Govt to award 42 port projects worth Rs 14,500 cr; create 244 MT capacity in FY13

After Prime Minister Manmohan Singh called for infrastructure led economic recovery in a review meeting of key infrastructure ministries, the Ministry of Shipping has gone ahead and revised its targets upwards and vowed to award projects for creating 244 million tonnes of capacity during 2012-13 spread across 42 projects at an estimated cost of Rs 14,500 crore. The government’s move to award projects worth Rs 14,500 crore in the current fiscal is forecasted to augment major ports' capacity to about 934 million tonnes (MT) per annum.

G K Vasan, the Union Minister of Shipping also revealed that the target would entail obtaining approval of establishing two new major ports one in Andhra Pradesh and another in West Bengal. The Shipping Minister also remained confident that the various incentives offered in Union Budget would certainly provide an impetus for the growth of India’s port sector.

Amid times of tight liquidity situation, the shipping sector faces several difficulties in raising easy money. In order to address this short coming and to enable the ports to raise funds to the tune of Rs 5,000 crore for various projects, the government in this year’s Union Budget proposed to extend the tax-free bond scheme for one more year. Moreover, the rate of withholding tax on interest payments on external commercial borrowings has also been reduced from 20 percent to 5 percent for a period of three years for ports and shipyards.

After the introduction of the tonnage tax regime, Indian shipping which was stagnating around 6 million Gross Tonnage for a decade witnessed a steady growth to reach 11 million Gross Tonnage by the end of 2011. The capacity of Indian ports went up to more than 1200 million metric tonnes by March 2012 from about 1100 million metric tonnes per annum at the end of the previous financial year. The Shipping Ministry has also brought to the notice of Finance Ministry the need for exemption of Minimum Alternate Tax (MAT) on the book profit on sale of qualifying ships and its inclusion within tonnage tax regime. The inclusion of interest income on funds deployed out of tonnage tax reserve within tonnage tax regime is also among the various other issues that are being taken up with the Ministry of Finance.

G K Vasan exuding confidence over the sector’s bright growth prospects, pinned hopes on high demand for energy in future, which would result in increased import of coal and oil while he also remained certain that the container volumes in India will remain in high growth trajectory. With India’s external trade, as a proportion of GDP, registering more than two-fold growth in last 10 years and a bulk of this international trade being carried through shipping, the sector is expected to witness high growth in the years to come.