Port sector welcomes tonnage tax, awaits specific packages

Although the port sector has been identified as a focus infrastructure sector along with airports and tourism, there were no specific proposals for the ports and shipping industry sector in the Union Budget.

The industry here is uncertain about the fate of the Sagarmala project, an ambitious port development project of the previous Union government.

The industry has welcomed introduction of tonnage tax, stating that the Indian shipping industry will benefit a great deal from it and it will put the industry at par with other countries.

This is also a step in the right direction which will help smaller shipping companies grow in size, the industry said.

"It is heartening to find that the port and shipping sector is being considered a focus area, but no specifics have been mentioned. We believe the ministry of shipping will soon come out with a package announcement for the sector," said Sanjay Gupta, chief executive officer, infrastructure, Adani Group, which promotes the Mundra port in Gujarat.

He said the question of how the government proposes to focus on port development remains to be seen and the industry expects announcements in this regard soon.

Gujarat has the highest number of 32 ports among all the states in India and it also boasts of a 1,600-km-long coastline.

Commenting on the Rs 40,000 crore fund earmarked for institutional funding to the sector, Gupta said banks and financial institutions will have to pick up feasible projects and fund them.

Gupta, however, said while the private sector would like to invest primarily in port development, it would be improper to expect such companies to provide hinterland connectivity.

Yogendra Garg, development commissioner, Kandla Special Economic Zone, said, "Its too early to react. We were expecting exemptions in the services sector, which contributes to over 50 per cent of our gross domestic product (GDP). Secondly, every export-oriented units (EOUs) should get 10-year exemptions. At present exemptions for EOUs are available only till 2009. We were expecting that the SEZ Act will be approved by the parliament by the end of this year. Some procedure reforms for the bigger EOUs were also expected, which is not reflected in the Budget. At present, all the units need to take physical permission from the central excise. We propose to introduce a self-certification system and a single-window clearance for bigger EOUs."

A K Joti, chairman, Kandla Port Trust, said, "The finance minister has given priority to the development of infrastructure at ports and airports, which is a welcome move. The shipping industry has demanded levy of tonnage tax to make it competitive. Tonnage tax introduced by the finance minister will give a boost to the shipping industry. KPT is developing five new cranes, three of 25 tonne capacity and two of 10 tonne capacity. They are expected to be completed by October this year."

Adani's Gupta, commenting on increase in service tax, said port activity might be hit because of this.

The industry is now awaiting the ministry concerned to spell out the plans for the sector in the near future.

The Alang ship breaking industry is disappointed with the Budget. "The ship-breaking industry at Alang is worst hit by the Union Budget. On one hand, customs duty on non-alloy steel has been reduced from 15 per cent to 10 per cent, while on the other, the industry has to pay import duty of 15 per cent on ships brought for breaking up, which is the highest in the world," said Vipin Aggarwal, secretary, Gujarat Ship Builders' Association.