Tonnage tax may be cleared

The long-pending tonnage tax proposal may get cleared soon. Shipping Minister Shatrughan Sinha said the ministry had planned to get an in-principle approval from the Cabinet shortly.

"The proposal is in its final stages and we are optimistic that the tonnage tax regime would be a reality in near future," Sinha said at a press conference held here today.

Shipping Secretary D T Joseph said more than financial constraints, the maritime industry suffered from improper policy regime. With the introduction of tonnage tax, the shipping industry's complaint of the lack of a proper tax policy affecting Indian tonnage would be addressed, he said.

He, however, pointed out that the industry was not prepared for the tonnage tax regime. He said companies should come up with concrete acquisition plans and how the savings due to the tonnage tax regime would be used.

Joseph said among other policy initiatives the government was considering the setting up of a separate fund to finance activities in coastal shipping and inland waterway transport sectors.

He said the fund would either get financed through the proposed maritime development cess and in case it was not approved, the government would bear the entire burden. Once the fund was cleared by the government, the ministry also planned to approach financial institutions like IDFC and IFCI to operate it.

The ministry also proposed to establish a national sea waterways programme bringing channel development directly under the Centre, releasing funds from port trusts currently entrusted with its maintenance and development.

All these proposals are a part of the Rs 100,000 crore Sagarmala Project, which is also set to be put before the cabinet.

The secretary said getting private parties to invest would not be much of a problem as the both ports and shipping sector have performed very well this fiscal. He said he expected traffic at the major ports to grow 13 per cent to in 2003-04 to 363 million tonnes from 313 million tonnes registered last financial year. He said shipping benefited from high freight rates, mainly with respect to bulk cargo.

He said the growth was driven by the increased demand for iron ore, steel and other bulk cargo components from China, which pushed up the freight rates.