“There have not been many changes in the
coastal shipping regime except the various taxes added for operations
of coastal vessels and the more and more preference for large carriers
over coastal ships as the former can offer more revenues,” said Mr. S. K. Shahi, CMD, SKS (Ship) Ltd, during SMP Expo 2012 while highlighting the coastal shipping scenario in India.
“The beginning of Indian maritime industry can be traced back to 3000
years but the modern maritime industry began in 1840 with the
establishment of Bombay Steam Navigation Company. The other notable
steamers were the Tata Line in 1894, the Swadesh Company in 1906, the
Bengal Steamship Company in 1907 and the Scindia Steam Navigation
Company in 1919”, he recalled.
Mr. Shahi focused on various positive points of coastal shipping
including the current proportion of cargo transport through various
means of transport, the cost savings by coastal shipping and the
benefits on environment due to reduction of emissions and other factors
found only in coastal shipping.
While he emphasized the fact that the optimal mix of coastal
shipping, inland water transport, road and rail will provide an
efficient transport infrastructure with mobility, flexibility and cost
efficiency, in his view adequate investments have not been made for
developing coastal shipping as compared to the other transport
infrastructure. Lack of policy measures, unfriendly attitude of major
ports towards the coastal ships and lack of dedicated ports / jetties
for coastal operations are the primary reasons for the set-back in
domestic cargo movement.
Mr. Shahi presented the views of the coastal shipping companies and
ship owners and listed their expectations and support required from the
Government. Following section enlists a few of them:
• Construction of exclusive 200-metre long coastal jetty in each
and every major port outside the exim area free of Custom formalities,
DLB etc. facilitated with modern equipments to handle containers and
heavy cargo
• Second preference to coastal vessels in berthing facilities and tariff charges as per tariff guidelines
• Developing financial institutions to fund coastal shipping vessels and operations
• Understanding and granting difference between the repair charges for foreign going vessels and coastal vessels and availability of dry dock for repairs
• To evolve a case for providing tax concessions both for fuels, spares and import of vessels as already the coastal ships pay a lot of tax
• Building a separate cadre of seafarers for coastal shipping with qualifications different from those for ocean going vessels as the lack of availability of qualified officers who prefer going on foreign vessels has caused a concern in the coastal shipping companies
• In the Union Budget 2005, Tonnage Tax has not been forwarded to coastal ships. This acts as a further disincentive for investment in coastal tonnage. Tonnage Tax should also be extended to coastal fleet
• If the Income Tax benefits are extended to the seafarers, manning coastal vessels, it will attract good officers and sailors.
• Industries situated within 50 km of sea should be mandated to use coastal vessels or at least 10% of cargo produced by the industries
• Formulation of separate coastal tariff should be done in order to reduce the handling cost of cargo
• Reduction in the survey fees, vessel survey in maximum 2 visits by surveyor
• Availability of long term funding of 25 years with 90% LTV at the rate of 6% interest
• Availability of bunker on credit and berth at arrival, port dues not to exceed 50% of freight and a welcome attitude by ports and port officials towards coastal vessels will go a long way in assisting the development of coastal shipping
• Second preference to coastal vessels in berthing facilities and tariff charges as per tariff guidelines
• Developing financial institutions to fund coastal shipping vessels and operations
• Understanding and granting difference between the repair charges for foreign going vessels and coastal vessels and availability of dry dock for repairs
• To evolve a case for providing tax concessions both for fuels, spares and import of vessels as already the coastal ships pay a lot of tax
• Building a separate cadre of seafarers for coastal shipping with qualifications different from those for ocean going vessels as the lack of availability of qualified officers who prefer going on foreign vessels has caused a concern in the coastal shipping companies
• In the Union Budget 2005, Tonnage Tax has not been forwarded to coastal ships. This acts as a further disincentive for investment in coastal tonnage. Tonnage Tax should also be extended to coastal fleet
• If the Income Tax benefits are extended to the seafarers, manning coastal vessels, it will attract good officers and sailors.
• Industries situated within 50 km of sea should be mandated to use coastal vessels or at least 10% of cargo produced by the industries
• Formulation of separate coastal tariff should be done in order to reduce the handling cost of cargo
• Reduction in the survey fees, vessel survey in maximum 2 visits by surveyor
• Availability of long term funding of 25 years with 90% LTV at the rate of 6% interest
• Availability of bunker on credit and berth at arrival, port dues not to exceed 50% of freight and a welcome attitude by ports and port officials towards coastal vessels will go a long way in assisting the development of coastal shipping
Possible policy initiatives which can be given to encourage the
coastal shipping were also presented in the conference some of which are
already discussed above and the others are mentioned below:
• Strict implementation of Cabotage Laws
• Exempt Custom Duty on import of coastal vessels, spares and bunker fuels
• Design specifications for coastal vessel
• To improve connectivity between ports and the road/ rail network
• One time Service Tax for coastal operations
• Increase in Marine Training Colleges with affordable fees
• Exempt Custom Duty on import of coastal vessels, spares and bunker fuels
• Design specifications for coastal vessel
• To improve connectivity between ports and the road/ rail network
• One time Service Tax for coastal operations
• Increase in Marine Training Colleges with affordable fees
Mr. Shahi expressed his hope that the Government appreciated the role
played by coastal shipping in the movement of cargoes and will through
promotion and development of coastal shipping ensure the smooth flow of
cargo to the hinterland of India.
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