Fiscal incentives for domestic shipping, ship building likely

The Ministry of Shipping has embarked a scheme to provide some fiscal incentives to Indian ship owners and ship builders who have also fallen a prey to the global recession of unprecedented nature. This follows a meeting of Committee of Secretaries held last week.

According to Shipping Secretary Pradeep K. Sinha, shipping and ship building sectors in India have not found Government support for the past few years. The ship building subsidy scheme was not extended beyond 2007.  The Committee of Secretaries met last week to discuss various options on ship building and ship-owning. The meeting was attended by representatives from the Ministries of Defence, Defence Production, Revenue and Commerce.

This sector has not grown. Only about eight per cent cargo is carried in Indian flagged vessels. If we consider Indian built, Indian flagged vessels, then the percentage share will be much lesser. Various fiscal measures aimed at reducing the manufacturing cost of shipbuilding were considered. One measure was making available cheap financing for ship acquisition as is available in Korea and China.

These two countries account for 76 per cent of ships built in the world market. As for the subsidy scheme, we discontinued it in 2007 unlike China. If revived for a few years, it can reduce manufacturing cost and help shipyards grow.

Mr. Sinha said: “We have sought infrastructure status for shipping and ship building. We are also in talks with the Ministries for provision of long term cargo commitment by public sector units in sectors such as oil, steel, coal and even Food Corporation of India. Earlier, we were facing delays. But, now due to continuous monitoring, the process has been streamlined.

On a long term basis, we would like to do away with tariff fixation for ports and let the competition dictate the tariffs. For that, the Major Ports Act will have to be amended. We are further simplifying the tariff setting guidelines – whenever that is finalised, it will apply prospectively for projects that are awarded after they are finalised, Mr. Sinha pointed out.

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