken this bond and increased attrition rates within the Indian shipping industry by facilitating large migration of Indian seafarers to foreign flag companies – is Indian government’s policy of differential taxation. The wages of an Indian seafarer on board Indian flag vessel are subject to tax whereas those paid for doing a similar voyage on a foreign flag vessel is tax free. By incentivizing, this policy has fueled the drain from Indian flag ships to foreign flag vessels.

In this context too, INSA has demanded several times that the tax treatment for Indian seafarers on Indian flag ships should be on par with that on foreign flag but we have yet to see the government do something about this.

The casualty in all of this is the Indian seafarer and the Indian ship owner. These two are the only entities left holding the baby. There has been little hesitation in certain quarters to term Piracy as a “business” since every stakeholder seems to be raking in money – from the underwriters who charge additional premiums to the negotiators, insurers, security companies and of course the pirates. It is the seafarer who faces personal risk and a responsible ship owning company who has to attempt and resolve the issue at the earliest and in the best possible manner.

While our Navy has done an excellent job in controlling piracy within the coastal zone of India and has been extremely active in tackling pirates and their vessels in the Indian Ocean region, we at INSA believe that it is time for the Indian government to escalate this to the United Nations Security Council. An international force under the aegis of the United Nations against the scourge of Piracy is the only definitive answer.

INSA believes that the media can play an extremely important role in building public opinion that would make action by United Nations Security Council inevitable. However, other than a few articles on piracy, one does not see much policy shaping or opinion creating endeavours by our media. We at INSA would be more than happy to share information/data with the media as we appear to be in consonance on the core issues – safety of Indian nationals, future of shipping, trade, economy and above all national security.



In Reply to Anil Devli 5 years ago

Dear Mr. Devli/INSA, thank you for writing in, thank you for reaching out, and thank you for the points brought up.

A full response shall be provided to you on INSA address after consulting with the editors of MONEYLIFE.

I would like to respond interim as follows;-

# On armed guards, in the specific case of the FAIRCHEM BOGEY, which as you know is an American controlled ship operating under the Marshall Islands FOC, there were armed guards on board till the 18th of August. they were then withdrawn because SALALAH anchorage was considered 'safe'.

# However, on the larger issue of armed guards onboard merchant ship, taking into account a variety of issues including lifeboat capacity, accomodation, line of command, inter-personal issues, port state issues, much still remains to be done. A strong flag state like India can, if it chooses to, bulldoze its way on this subject if it wants to.

# To blame the exit of Indian seafarers from Indian flag to foreign flag only for reasons of taxation is to miss the woods for the trees. This is another subject which can be debated at length.

# The media is not some sort of tap, to be switched on and off at will, as your last para suggests. In the first instance, INSA and its members will need to open themselves up for much more scrutiny from the media, on a variety of issues like:-

=how many INSA members are also owners/operators of foreign flag/FOC vessels.
=where is INSA on wage negotiations with Indian seafarers.
=why are Indian seafarers on Indian ships not treated as "employees" by INSA members, but instead, kept on contractual basis.
=what is INSA's position on citadels and non-armed responses onboard Indian flag ships.
=what is INSA's position on additional insurance as well as compensation for Indian seafarers on Indian ships who end up in trouble of any sort including piracy.
=what is INSA's position on the RPS Rules 2005 from DGS, which acts as a direct counter-punch to anything that INSA expects wrt employing Indian seafarers?

=Most of all, what is INSA doing to encourage media to interact with Indian seafarers on Indian ships, along the lines of what, for example, the Indian Armed Forces are doing lately?

There is a lot that INSA can and should do, instead of just picking on one aspect - taxation. Today Indian seafarers on Indian flag ships are not given shore leave in Indian ports, they are treated like rubbish by the vast variety of "authorities" who are inter-acting with ships in port, the big issue of still keeping seafarers on contractual "wages" instead of on employment is ofcourse mentioned.

Thank you for writing in. I would certainly wish to take these issues forward, but please look within - when was the last time INSA came out strongly on issues pertaining to the way shipping is being destroyed in India, especially Indian flag?

