Budget for 2022-23: Centre mulls sops to set up shipping lines
As exporters grapple with a 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, official sources told FE.
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 $100-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.
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