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New Indian govt gives little to shipping in budget

New Indian govt gives little to shipping in budget
With a new government those in India hoping the latest budget would bring joy to shipping will have been rather disappointed.

The Indian Budget for fiscal 2014-15 has mostly ignored the demands of the Indian shipping fraternity, and merely doled out a few concessions for the ports and shipbreaking sectors.

“3P India”, an institution to provide support to mainstreaming public-private partnerships (PPP) is to be set up to give the necessary thrust to infrastructure, according to Finance Minister Arun Jaitley, who presented the budget in Parliament on Thursday.

In addition, 16 new port projects are proposed to be awarded this year, with a focus on port connectivity – for which INR116.35bn ($1.96bn) has been allocated. These include development of the outer harbour at VO Chidambaranar port (formerly Tuticorin) and special economic zones (SEZs) at Jawaharlal Nehru port and Kandla.  

Kakinada port would be developed with special focus on manufacturing. Goods moved on coastal vessels would attract lower taxes, though exact details were not revealed.

The budget lays emphasis on the development of industrial corridors running along ‘smart cities’ and linked to transport connectivity; and to the revival of SEZs to make them effective instruments of industrial production, economic growth, export promotion and employment generation.

In order to promote inland waterways, `Jal Marg Vikas’, an INR42bn project on River Ganga, envisaging efficient river freight operations on the 1,620 km distance between Allahabad and Haldia, will be developed. This could prove to be a major revenue booster for Haldia port in West Bengal.   

“River transport contributes a mere 7% of total cargo transportation in India; this is substantially lower than developed countries, and even China,” said Jaitley.

“Approximately 40% of 4,500m tonnes of coal production in China is ferried through rivers. In contrast, 80% of India’s 600m tonnes annual coal production is moved by the Railways. The Ganga Jal Marg Vikas Yojana will boost coal movements through inland water.”

A sum of INR20.37bn will be provided for an integrated Ganga Conservation Mission, called ‘Namami Gange’.

The budget also contains the first ever effort to link rivers across the country, with a view to better freight movement. The Finance Minister has set aside a sum of INR1bn to expedite the preparation of detailed project reports as a serious move in this direction.

He also revealed that a comprehensive policy would also be announced in the current fiscal to promote the Indian shipbuilding industry.

For the shipbreaking industry, customs duty on import of ships meant for demolition has been reduced from 5% to 2.5%. Last year, on the eve of the 2013-14 budget, the then Finance Minister of Gujarat, Nitinbhai Patel, had suggested that the 5% duty be totally waived, but the demand has been only partially met in this Budget.

“Although details on the role of 3P India are yet to be finalised, a positive impact on the port sector is expected from the proposed body, which could address some of the obstacles faced by port developers operating through the PPP route, especially if it could support the developers in obtaining regulatory approvals and speedy resolution of pending issues,” said K Ravichandran, senior vice-president for Corporate Ratings at rating agency ICRA.

 “Along with the constitution of this institution, the proposed large investments in the sector on new capacity additions would provide major impetus to the growth in the sector. Hassle-free custom clearances through a single window would all boost trade movement at Indian ports in the long term.”

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