Due to difficulties in transferring the lease of important non-core assets, such as the Shipping House and Maritime Training Institute in Mumbai, the strategic sale of Shipping Corporation of India (SCI) is expected to be postponed until FY26.
As part of the government’s larger disinvestment plan, SCI, the biggest maritime firm in India with a fleet of 70 ships, is being strategically sold.
Despite recent developments, including the Maharashtra government’s approval of a stamp duty waiver, a senior government official stated that the disinvestment process has been halted and its privatization has been impacted by bureaucratic delays in the state in completing the lease transfer to the defunct Shipping Corporation of India Land and Assets Limited (SCILAL).
A crucial step in the disinvestment process, the transfer of non-core assets to SCILAL, has proven to be more difficult and time-consuming than first anticipated. Now, the government will have to review the schedule.
The Finance Ministry is re-engaging with line ministries to resolve a number of concerns, according to official sources; nevertheless, other administrative ministries play a crucial role.
Even something as basic as attempting to modify the Maharashtra lease has taken nearly a year. The state’s revenue department received the proposal from the Mumbai collector, but lengthy bureaucratic consultations caused the process to stall. The procedure will continue to be postponed if they do not make progress. Even while no one is purposefully impeding the process, there are ongoing delays since essential homework is still incomplete.
These non-core assets, which were transferred to SCILAL to facilitate the sale of SCI’s shipping company, include the iconic Shipping House and the Maritime Training Institute in Mumbai. They are leased from the Maharashtra government.
This shift has necessitated extensive talks across multiple state ministries. The SCI assets in question are leased by the Maharashtra government, and the lease needs to be transferred from SCI to SCILAL. The strategic sale of SCI, which was first approved by the Union Cabinet in 2020, is being delayed by this bureaucratic backlog. Only in February 2023 did the Ministry of Corporate Affairs sanction the demerger itself, which divided SCI’s non-core assets into SCILAL.
There has been some improvement in spite of the setbacks. The Maharashtra cabinet authorized a stamp duty relief, saving an estimated Rs 300 crore and removing a major financial obstacle. Delays in completing lease transfers have resulted in additional disruptions and prolonged the sale timeframe, despite the fact that this was considered a critical step in moving the sale along.
It was originally anticipated that the sale, in which the government sells its 63.75 percent interest, would bring in Rs 3,000 crore for the exchequer. Long-term delays, however, have raised doubts about its completion.
The unsolved lease transfer difficulties continue to be a bottleneck, despite the expectation that the approval of the stamp duty waiver would speed up the process. The government’s aggressive disinvestment goals for the current fiscal year may be jeopardized if these issues force the sale’s completion beyond FY26.
