As the Indian shipping industry is grappling amidst the global downturn, the inclusion of coastal shipping and inland waterways under service tax net during the budget has come as a shock, and the shipping bodies are taking up the matter to the shipping ministry, and a letter is soon to be send to the shipping ministry, which is supposed to include demands regarding coastal shipping among other things.
?Currently only 7% of the cargo moves through the costal water. At a time when the shipping companies are focusing to increase movement through the coastal waters, the introduction of service tax for coastal shipping comes as a set back, hence we will be sending a letter to the shipping ministry by early next week,? commented a senior official from Shipping Corporation of India on conditions of anonymity.
As coastal shipping and inland water bound cargo is very low in India compared to several other countries, the industry is skeptic that the introduction of service tax at this juncture might dampen the existing demands as well.
According to some, though the intention of the government is to bring parity between the different ways of moving cargos-through rail, road and water- the stance, however should not impact the existing share of coastal shipping. Moreover, the shipping sector has been making efforts to align itself with mainstream developments, owing to the coming in of number of ports and enabling legislations like river-sea regulation from the directorate general of shipping. At such a time, coastal and inland waterways operators feel that the new tax could be a serious blow to the industry.
?As it is the share of coastal shipping is low. The government wants to bring parity between different kinds of logistics, however we fear that due to this the share of coastal shipping might go down further,? commented an Indian National Shipowners Association official.