The answer, Mr. Devli, lies in the simple fact that most of the INSA members have more ships under foreign / FOC flag than under Indian. So obviously, where do the real interests lie?

Warm regards/Veeresh Malik


In Reply to malq 5 years ago

"# On armed guards, in the specific case of the FAIRCHEM BOGEY, which as you know is an American controlled ship operating under the Marshall Islands FOC, there were armed guards on board till the 18th of August. they were then withdrawn because SALALAH anchorage was considered 'safe'. "

Who on earth deemed Salalah as ''SAFE''???!! IF it was so called intelligence from the " "Security Company" " then they failed in their duty as a provider of services, this company would have known that Salalah certainly is NOT SAFE, nowhere within the HRA is "SAFE". I would sugest the CEO of this security company be questioned on why they allowed the team to disembark at Muscat (certainly could not have disembarked anywhere else 2 days geographically from salalah) without advising this was a dire idea!
Also I find it strange that a team would disembark at Muscat when the vessel had come from north of that location, armed teams are usually embarked and disembarked at Muscat and NOT upwards north.
SOMETHING NOT RIGHT ABOUT THAT STATEMENT of a team being disembarked on 18th. WERE THEY REALLY EVER THERE??? Doubtfull or yes they were and are inept and should foot the bill on bad advice which led to ultimately; a hijacking of that vessel they were employed to protect! This decision would have to come from the top of the chain in security...CSO of anglo eastern/owner coy OR Director/CEO of the security team company regardless of what the captain wants.


5 years ago

Further update No. 1 on FAIRCHEM BOGEY IMO 9423750

Here's an update on what reportedly happened with the FAIRCHEM BOGEY, and a sordid tale of ineptitude and lack of real concern all around, as well as the realities.

# The FAIRCHEM BOGEY was anchored about 2 miles away from the Port of Salalal (POS).
# The first boarding by pirates was at about 0500 hours local time, when there was apparently only a quartermaster on the bridge, since the ship's complement was extremely tired. Fudging of time sheets is not an unknown truth in an industry where people have to prove that they worked only about 100 hours a week.
# Alarms and MAYDAY issued on Channel 16 immediately, and then continued on Channel 16 open for all in vicinity to hear.
# More pirates boarded till about 0700 hours local time.
# The Port of Salalah immediately contacted the Royal Omani Army, Navy and Coast Guard - it appears that the Navy did not even have anybody to pick up the phone at 0500 hrs.
# It took the ship 3 hours and 20 minutes to start moving seawards under pirate control from anchor. It is assumed that about 1.5/2.0 hours was spent in getting in and then out of the citadel, some seafarers were left outside the citadel, though this is not confirmed either.
# When Royal Omani Navy deployed a patrol boat and ordered the vessel to stop or they would shoot, the response was "don't shoot they will kill us" from the ship.
# Helicopters were not deployed to attempt to put special forces onboard, also slight mist/fog, reported.
# The Royal Omani patrolboat that followed gave up the chase after about 40 nautical miles.
# An Italian and a Chinese warship which were present in Salalah declined to do anything as the incident was in Omani territorial waters.
# Some members of the ship's complement were apparently able to contact their family members.

More updates soon.


Anon UKSec

In Reply to malq 5 years ago

This crew were trained/advised in anti-piracy and therefore having 1 man on watch was totaly against NSP's in High Risk Area's. You can assume 18+ were off duty asleep. Surely 1 man bridge deck lookout would have spotted the danger and called the anti piracy drill into play.
As to the security/naval services of Oman...where is the anchorage protection measures??? At least a security zone should be placed and patrol rotated 24/7...then again, if they can't even answer a radio/telephone, then I guess I must be having a laugh to question the security zone. Anchorage charges are quite high and for that money shipping companies should now demand if they pay the fees that they should expect reasonable security measures be in place by that countries authorities. If Mombassa can do it in their current financial situation, am quite sure Oman can!
Also...why did the shipping coy/charterers not ensure the continuation of armed security as before?? I would suspect SW Monsoon season puts out a false sense of security.
I for one always advise due dilligence and vigillance throughout the High Risk Area no matter what the weather.
My thoughts go to the crew and of course their distressed families back home.

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