Indian Shipping Ministry Pushes For Tax Parity To Bolster Domestic Fleet
India’s Ministry of Ports, Shipping and Waterways is advocating for crucial tax parity to level the playing field for domestically-flagged vessels, aiming to boost their competitiveness against foreign counterparts. Indian-registered ships currently face up to 20% higher operating costs due to various domestic levies, including taxes on imports and services. This disparity has historically driven a significant portion of India’s maritime trade towards foreign operators, hindering the growth and profitability of the nation’s own fleet and resulting in substantial foreign exchange outflow.
Officials confirm that discussions are actively underway with the Ministry of Finance to formalize a proposal for reducing duties and taxes on Indian vessels. A committee is currently assessing the specific taxation issues raised by domestic ship owners and operators. The existing Indian fleet, comprising over 1,500 vessels, has struggled to increase its share of cargo, with imports carried by Indian ships stagnating at around 8% since 2021. Previous subsidy schemes, such as the ₹1,624 crore initiative introduced in FY 2021-22, have not yielded the desired impact, partly due to exclusions of key cargo segments like exports and coastal carriage contracts.
The robust tax incentives offered at the Gujarat International Finance Tec-City (GIFT City) for ship ownership, including tax holidays and GST exemptions, are being considered as a potential model for broader industry-wide reforms. By addressing these structural disadvantages, the shipping ministry aims to not only enhance the financial viability of Indian vessels but also strengthen the nation’s strategic maritime capabilities. This move aligns with the broader vision of “Atmanirbhar Bharat,” seeking to reduce dependence on foreign shipping lines and establish India as a formidable global shipping hub.
This policy shift represents a vital step towards enhancing India’s self-reliance in maritime trade and optimizing resource allocation. By fostering a more equitable environment for domestic businesses, the government can stimulate job creation and ensure economic resilience. Such reforms are crucial for bolstering national infrastructure and securing a stronger position in the global supply chain.
