Ease of doing business in the maritime sector

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The new initiative of GOI to improve the business environment and its relevance to the maritime industry.

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NATIONAL MARITIME DAY CELEBRATION COMMITTEE EASE OF DOING BUSINESS IN THE MARITIME SECTOR - CAPT ASHOK MENON

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WISH ALL OF YOU A HAPPY NATIONAL MARITIME DAY

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The doctrine says government generally should not intervene in the marketplace.

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India ranks 130 out of 189 countries in ease of doing business. Access to credit and ease of paying taxes has worsened.

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India’s rank is lower than its BRICS (Brazil, Russia, India, China, South Africa) counterparts. Only relief: Pakistan at 139 is below us !!!

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There is an urgency to focus on improving the business environment and arrest the decline in relative performance against the various determinants of investment attractiveness

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The Leaders in ease of doing business : Singapore New Zealand Denmark South Korea Hong Kong UK USA

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India suffers from a chronic hangover of the Colonial Raj - Red Tapism and Beaurocratic Inertia. Thus enters what is commonly known as Speed Money. Businesses are willing to pay extra to get their files moving and this is the start of corruption….

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The Government realizing that this was hindering India’s potential for growth has finalized a series of measures to improve the ease of doing business in India. The Ministry of Shipping has unleashed their measures in this context.

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Some of these measures are : Easing of Cabotage Laws, which now makes it possible for foreign flagged ship to carry coastal cargoes Simplification of licensing regime for Indian-registered ships Major Port Trust Act to incorporate Companies Act n be more corporate

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The Merchant Shipping Act 1958 will be amended. It seeks to promote ease of doing business by simplifying rules and regulations governing Indian ships and their operations.

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Taxation laws simplified: exempted Customs and Central Excise duty leviable on bunker fuels Customs Act, 1962 amended to avail duty free imports or domestic procurement of inputs used in shipbuilding and ship repair.

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Taxation has been statistically proved to be the single biggest impediment to the business environment and results in the generation of a parallel economy.

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End of the day, taxes are killing. Companies have to pay almost sixty percent in direct n indirect taxes – Service tax, VAT, Corporate tax, dividend tax, the list is endless. Thus the incentive to avoid paying taxes and a parallel economy begins.

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The proposed introduction of the GST – Goods and Services tax would be a giant step for the reform of indirect taxation in India. A number of Central and State taxes would be amalgamated into one single tax.

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Relief for seafarers on Indian flagged ships: period of stay in India shall be counted as per the entries made in his/her CDC. Promotion of e-governance for permissions – Approvals, licenses, CDC, exam fees etc.

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Approval of proposal for financial assistance of 20% for ships built in the country, while providing for a budgetary support of Rs 4,000 crore Probably too less as much earlier the assistance given was upto 95% by SCICI

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Government is also planning to set up two new ports – one in Maharashtra and the second in Tamil Nadu - in addition to already approved Sagar port in West Bengal and work on these ports will begin by March.

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Sagarmala project, which seeks to achieve the broad objectives of enhancing the capacity of India’s ports and modernizing them to improve efficiency, thereby enabling them to become drivers of port-led economic development.

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The project includes modernisation of our ports and islands, setting up of coastal economic zones, new major ports and fish harbours. The total investment in the project would be to the tune of Rs 70,000 crore, preferably in the PPP mode.

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The Indian government is considering a proposal to set up an Integrated National Waterways Transport Grid (INWTG) which covers mainly five National Waterways. It is also considering a proposal for 101 more national waterways

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With the establishment of the INWTG, the National Waterways would be connected to National/ State Highways and would become an integral part of the transportation grid in the country.  This will reduce transportation costs , pollution and ease up our cngested roads.

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These are all grand ideas, but does the will exist to put them into effect?? Only time will tell….

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What needs to be done? The average Indian must develop Entrepreneurship skills and take advantage of the growth spiral to build up their business. There are big business opportunities which will open up,

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With the Government policy favouring business ventures, the time is ripe for seafarers and businessmen to explore new horizons. Since the focus is on PPP – Public private Partnership a huge scope exists. Dare to dream…

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What are these horizons?

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SHIP CONSTRUCTION India’s share in the global ship construction is less that 1%. This in spite of  a long coastline of 7515 Km and 1197 islands, and located strategically on major maritime routes

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Inspite of low labour cost, a robust domestic demand and a long waiting list for existing shipping companies, there are no new entrants and existing players are not ramping up their production. Companies like Bharti Shipyard and Larsen n Toubro are finding it difficult to survive.

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Why? Shipbuilding attracts a complex set of levies and duties – Octroi,CST,VAT , Excise etc Service Tax at 15 % is applicable on all design and engineering services CorporatetaxalsoimpactsIndianshipbuildersadversely

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4.Financingcostsassume greater significance because of huge capital requirements. - Leading shipbuilding countries like S Korea, China and Japan give special status to shipbuilding n repairing, including relaxation of taxation, easy financing etc.

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The Administration should take the ‘Make in India’ campaign to the ship construction industry and try to give India a larger share of the ship construction business.

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Thus if India is to increase visibility in the global ship building industry, some hand holding is required. Government must emulate the policies of major shipping nations, if they are serious about the betterment of the business environment

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History has proved that all powerful and developed nations have had a robust ship building industry. So if the crouching tiger has to spring, perhaps we must relook at the ship construction industry….

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This is what we have been!!!

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This is what we want to be!!!

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But this is what we have become, bogged down by narrow political interests, a strict tax regime and an inert beaurocracy!!

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The road less travelled Indian seafarers and those pursuing pre-sea training must consider the unconventional route, if they have to achieve their dreams. The mind set is that once in a pre sea course, sailing is the only option.

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Are there other options? Skill India is a a new inititative by the Government for providing value addition to youths in order to improve their employability. With minimum costs, the youths completing these courses will be provided certificates

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A pre sea student (whether rating or officer) or even a junior officer can take advantage of these additional skills such as welding, gas cutting, fitting, refrigeration etc Armed with these skills they are now prepared to search for new horizons.

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Employment opportunities exist for trained and skilled youth in the offshore industry. One must have the courage and perseverance to take the road less travelled. The initiative on ease of business will surely open new corridors which will increase the requirement of skilled personnel.

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Instead of sitting at home, waiting for a plum job to drop into their lap, these students must venture forth and acquire skills that they can fruitfully utilize anywhere. Only then can dreams become reality.

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THANK YOU

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