• Notification Date: 14-10-2024
• Notification No: N/A

Shipping companies stress on delays, taxation, and liquidity issues

The government on Friday discussed liquidity issues in the shipping industry, cargo contracts for oil and coal importers, and tax issues for Indian seafarers, among others.  

These issues were discussed in a meeting of officials from the ministries of trade and industry, finance and shipping, and industry representatives.  

The industry raised issues such as the 5% Goods and Services Tax (GST) levied on imports of ships, which is not refundable in the case of ships sailing in international waters.  

"Around Rs 500 crore is wedged due to GST issues," an industry source said. The 30% withholding tax on salaries of Indian shipping companies was also an issue raised in the meeting. Foreign shipping companies do not exempt seafarers from this tax, and the industry believes this is harmful to Indians.  

"The meeting discussed how to increase India's share in shipping and international trade," the official said.  

In addition, measures to encourage free on board (FOB) instead of cost, insurance, and freight (CIF) of goods were also discussed to enable Indian vessels to participate in tenders.  

In a CIF delivery contract, the supplier or seller is responsible for dispatching the cargo, whereas in an FOB cargo contract, the buyer or importer is responsible for transportation. Addressing these issues is important as container shortages, rising ocean freight and shipping costs, shipping delays and transit times at Indian ports, and geopolitical uncertainties, including the Red Sea crisis, are impacting Indian exports. 

India's merchandise exports fell for the second straight month, dropping 9.3% in August, the slowest drop in 13 months. Traders blame rising transport costs, a slowing Chinese economy, and weaker economic conditions in the West. India last month decided to cut certain charges at ports and buy five more used container ships from SCI to address traders' afflictions in the shipping sector and boost exports.