Govt indifference cause for Indian shipping industry plight


 When global game plan in promoting shipping industry is by attracting investment through tax breaks and sops, India looks the other way and beats itself out of the game by levying around 12 different types of investor-unfriendly taxes on the industry including income, service and MAT that not only scuttle the entrepreneurs interest in the country, but drastically reduce the Indian tonnage, voiced the speakers in unison at the India Shipping Summit 2013 held in Mumbai from Oct. 21 to 23.

Regressive taxation, bureaucratic indifference and governance apathy combined together have reduced the Indian tonnage share from 4.18% in 1960 to 0.79% (roughly 1, 800 ships at now) in world fleet when the global fleet growth on the other hand had zoomed from 36, 000 ships to 1, 25, 000 ships during the same period, they said.

The 12 different types of tax levy including service tax and MAT imposed by the Indian Government hounds the Indian shipping entrepreneurs out to foreign tax havens that pamper them with plethora of concessions. The Shipping Ministry should sit up and take notice as to how the Indian companies are quite successful in countries like Singapore and Cyprus, they rued.

Regressive and repressive tax regime in India has hustled out companies to the aforesaid countries and little surprising that those companies had cosily crossed their corporate growth milestones, besides surpassing their parent entities in India, they exclaimed in despair.

One is tempted to ask how the subsidiary of India’s 3rd largest shipping company, Mercator lines Singapore entity has grown bigger than its Indian parent? Why Tata in partnership with NYK is running its shipping business in Singapore and not operating in India? And why many of the Indian shipping entrepreneurs who had moved abroad are remarkably successful in business than those shipping lines that are incorporated in India? And whether maritime bureaucracy is aware of the flight of flags and the dwindling of tonnage? These are the pathetic questions posed by none other than Mr. Anil Devli, former CEO of INSA.

Shipping entrepreneurs who fled the country to investor-friendly nations unanimously concur that there is lack of strategic vision by the Government in growing the Indian maritime sector, he lamented.

Indian bureaucracy shackles day-to-day economic activity and it is the only bureaucratic machinery in the whole world that has no accountability with constitutional immunity, opined Mr. Ravi Mehrotra, CBE, Executive Chairman, Foresight Group, who has based his business in London and was proud to state that he has not visited any Government office there for approvals and clearances in his shipping business career spanning over 30 years. “Had I started the same company in India, I certainly wouldn’t have reached my present level of growth”, he openly declared.

When world shipping fleet flaunts a staggering 96, 000 vessels, India struggles to stumble past the 2, 000 numbers. Indian industry is still stuck in the state of infancy in both foreign-going and near-coastal trade tonnage. Unless the bureaucratic and political dispensation reform itself and set right the skewed taxations, the country won’t achieve the level playing field with maritime hubs like Singapore, China and Korea, he remarked.

Nurturing the ambition of developing itself as the future maritime hub of the region, India can’t afford to be insensitive to entrepreneur exodus to tax-friendly and flag-flexible destinations like Cyprus, Panama and Singapore, deplored Mr. Nigel Bell, Managing Director, Bell Shipping Ltd. “My first experience in dealing with the Government here took 11 months to get an import licence when it was applied in 1982”, he informed the gathering.

Business-friendly bureaucratic set-up and investment-promoting tax policies should be adopted to increase the India tonnage, he asserted and added that without Indian tonnage growth the dream of maritime hub would never come true. Foster the idea of holistic maritime hub like Singapore and Denmark that have the entire eco-system of lawyers, brokers, P/I club, managers and charterers existing together in the hub eco-system, said Mr. Peter Hinchliffee, OBE, Secretary General, International Chamber of Shipping and International Shipping Federation. Government policies should be in the long term interests of shipping as the commercial contracts entered into are for long-term, he pointed out.

India has an ad hoc ‘band aid’ approach in dealing with the festering issues of the industry, observed Dr. Anil Sharma, Founder-President, and CEO, GMS. “Most of the time our initiatives stop with conferencing and think-tank deliberations and its time that we move to the ‘do-tank’ phase” of it, he stated.

Single handedly countering the bashing of bureaucracy and governance by the industry, Mr. Rajeev Gupta, Chairman, Mumbai Port Trustadvised that the industry should stop its whining, crying and cribbing tone and make concerted attempts to be heard at the decision-making corridors. He underscored that India’s federal system of governance and vote bank democracy also have their roles in the present state of affairs.


About Andaman Saravanan

Maritime Journalist

Posted on October 25, 2013, in Uncategorized. Bookmark the permalink. Leave a comment.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: