Asia/Pacific News
India Mulls Dropping Bunker Tax
India's shipping ministry is calling for the elimination of a 25 to 30 percent customs duty on bunkers for vessels carrying cargo for transshipment, Indian business paper The Economic Times reports.
Shipping experts say removing the tax would encourage mainline container ships to serve the Indian markets, rather than berthing at Colombo, Sri Lanka and using smaller feeder vessels to move cargo to and from India.
One official estimated that eliminating the duties would cut government revenues by about Rs 56 crore ($9.3 million) per year but that it would increase export-import handling operations, producing direct and indirect benefits of more than Rs 700 crore ($116 million).
The move could encourage more transshipment even without changing cabotage rules that now restrict movement of foreign vessels on coastal routes, something that has been controversial.
"We realised that the tax norms do not provide us with a level playing field for the movement of EXIM cargo on the coast," the official said.
"In the long-term we want to relax cabotage for all such cargo, this is a short-term measure."
At a recent summit, Indian coastal shippers said they need government and industry support, including the development of bunkering facilities.
