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Coastal shipping plan hits iceberg

Mumbai, Nov. 23: Manufacturing companies are worried over a draft suggestion of levying a cess on all cargo passing through domestic ports to part-finance the Rs 100,000-crore Sagarmala project.

Manufacturing companies feel that if the suggestion is implemented, it could increase their cost of production. Sources said this concern was voiced at a meeting of leading companies on Friday.

Industry observers said a panel committee comprising members of diverse sectors are set to approach the secretary of the ministry of shipping on November 28 to seek redressal.

According to a draft suggestion prepared by the ministry, a nominal cess of around Rs 50 per tonne will be levied on all cargo passing through ports in the country. This proposal, which is akin to that seen in the road sector, is expected to generate over Rs 2,000 crore annually.

Though the Prime Minister's initiative to develop coastal shipping is welcomed by the industry, it is felt that a nominal cess would further raise transportation costs.

“The industry is already burdened with other charges and high terminal-handling costs. Such a cess may therefore pose an added burden,” a source said. The low-value cargo will be most affected by the imposition of such a cess, sources added.

The Sagarmala project was announced by the Prime Minister on the Independence Day to encourage movement of cargo through coastal shipping in the country. The plan is to integrate the maritime sector by covering ports, inland water transportation and other issues pertaining to the shipping sector.

In this regard, the ministry of shipping has proposed a separate Coastal Shipping Development Financial Agency and it has sought various incentives.

While these include infrastructure status for coastal shipping, the ministry, according to reports, has also proposed duty-free supply of bunkers to coastal ships. The government is also considering exemption of customs duty on imports of spares and equipment needed for the repair of vessels and removal of import duties on different equipment.

There is also a call for incentives from financial institutions through lower interest rates for acquisition of ships to make the project successful.

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