The shipping industry,
which is already in choppy waters, may have to wait longer for the tide to turn
in their favour. The budget was a disappointing one for the industry, which was
expecting a modernization fund for easy access to low-cost borrowings,
abolishing seafarer's tax to retain talent and exemption from service tax on
several inputs.
The silver-lining was
Pranab Mukherjee's proposal to do away with the 5% countervailing duty imposed
on ships last year. Anil Devli, CEO, Indian National Shipowners Association
(INSA), said, "Doing away with this levy will end lot of uncertainty among
companies about bringing their ships to the Indian coast. But overall most of
our demands have been given a go by."
The reduction of
withholding tax on interest payments of external commercial borrowings is also
expected to help port developers and shipbuilders to some extent.
"While reduction in
withholding tax will help easy access to finance, the increase in service tax
is a dampener," said Prakash Tulsiani, managing director, APM Terminals,
Pipavav port. He added the reduction of import duty on coal will attract larger
volumes of the commodity, which in turn will lead to growth in bulk cargo
business.
Suren Vakil, managing
director, BMT Consultants India, said, "It's an opportunity lost. There is
nothing to promote coastal shipping, which could have had a huge potential for
reducing traffic on roads and freight costs. Moreover, tax break on ECB will
have a marginal impact as most funds are raised locally."
Essar Shipping's managing
director A R Ramakrishnan said, "There is no announcement in terms of
direct initiative for the shipping industry in the budget. There are positive
opportunities that could arise for the industry from the various initiatives
announced for the power, steel and ports sectors. These sectors being
substantial users of shipping services, the support provided to them over the
next two/three year period would have a positive impact for shipping
firms."
The 2% increase in excise
duty is expected to affect ship breakers in Alang. "We will have to bear
an additional burden of Rs 150 crore with the hike," said Vipin Agrawal,
vice president, Alang Ship Recycling Industry Association.
Source:
Times of India. 17 March 2012
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