Surviving with New Tariff Guidelines: Review and Options

The Ministry of Shipping Ministry has announced changes in tariff fixation for major ports and the new guidelines are aimed at allowing competitive market forces play a greater role in tariff determination and flexibility. According to the Ministry, the measure is a major step forward.

The Shipping Ministry had been contemplating to come up with new tariff guidelines in response to feedback received from various stakeholders, who felt the existing Tariff Authority for Major Ports’ regulations were detrimental to the growth of the sector. It was also felt that there was no level-playing field between the major ports and the non-major ports, as the latter were outside the ambit of TAMP.

The new guidelines for determination of tariff for projects and major ports come into force with immediate effect. Beside providing for tariffs to be indexed to inflation, they also set out performance standards for port projects to improve accountability and ensure improved quality of service. The focus of TAMP will now gradually shift to performance monitoring and redressing grievances.

Interestingly, during the last 10 years, non-major ports contributed only 10 per cent of the total port volumes. However, in 2012-13, their share has gone up to 48 per cent and that of major ports has come down to 58 per cent. By the year 2020, the share of non-major ports is likely to increase further to 55 per cent and that of major ports could come down further to 45 per cent.

AGENDA

  • The implications of the new
    guidelines and its impact on private
    port developers and investors.
  • The need for port reforms to attract
    private investment

ATTENDEE PROFILE

  • Ministry of Shipping
  • Private Port and Terminal Operators
  • Private Investors
  • Equity Firms

AMTOI & FFFAI Transportation Demands and Creating Capacities

India’s total tonnage is just over 11 million gross tonne and contributes to only 8 per cent of the total exim trade. The remaining 92 per cent of India’s seaborne freight is carried by foreign ships. Lack of a level-playing field in the matter of taxation is impacting the competitiveness of India’s domestic shipping industry. The two main components are service tax on input services and stringent regime of seafarers taxation. Under the provision rules in the service tax, a foreign shipping company moving Indian cargo within India does not have to pay service tax because of its place of residence outside India. But an Indian shipping company ferrying this cargo will have to pay 12.5 per cent service tax which adds to its cost and makes it uncompetitive. As for seafarers taxation, nearly 50,000 Indian seafarers on Indian flagships pay income tax, often at the highest slab rates, while those working on foreign flags get NRI status and tax-free salaries if they sail for six months or more in a year.

Since Indian shipowners have to compete with foreign flag vessels which pay no taxes under some flags like Cyprus, Singapore and Panama, many Indian companies prefer to register their fleet under foreign flags. There is therefore a dire need to increase the percentage of tonnage under Indian flag for the strategic value of maintaining the supply line for essential cargoes and to guard against undue freight charges by cartels and monopolies. The Comptroller and Auditor General (CAG), in its report on shipping, noted that the government should ensure a level-playing field for Indian shipping companies as they are exposed to a variety of various direct/indirect taxes, higher than their international counterparts. The pending issues hurting the sector’s growth, including grant of infrastructure status to shipping industry and lack of access to cheaper funding, need to be resolved forthwith.

INLAND WATER TRANSPORT AND COASTAL SHIPPING:

India has a total coastline of 7,551 km and about 14,500 km of navigable inland waterways, of which 4,503 km are national waterways, being developed and maintained by the Central Government while the remaining is the responsibility of the respective State governments. About 55 million tonnes of cargo is being moved annually by inland water transport (IWT).

While IWT is a fuel-efficient and environment-friendly mode of transportation, it is important only in states such as Assam, West Bengal, Bihar, Mumbai, Goa and Kerala. Also, it is operational only in restricted stretches of Ganga-Bhagirathi-Hooghly rivers; the Brahmaputra river; the Barak river; the rivers in Goa; the backwaters in Kerala; inland waters in Mumbai and the deltaic regions of the Godavari-Krishna rivers.

To give a boost to this sector, the IWT Policy proposes several fiscal concessions and guidelines for encouraging private sector participation in development of infrastructure and ownership and operation of inland vessels. IWAI has also been open to joint ventures and equity participation in BOT projects.

AGENDA

  • The government policy to boost
    inland waterways
  • The constraints in development of
    infrastructure
  • The IWAI initiatives for private
    participation

ATTENDEE PROFILE

  • IWAI Officials
  • IWT Operators
  • Coastal Ship Operators
  • IWT Users
  • Infrastructure Development Firms

 

  • Barge Owners
  • Power Companies
  • Coal Importers
  • Bankers and Financial Institutions
  • Ports