The Indian shipping ministry is working to establish tax parity between domestic vessels and foreign-flagged ships to reduce costs for local operators. A proposal for tax adjustments is set to be submitted to the finance ministry, with a committee currently reviewing taxation issues raised by Indian shippers and ship owners.
India’s shipping fleet consists of 1,552 domestic-flagged vessels with a gross tonnage of 13.65 million. However, these vessels incur approximately 20% higher costs than foreign competitors due to domestic taxes. This discrepancy impacts their profit margins, especially with many tenders opening to global competition. The GIFT City in Gujarat offers incentives like a 10-year corporate tax holiday and exemptions from certain taxes on ship maintenance.
The proposed tax changes aim to bolster India’s maritime sector, which has struggled to meet growth targets. Industry representatives have voiced concerns about discrimination against domestic vessels, citing issues such as IGST on ship imports and restricted tax credits. As a result, support for Indian shipping companies, including a ₹1,624 crore subsidy scheme, has not significantly increased the share of cargo carried by Indian-flagged ships, stagnant at 8% since 2021.
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