For developing shipping in Kerala
A draft report on a strategy for developing coastal shipping in Kerala has suggested that the State government, through the Maritime State Development Council, appeal to the Reserve Bank of India (RBI) to direct banks to provide finance at concessional rates to coastal shipping companies for a limited period.
The draft of the study, prepared by Deloitte Touche Tohmatsu Private Limited, said that shipping required heavy investments and opened up higher risks as a result of which banks were averse to financing shipping companies.
The study highlighted that there had been a long-standing demand for a dedicated coastal shipping fund, arranging corpus for which was a big challenge.
The State government should incorporate this in its agenda and try for financial assistance from the Union government.
The study suggested the setting up of a State-level specialised financial institution on the lines of IL&FS or IDFC to finance maritime sector.
The Union government had not conceded a demand to remove duty on bunker used by vessels on coastal service, the study said. It pointed out that Kerala had cut value added tax (VAT) rate from 12.5 per cent to 0.5 per cent for bunker supplied to foreign vessels at the liquid terminal located within a Special Economic Zone on Puthuvype Island.
The bunker did not attract customs and other duties as the terminal was located within a SEZ.
To encourage coastal shipping, the State government should push for the removal of the duty on bunker supplies to coastal shipping. At the same time, VAT relaxation on bunker supplies to foreign vessels should be extended to coastal ships. The State should also pursue the case for service tax exemption on coastal shipping.
Kerala has lagged in developing coastal shipping, accounting for just four per cent share in the total coastal shipping volume in the country.
The States of Gujarat and Maharashtra accounted for nearly half the volume of coastal cargo traffic in the country while these States along with Tamil Nadu, Andhra Pradesh, and West Bengal account for more than 75 per cent of the volume of coastal cargo transport.
Source: The Hindu
