Indian Budget gives big Boost to coastal shipping

Mar 07, 2011, 3:04PM EST
The budget having given major benefits to coastal trade, more players likely to make an entry

Like the curate’s egg, the Indian fiscal 2012 budget is good in parts. Various players of the maritime sector have expressed both optimism and disappointment over various aspects of the budget pertaining to seaports and the efficient, safe and cost-effective movement of freight.

Coming as a surprise, the good part has gone to the coastal shipping which has been given a big boost by the government. The surprise comes because shipping had not received any good news from the subsequent budgets presented after the introduction of the tonnage tax in 2004. Now after several years the government has surprised the trade by showering some benefits on the Indian coastal trade.

Coastal operators expressed happiness now that they are better placed. One such operator stated that the finance ministry has given a good boost to their trade as now they will be able to import of spares for their vessels free of duty and there is a 25% reduction in service tax. This will definitely lead to savings that could be utilized for other developmental activity.

The other only good news in the budget is In terms of infrastructure development.  A beginning has been made by setting apart an amount of $ 1.1 billion for maritime infrastructure development fund. However, considering the amount of investments that will be spent in the ports, both under the private and public sector, the amount appears to the grossly inadequate. Moreover, in the maritime sector, ports are not the only activity area. There is shipping, shipyards, offshore, etc. There have been also quite a few announcements about infrastructure bonds as well as foreign investments in these bonds of $ 5.6 billion available as tax rebate and the $ 1.1 billion is a part of the wider package.

A spokesman of Indian National Shipowners’ Association pointed out that shipping is not considered as infrastructure just like ports are. But overall, from the economic point of view for the nation and overall for the port sector, definitely these augur well. This he felt will have a positive impact on Indian economy and Indian port capacity development and in-turn will have positive effects on shipping though not directly but indirectly.

Already some logistic operators are in the process of drawing up plans of getting into coastal shipping business. During a meeting of the Shipping, Transport & Logistics Committee of the Bombay Chambers of Commerce held this morning discussions centered around the RoRo coastal trade, which has been give a great fillip.

Instead of transporting by road, trucks involved in long haul would now find it cheaper to move to the closest non-major port and take a RoRo vessel to the port nearest to the destination. From there they could then complete the last leg of the journey by road. (Of course the trucks will have to have all India permit). By using the coastal ship, they will not be subjected to payment of multiple interstate tolls, octroi, or other payments. On the whole it will work out faster as the drivers do not have to stop for the nights, no taking breaks, and no time consuming checks at interstate entry points. The movements will be expeditious between non-major ports since the customs are posted only at major ports treating all goods as international cargo requiring filing of documents, etc. Besides major ports don’t have dedicated berths for coastal vessels and such ships are made to wait their turn some time for a few days.


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