Budget aims to give a boost to port development

Development of ports in the country is expected to get a boost following the announcement of tax-free bonds and lowering of withholding tax on ECB related payments for the sector in the Union Budget for FY13.

"The reduction in withholding tax from 20% to 5% on ECB related payments will help ports raise low-cost foreign debt," said Deloitte India senior director Hemant Bhattbhatt.

In the budgetary proposals, Finance Minister Pranab Mukherjee also allowed raising of Rs 5,000 crore from tax-free bonds for ports.

Over Rs 1.5-lakh crore investment is required in the country’s ports sector in the next five years, of which a major chunk is expected to come from the public-private partnership, said the Economic Survey for FY12.

Private participation is needed particularly for mechanisation of cargo handling, improvement of drafts at the ports, strengthening port connectivity by building road and rail links, and technology upgradation and automation, it said.

The challenge for the sector is to build vibrant, efficient, and safe ports and shipping services and a strong base for the ship building industry, it said.

Capacity expansion of ports in the 12th Plan is proposed largely through private sector investment and internal accruals. It would be a challenge to garner about 80% (about Rs 1.23 lakh crore) of the required investment through PPP (public-private partnership), the survey added.