: Centre to consider sops to set up shipping lines #FinanceIndia #StockMarketNEWS Centre to consider sops to set up shipping lines New Delhi, 3 Jan (KNN) With the ongoing global container shortage and
@stockMarketNEWS 19 Days ago
Centre to consider sops to set up shipping lines #FinanceIndia #StockMarketNEWS
Centre to consider sops to set up shipping lines New Delhi, 3 Jan (KNN) With the ongoing global container shortage and exorbitant freight costs, the government is exploring a proposal to extend tax and other incentives to draw large players to set up shipping lines in India.
The incentives may be announced as early as in the upcoming Budget for 2022-23, subject to the finance ministry’s concurrence. The ministries of commerce and shipping are learnt to be deliberating on various options some officials are studying the attractive Ireland model of taxation for shipping firms. Once a proposal is ready, the approval of the finance ministry will be sought.
Shipping costs of Indian exporters to most destinations have more than doubled in the past one-and-a-half years in the wake of the Covid outbreak, mirroring a global trend.
Given that state-run Shipping Corporation of India (SCI) caters for less than 5% of the roughly USD100-billion domestic market, it’s not in a position to ensure orderly evolution of the shipping cost curve. As such, the government has now put the SCI on the block for sale.
Another source said the government could extend the validity of the Transport and Marketing Assistance (TMA) scheme, meant primarily for farm exporters, beyond March 2022. Under this scheme, which was reintroduced this fiscal with larger coverage and greater support, the Centre reimburses exporters a certain portion of freight charges. Rates of the assistance have been raised by 50% for exports by sea and 100% for those by air.
Apart from emerging risks from the new Covid strain, elevated shipping costs and non-availability of adequate containers remain the biggest challenge facing Indian exporters, as they seek to take advantage of a resurgence of industrial demand in advanced economies in recent months as reported by Financial Express.
Many global shipping firms are registered in Ireland, as it adopts a liberal tax regime for them. For instance, shipping firms based out of Ireland pay tax based on the tonnage of the fleet as opposed to tax on profits recorded by the business. This, combined with the low, general corporation tax rate of about 12. 5%, typically keeps their tax liability lower than in many other countries. Similarly, no capital gains tax is slapped there on the disposal of a ship.
“Incentivising the setting up of shipping lines in India and even the manufacturing of containers would be a key step towards self-reliance in this area. China has invested hugely in container manufacturing and is now reaping the benefits, although it, too, faces elevated costs,” according to a senior government official.