India’s largest shipowner Shipping Corporation of India (SCI) is considering a gradual reduction of exposure to its loss-making international container service.

The move comes at a time when the government is understood to have initiated a review on the relevance of SCI as a state-run enterprise, since the private sector has been coming forward in a big way to invest in the shipping sector.

SCI, the only Indian company operating an international box service, has been finding it difficult to keep its container vessels afloat in the past few years due to a prolonged slump in the freight market. It operates five boxships out of a 72-strong fleet.

“Although there has been a marginal improvement in rates compared to last year, they are still ruling at uneconomic levels,” said a shipping company official.

The Indian national carrier runs three main container services from India – to Europe, the Far East and West Asia. Some of these weekly services are operated in collaboration with other international container shipping lines.

“We are examining it [the container shipping business] minutely with a microscope; there is no point in running a continuous loss-making service,” said SCI’s chairman and managing director Arun Kumar Gupta.

“If we are pushed to the wall, and if we think there is no way we can turn around the loss-making container shipping business, we might as well close it down.”

While SCI wants to reduce its global liner operation, the company is keen on expanding its container services along the Indian coast. It is also exploring the scope of deploying some of its larger vessels for coastal operations.

The new BJP-led National Democratic Front government is expected to come out with a comprehensive shipping policy that will lean towards promoting coastal shipping, and SCI is likely to play a key role in this endeavour.

“Strategically, it would not be a wise move for SCI to exit the international container service segment entirely,” said a former senior official of the company, requesting anonymity. “Its presence in the container trade is important. Instead, the company should be rationalising its service to make it economically viable.”

SCI has been reporting losses for the past three years, and is in danger of losing its Navratna (one of the nine jewels in the Indian government’s crown) status. In fiscal 2013-14, the corporation reported a loss of INR2.75bn ($45m).