Indian Budget Proposals for Maritime Sector
Finance Ministry Arun Jaitley in Union Budget for financial 2016-17 (Apr-Mar) has announced imposition of 14% service tax on services provided by domestic shipping companies transporting goods from outside India.
“The service tax on services provided by shipping companies by way of transportation of goods by a vessel from outside India up to the customs station in India will be 14% with effect from 1 June, 2016,” said the Budget.
Shipping Corporation of India, Mercator and Great Eastern Shipping among others are some of the top domestic shipping companies.
The Modi government has allocated Rs 800 crore next fiscal year for development of new ports and ongoing work on its National Waterways project, Arun Jaitley said.
"In 2015, India's major ports have handled the highest ever quality of cargo. We have also added the highest ever capacity in major ports. We have started a series of measures for modernizing the ports and increasing their efficiency. The Sagarmala project has already been rolled out. We are planning to develop new greenfield ports both in the eastern and western coasts of the country. The work on the National Waterways is also being expedited. (Rs) 800 crore has been provided for these initiatives," Jaitley said in his speech.
The cargo traffic of Indian ports increased by 8.2 per cent to 1052.2 million tons in 2014-15, with traffic at non-major ports increasing at a faster rate than at major ports, according to data on the Economic Survey 2015-16 put out last week.
The initiatives of the Government to modernize the ports and escalate their efficiency are expected to repute the Indian ports as fully equipped havens for global entities, say market observers. The formulation of The Sagarmala Project and work on the National Waterways will have a positive impact on the sentiments of the marine and shipping industries.
The shipping companies engaged in export assignments will be allowed the input tax credit, a move to encourage export of goods, one of the crucial parts of 'Make In India' initiative kick-started by the government.
“Services provided by Indian shipping lines by way of transportation of goods by a vessel to outside India being zero rated with effect from 1 March, 2016,” said the Budget.
India is eyeing annual savings of Rs 25,000 crore on logistics costs by 2025 by promoting coastal shipping under its ambitious Sagarmala project.
Sagarmala aims at promoting port-led development by harnessing the country's 7,500-km long coastline, 14,500-km of potentially navigable waterways and strategic location on key international maritime trade routes.
