The Telegraph
Saturday , May 3 , 2014
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Strategy to help local shippers

Gautam Chatterjee (right) with former revenue secretary Sumit Bose in Calcutta on Friday. Picture by Kishor Roy Chowdhury

Calcutta, May 2: The Centre has mooted an alternative plan to boost Indian flag bearing liners and offer some benefits that are enjoyed by foreign liners, an official said.

“We have decided an alternative plan to offer some competitive advantage to Indian liners. A proposal has been sent to the ministry of shipping to introduce a concept of Indian controlled tonnage,” director-general of shipping Gautam Chatterjee said. Indian-controlled tonnage will be a category for foreign flag carriers with Indian management.

Ships usually fly the flag of the country where they are registered and are subject to the tax laws of those countries. Ships registered in India are liable to pay a tonnage tax based on the cargo-carrying capacity. But, there are several other taxes such as service charge, corporate income tax and tax on charter hire chargers that are applicable to shipping companies.

However, such taxes are not applicable on foreign flagged vessels registered in tax-free countries such as Panama, where a significant number of ships are flagged.

There are a number of carriers with foreign flags but controlled by Indian operators and they avoid Indian registration to access cheaper credit and various tax benefits.

“With this (the move), foreign flag liners controlled by Indian owners can register in India and get all tax benefits and cheaper credit that foreign flag carriers enjoy over domestic carriers,” Chatterjee said.

He said till the time Indian liners were unable to get access to a level-playing field, Indian controlled tonnage system would help the Centre to have better control on foreign flag carriers with Indian management by relaxing certain norms to enjoy similar benefits with Indian registration, which were not allowed earlier.

Using a provision of the merchant shipping act, the shipping ministry will not require the cabinet’s approval to introduce the concept, Chatterjee said.