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India Club

By Amigos IAS

Why is it in the news?

  • India plans to establish its protection and indemnity (P&I) entity, known as the India Club, to offer insurance for ships in Indian waters.

About P&I Entity/Club

  • P&I Entity/Club is a mutual insurance association providing risk-pooling, information, and representation exclusively for members, including ship owners, operators, charterers, freight forwarders, and warehouses.
  • Reports only to its members and covers third-party open-ended risks such as cargo damage, war, and environmental issues like oil spills, often avoided by traditional insurers.
International Group of P&I Clubs

·       Comprises 13 clubs based in London, covering around 90% of global ocean-going ships.

·       Includes the UK, US, Korea, Singapore, Japan, the Netherlands, China, Bermuda, Norway, and Sweden.

·       Club members contribute to the common risk-pool based on pooling agreement rules.

Reasons for Establishing India Club

  • A locally focused Indian entity aims to reduce susceptibility to global sanctions, ensuring coverage for ships operating in regions facing sanctions.
  • The Russia-Ukraine war highlights the significance of having such coverage.

 Challenges for India Club

  • The move may primarily benefit entities like the Shipping Corporation of India and some small shipping lines, as 90% of Indian-owned ships operate under foreign flags (e.g., Panama, Liberia, Kazakhstan).
  • The India Club may face challenges if global traders do not accept its coverage, impacting its effectiveness in the international shipping market.

Conclusion

  • The establishment of the India Club reflects India’s strategic move to enhance self-reliance in the maritime insurance sector.
  • However, challenges related to the acceptance of coverage and the limited impact on a significant portion of the Indian-owned fleet operating under foreign flags need to be addressed for the India Club to achieve widespread success and recognition in the global shipping industry.

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