Ministry of Ports Seeks Removal of IGST on Imported Ships to Boost Indian Maritime Sector

The Ministry of Ports, Shipping, and Waterways has formally requested the Finance Ministry to eliminate the 5% Integrated Goods and Services Tax (IGST) on imported ships registered under the Indian flag. The goal is to encourage local tonnage and incentivize Indian fleet owners to register their ships in the country. This move has sparked concern within the domestic shipbuilding sector, as some believe that removing the IGST could threaten their interests by making imported ships more competitive.

Indian shipbuilders argue that the IGST currently in place serves as a protective measure to support locally produced vessels and prevent imported ships from undercutting domestic competition. They fear that eliminating this tax may lead to a situation where imported ships become cheaper and overshadow domestically-built ones. On the other hand, the Ministry of Ports, Shipping, and Waterways argues that removing the IGST would level the playing field for Indian fleet owners competing with foreign-owned vessels in Indian waters, alleviating their current disadvantage.

The existing tax regime, coupled with delayed input tax credit recovery, hinders the cash flow of Indian fleet owners and deters them from purchasing new ships. Instead, many opt for second-hand ships from the global market, further highlighting the challenges faced by the local maritime industry. While the Finance Ministry has yet to make a decision on this matter, both sides are closely monitoring the discussions as the outcome could significantly impact the future of India’s maritime industry and the “Make in India” initiative outlined in the Maritime India Vision 2030.

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