New Delhi, Aug. 22: The shipping ministry will take up with the finance ministry the issue of dredging companies losing their earlier tax concessions in the new budget.

Until now dredging companies enjoyed the same benefits as the shipping firms under section 33 AC of the Income Tax Act, which extended tax exemption benefits to savings undertaken for expanding the existing fleet. These funds had to be reinvested for the acquisition of new vessels within eight years.

Tonnage tax to confer greater tax benefits to shipping companies has been introduced in this year’s budget and section 33 AC has been completely scrapped. However, dredging companies have been excluded from the tonnage tax and have also ended up losing the concessions under 33 AC.

This, according to the shipping ministry, is unfair as dredging companies play a key role in creating and maintaining the infrastructure required for shipping. It was for this reason, they had been extended the tax benefits earlier.

The issue assumes importance as the country lacks dredging capacity, while it is amongst the world’s largest market for such operations. Most of the Indian ports are shallow and constant dredging has to be done for maintaining the water depth in some parts, while others have to be further deepened to increase the capacity of the ports to take in larger ships. Maintenance dredging is especially required for the Calcutta and Haldia ports due to heavy silting in the Hooghly.

Dredging Corporation of India, with a fleet of 12 dredgers, is the leading concern in this field. There are a handful of smaller dredging companies, like the Gujarat-based Jisu.

Leading Dutch and Belgian firms also undertake dredging contracts in the country as there is a shortage of dredgers. However, these firms have formed cartels and were exploiting the country’s weakness. Shipping secretary D. T. Joseph had surveyed the prices charged by foreign firms and found that they were charging up to twice as much as the domestic firms.