India Prepares to Launch its Own P&I Club
India's government is reportedly ramping up to launch its own local P&I club. Its first services would be for the domestic market, but it could expand later to cover international shipping interests, according to local media – and this could provide India a way around disruptive Western sanctions.
The new India Club will reportedly operate as a traditional insurance cooperative, pooling premiums from its shipowning members and drawing on support from the national government. Existing government-backed insurers like New India Assurance and GIC Re may play a part in its creation. In the first phase, it is intended to reduce Indian shipowners' dependence on foreign insurers and potentially cut costs.
Indian officials have previously called for a locally owned P&I club that would provide resistance to sanctions. The Indian downstream sector has a voracious appetite for Russian crude, and it has absorbed much of the leftover volume that Europe abandoned when Russia invaded Ukraine. The sales arrangement is beneficial for Indian refiners and the Indian economy, since the oil is sold at a discount price.
Part of India's oil imports are shipped by Russians to Russians: India's second-largest refinery is half-owned by Russian state oil firm Rosneft and runs almost exclusively on Russian crude. The other leading Indian consumer of Russian oil, Jamnagar Refinery, is owned by a close ally of Indian Prime Minister Narendra Modi.
dWestern sanctions on Russia have occasionally interfered with this trade. Gatik Ship Management, a Mumbai-based tanker operator that sprung up in the first year of the war, flourished briefly in the Russian oil trade with support from Western service providers. Its rapidly-assembled fleet of 60 tankers worked with some of the largest insurers and class societies. However, when news spread that Gatik might be out of compliance with Western sanctions, the biggest names in the business withdrew – leaving Gatik high and dry. (Gatik eventually sold off its fleet, citing "substantial losses due to shifts in insurances, flags, and classes.")
More recently, a number of India-bound tankers with Russian oil cargoes have had to divert to other destinations because of sanctions on the vessels themselves or on connected entities. The Indian government has been keenly aware of the disruption and has been planning a sanctions-resistant, local P&I club for some time.
"I would think it is important to have a P&I entity of India's own ownership," said Finance Minister Nirmala Sitharaman in October 2023. "It would reduce India's vulnerability to international sanctions and pressures to provide strategic flexibility in shipping operations."
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