Interest subsidy for shipbuilding on the cards

Government is laying special thrust in promoting the Indian shipping industry

Companies that give shipbuilding orders to domestic shipyards, it has been proposed, would receive an assistance of 6.5 per cent on the total loan from the Centre, a senior government official told Business Standard.

The shipping ministry is pushing for the subvention scheme to be included in the Union Budget.

The government has shown signs of wanting to promote the shipping industry. The latest directive from the President to GAIL Ltd ,asking the state-owned energy company to place its orders for liquified natural gas carriers with Indian shipyards, was a move in this direction.

Indian shipyards are often unable to meet the technical and design requirements of companies, leading to delivery delays. To mitigate this, the shipping ministry is also planning to start a design centre. “The required design support is unavailable. It is a value-added service that we can provide not just to Indian but also to global shipping companies,” the senior official said.

Seeking more tax reforms for the shipping industry, companies have been lobbying for the removal of the seafarer taxation, levied on personnel working on Indian vessels. Industry players said the tax ensures they do not get a level-playing field in an industry that is essentially global. “We have to deduct this tax at source. Indian seafarers do not pay this tax if they are on a foreign flagged vessel. It makes hiring Indian vessels that much more expensive,” a senior shipping company executive said.

The ministry had asked for the removal of this tax in last year’s Budget, too, along with the extension of the shipbuilding subsidy. The 2013 budget in order to give fillip to the shipbuilding sector had exempted vessels from excise duty. Besides, the 6 per cent countervailing duty on imported ships was also removed by former finance minister P Chidambaram.