The Economic Survey
has pointed out that wide-ranging reforms are a must if the country is to realise
its ambition of achieving growth rates in excess of 7% p.a. These reforms cover
the agricultural, industrial and service sectors of the economy, as well as
policy changes to be initiated by the Government. Important areas of reforms
include:
Background
Shipping industry is cyclical and capital intensive
in nature.
The world shipping fleet stands at around 500
mn GRT (Gross Registered Tonnage). India's share stands at around 7 mn GRT.
The proportion of India's sea-borne trade carried
by the domestic shipping industry has been steadily decreasing and now stands
at around 30%.
After an impressive performance in FY01, the
Indian shipping industry is facing rough weather this fiscal.
Currently cruise ships, excursion boats, ferryboats,
cargo ships, barges and similar vessels for transport of persons or goods
do not attract any customs or excise duty.
Major announcements made in previous
year's budget
The rate of depreciation available in respect
of ships and inland water vessels was increased to 25%.
Exemption from basic customs duty on ships,
launches, boats and tankers was withdrawn and basic customs duty of 5% was
levied on them. However, these goods were exempt from Special Additional Duty
(SAD).
Special Excise Duty (SED) on yachts and other
vessels for pleasure or sports, rowing boats and canoes was raised from 8%
to 16%. These vessels attracted a total duty of 32% (16% CENVAT + 16% SED).
Industry's demands from Union Budget
2002-03
The industry should have the option to pay tonnage
tax in lieu of corporate tax. Tonnage tax is a lumpsum tax on the ship's earning
capacity as calculated through globally accepted procedures on the basis of
Net Registered Tonnage (NRT) of the vessels. The present regime of corporate
tax sans any major fiscal benefits has made the industry non-competitive in
international operations as foreign companies pay only minimal tax.
There should be an exemption from income tax
for Indians serving on domestic-flag vessels, thereby bringing them in line
with those employed on foreign-flag ships. This tax relief is essential to
make employment on Indian ships as attractive as that on foreign vessels.
The discriminatory tax system has led to an acute shortage of officers to
man Indian vessels.
Rate of depreciation for ships should be revised
from 25% to 40% in order to bring them on par with other modes of transportation.
A 10-year tax holiday should be given for coastal
shipping.
Ship repair equipment and spares for coastal
ships should be exempt from excise duty.
Key Players
Shipping Corporation
of India, Great Eastern Shipping, Essar Shipping, Chowgule Steamship, Varun
Shipping Ltd.
