To get more crude oil to India, oil companies want the Union government to allow them to import crude oil on what is called the cost, insurance and freight (cif) basis, without requiring any approval from the Shipping Ministry. The move is expected to eventually help more foreign flagged vessels to ship crude oil to India. Allowing crude imports on cif basis will transfer the power of how crude oil carriers are chosen to the selling party Â— that is, firms in other countries.
Booking cargo on cif basis means that the seller bears the cost of insurance and freight. Indian ship owners, who feel such a proposal will take away their potential business, have opposed the move. If the costs of international ship owners are lower today, it is due to their taxation norms, they feel.
India imports about 170 million tonne of crude oil a year. Crude oil purchased from various countries is transported on cargo ships. Booking the cargo on what is called the freight-on-board (FoB) basis requires the buyers Â— domestic oil marketing firms Â— to arrange ships and insurance to cover loss or damage to the goods.